Thursday, January 28, 2010

Can I eliminate my student loans in bankruptcy?

28 January 2010

Probably not. Most unsecured garden variety loans can be wiped out, or “discharged” in a bankruptcy. This means that the bankruptcy court enters an injunction on the collection of the debt from your person. In other words, your personal responsibility for the loan is eliminated. (Creditors still may have their rights to any collateral that secures the loan.) However, despite not all unsecured debts are dischargeable. Student loans are one of the types of obligations that are (almost) non-dischargeable. The student loan exception appears in Section 523(a) (8) of the bankruptcy code. The exception applies to:

• an educational benefit, overpayment or loan, made, insured or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or a nonprofit institution; or
• for an obligation to repay funds received as an educational benefit, scholarship or stipend; or
• any other education loan that is a qualified education loan, as defined in section 221(d)(1) of the federal tax code.

Without traversing the different laws that define the scope of the definition of a student loan in the bankruptcy code, suffice it to say, it is really almost any loan related to education. Including even books, supplies, transportation expenses, etc. as long as they are incurred by eligible students to attend eligible education institution, which is almost any education program.

It is possible to discharge student loans if they represent an “undue hardship.” However, this is been construed by the courts to be a very, very high hurdle. It must be compelling. The burden is on the debtor, the person seeking discharge. In re Kopf, 245 B.R. 731(Bankr. D. Me. 2000). It has been said that some courts are so strict that the debtor must be severely disabled to even be considered. However, there are different competing tests the courts can apply. One of the most popular is the “totality of the circumstances.” Some of the factors are: “the debtor’s past, present, and reasonably reliable future financial resources; 2) calculation of the debtor’s and his dependents’ reasonable necessary living expenses; and 3) any other relevant facts and circumstances surrounding that particular bankruptcy case.” In re Andresen, 232 B.R. 127, 139 (B.A.P. 8th Cir. 1999).

A practical consideration is how to afford to present the argument in the first place. First, one must file the bankruptcy, which theoretically can be done pro se in payments or possibly even waived. However, most people file using the services of an attorney, which is wise, but comes with a cost. Then after the bankruptcy is filed, an adversary proceeding must be filed. This is essentially a separate law suit in the bankruptcy case. Also, presentation of an undue hardship argument is not a simple endeavor. Facts must be gathered and analyzed. An argument must be developed, research must be done, and it must be thought though. Not to mention the creditor may pose a worthy opponent. So, if you are wondering if you can discharge your student loans, know that you face a high hurdle and significant practical considerations.

My car was repossessed? Can I get it back if I file for bankruptcy?

Saturday 19 December 2009

It depends on whether the repossession company or creditor still has the car and hasn’t sold it. If the creditor still has the auto, it will most likely be deemed that it is still property of the bankruptcy estate (that means it is property subject to the bankruptcy court’s jurisdiction) and the bank simply holds it as a custodian. See In re Pluta, 200 B.R. 740 (Bankr. Mass. 1996). Your lawyer can then possibly demand the auto be returned to you after you file bankruptcy.

However, this begs the question whether you want it back. It is quite common for people to have the desire to retain their automobile, but an objective outlook is necessary. Is your car a benefit to your financial balance sheet or not? Does the car have equity? In other words, is the auto worth more than the amount owed to the lender? If it was repossessed than there was a loan that was probably in the arrears, and it is unlikely there is equity. And if not, it is a negative on your balance sheet, and probably not worth keeping. But, there may be a way a bankruptcy lawyer can eliminate the excess debt through a chapter 13 plan. Also, there may be a way to keep the car through alternative financing. Lastly, there is a possibility that you could obtain financing for a different car through one of the lenders that specialize in post-bankruptcy financing. In any event, it behooves you to consult an experienced bankruptcy attorney to learn the options available to you under bankruptcy or a different alternative.

What is so good about an LLC?

Wednesday 16 December 2009

Typically one thinks of being able to shield personal assets from creditors that arise from their business activity (“inside liability”) as the main reason to create a business entity. Once the decision to create a business entity is made, the type of entity, corporation (Inc.), professional corporation (P.C.), limited partnership (L.P.), or limited liability company (“LLC”) is based on the corporate structure desired or other considerations. But there is one feature of the LLC that should be considered when making this decision; the shielding of the corporation from liability arising from personal acts (“outside liability”). Yes, it is important to consider outside liability in addition to inside liability when deciding the right business entity form to choose.

Understand, that no corporate entity can shield the corporation in all aspects, but the LLC has an advantage over other business entities in these situations. When a personal creditor seeks to take corporate assets from a (non LLC) corporate owner, he can take ownership of the stock. If it is a majority of the stock, generally, then this creditor will be able to run the company. Now, corporate agreements can be made to create the opportunity to prevent the creditor from taking control, like allowing the minority shareholder the option of buying the creditor out before exerting control. However, one may forget to import these clauses, or other shareholders may not be able to exercise them when it happens.

With the LLC, the creditor does not obtain the voting or management rights of the entity, but only a “charging order” that allows the creditor’s judgment to be satisfied by the LLC member’s interest. The major benefit is that the creditor never gets to run the company, and you maintain control. The creditor will be able to take corporate distributions, and although distributions should not be withheld in bad faith, it is still a decision the company (that includes you) makes. The reason behind this difference is that other members of the LLC should be protected from the other member’s creditors.

A few caveats though; one is that although Massachusetts recognizes single member LLC’s , there is an argument that single member LLC’s should not receive its special protection. At least one out-of-state court has ruled that way. In re Albright, 291 B.R. 538 (Bankr. D. Colo. 2003). Another caveat is that when bankruptcy is involved, new considerations may alter these basic rules. Finally, when seeking to protect anything from a creditor in the corporate setting, you must follow the proper corporate rules and structure to ensure the creditor does not successfully “pierce the corporate veil.” In closing, we urge you to consider the benefits of an LLC when making the decision what business form to start.

What are the requirements to obtain a reverse mortgage, and should I get one?

Saturday, 12 December 2009

The most prevalent and only recommended type of reverse mortgage is the Home Equity Conversion Mortgage (“HECM”) (the acronym is pronounced heck um). HECM’s are insured by the United States Department of Housing and Urban Development (HUD). Some of the basic requirements for a reverse mortgage in Massachusetts are:

1) the mortgage must be granted in your primary residence(annual certifications of this fact will be conducted);
2) you must complete a counseling program that is approved by the Executive Office of Elder Affairs (associated with the Massachusetts Division of Banks);
3) the loan you apply for must be approved by the Massachusetts Division of Banks
4) the dwelling type must meet eligibility requirements, generally single family homes, owner-occupied (2-4) family homes, condos (additional details apply), manufactured homes (additional details apply), and Planned Unit Development(s) are acceptable;
5) the dwelling itself must be approved on the basis of safety and structural integrity, and the repairs deemed necessary may not exceed 15% of the value of the property;
6) the borrower(s) must be 62 years or older; and
7) (other more detailed requirements apply).

If a dwelling is found to need repairs, one can still obtain the loan before the repairs are made. A repair estimate must be provided. The lender then can set aside 150% of the repair estimate, and the loan can close. The borrower will have 6 months to make the necessary repairs, and upon successful inspection of the repairs, the remaining funds can be disbursed.

Some myths that do not matter are, the borrowers’: 1) income; 2) generally, their credit (with some exceptions); 3) liquid assets; and 4) physical health.

How much can I borrow? The maximum loan amount (known as “maximum claim amount” by insiders) is determined by a formula that considers the borrowers’ age, the maximum claim amount, and the expected applicable interest rate. However, it will not be more than the lesser of: 1) the fair market value of the dwelling; or $625,500.

The most basic, attractive feature of the reverse mortgage is that no payments are required during the life of the borrowers. This allows a person to use the equity usually built up over many years, without the requirement of periodic payments that a senior person may not be able to make. (However, property taxes or insurance will likely need to be made.) Further, they are non-recourse, which means that the lender can only seek repayment from the collateral, the dwelling itself.

Disbursements can be made in the following ways: 1) lump sum; 2) fixed monthly payments (for a time or as long as the borrower lives in the dwelling); 3) open access to a credit line; and 4) some mix of a credit line and monthly payments.

Can I use a reverse mortgage to purchase a new home? Yes, the mortgage is granted in the dwelling the borrower is purchasing. The funds are used to purchase the home, and the borrower must move in within 60 days and maintain residency. The property must be inspected, and any required repairs must be completed prior to closing. There is no other financing allowed in the transaction. So, any funds needed in addition to the reverse mortgage must come from the borrower. Other conditions apply.

When is the loan required to be paid back? When one of the following occurs:

1) All of the borrowers have died;
2) all of the borrowers have transferred their interest in the dwelling;
3) the borrowers move;
4) the property is deemed in need of repairs that the borrow refuses to make; or 5) a condition/covenant of the mortgage is violated.

Some major considerations are the cost and estate planning ramifications. Bottom line, reverse mortgages are expensive. You will give a significant amount of the equity in the home in upfront costs/fees, insurance fees/costs, monthly service fees, and continuing interest. Also, consider that the expected beneficiaries of the dwelling will have a significant loss of the value to be received. Further, the heirs of the borrowers’ will need to ensure the re-payment of the loan after the borrowers’ pass away. This is usually done by the sale of the residence, but must be completed in a timely manner.

If you are considering a reverse mortgage, we suggest obtaining counsel from an attorney with experience in financial and/or elder law matters.

Can my (private) employer fire me for filing for bankruptcy?

Friday, 11 December 2009

The answer is No. It is plainly stated in the bankruptcy code that:

11 U.S.C. 525 . . .
(b)No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt— (1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act; (2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or (3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.

This may beg the question what a prospective employer can do when confronted with an applicant who has filed bankruptcy. Some commentators take the position that the answer whether discrimination on this basis is allowed is no. However, almost all of the cases that have interpreted this provision have ruled that it only applies to the debtor's current employer. In re Hardy, 209 B.R. 371, 374-376 (Bankr. E.D. Va. 1997); In re Merriweather, 185 B.R. 235 (Bankr.S.D.TX 1995); In re Briggs, 143 B.R. 438 (Bankr.E.D.MI 1992). But see In re McNeely, 82 B.R. 628 (Bankr. S.D. Ga. 1987)(applying Section 525(b) to service purchaser/independent contractor relationship). None of these cases are binding though, so the question is an open one.

There are some other considerations if you are applying for a new job and concerned over this particular potential ramification of filing for bankruptcy. First, the ambiguity noted above may be enough to stop any employer from taking the chance of violating the law. Typically employers, and especially their counsel, like to take the safe road. Second, the percentage of employers that truly take action based on a credit report, even if they do check it, might be less than you think (I personally have never heard of someone not getting a job due to a prior bankruptcy). Third, an employer may prefer that a person had filed for bankruptcy and eliminated their debt, as opposed to continuing on with a significant debt load. They could be concerned about those with a greater incentive to steal. Who do you think is more of a risk to employ, a person who is probably debt free or someone struggling to carry a significant debt load? Finally, the pros and cons of a decision to file bankruptcy should be carefully weighed with competent counsel. There is wisdom in a multitude of counselors.

Attorney-Client privilege and emails sent from work.

Wednesday, 9 December 2009

In today’s electronic age you may be using email for very confidential communications regularly. But if you want to rely on the attorney-client privilege to ensure your opponent or others can not compel the disclosure of the communications between you and your lawyer, you better not use your companies’ email system. The attorney-client privilege generally applies to all confidential communications between a client and his attorney undertaken for the purpose of obtaining legal advice. The privilege can be waived. It will be considered waived if the communications occur with others present. This generally means that a message through your employer’s email system, because the employer has access to the messages, is not subject to the privilege. This can also be the case when simply using an employer's computer to send emails from a private account (e.g. msn or yahoo). The email communication is typically considered made with a third party present. So, before firing off an email to your lawyer from work, think twice about whether you want the message to remain confidential. I bet the lawyer will!

Thursday, January 21, 2010

I was sued for negligence and my homeowners insurance company has denied my claim saying the damage was caused by an intentional act, what can I do?

Friday, 1 January 2010

It is common for homeowners insurance policies to have exclusions for damage caused by an act “which is expected or intended by one or more ‘insureds’” (intentional act). Insurance companies may say this exclusion applies to all people covered under the policy, even when more than one person covered under the policy is being sued, and even when some of them are being sued solely for negligence. A claim denial may lead to dismay, especially after you have been sued and you need to present a defense, rather quickly.

However, there may be hope. It may be found in the Severability of Insurance clause (hopefully) contained in your policy. This clause usually reads something like “[t]his insurance applies separately to each ‘insured.’” What this has been interpreted to mean in Massachusetts is that each person covered under the policy must be considered separately. Worcester Mut. Ins. Co. v. Marnell, 398 Mass. 240 (1986); see also Lumberman’s Mut. Cas. Co. v. Hanover Ins. Co., 38 Mass. App. Ct. 53 (1995). In other words, the policy must be construed as if each person insured under the policy had their own independent policy. So, if one person is being sued for negligence, then the damages claimed in the underlying suit must be considered to be allegedly caused by that person’s negligence for insurance coverage purposes. That usually means there really is coverage under the policy for those accused of negligence in the underlying suit.

However, it is not advisable to take on an insurance company alone and interpretation of insurance policies can be tricky business. So, give a lawyer a call to see if there indeed may be coverage when your homeowners insurance company denies your claim.

Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com

Can I keep one of my credit card accounts even if I file for bankruptcy?

4 January 2010

It depends on whether the account has a balance when you file your bankruptcy petition, and, if there is no balance, how a creditor may react to the bankruptcy filing. If your account has a balance, the answer is no. The reason is that the chapter 7 bankruptcy petition, which is signed under the penalty of perjury, requires that you list all your debts. So, the account must be listed on the petition, and if the bankruptcy is successful, it will be discharged. What if there is nothing owed on the credit card account? In other words, there is a zero balance. In that case, the account is not technically a debt, so it is not required to be listed on the bankruptcy petition.

So there is nothing in the law that prohibits you from keeping such an account through and after the bankruptcy. (There are a number of practical and other legal issues that would need to be covered. In other words, this type of intent/activity really screams for a bankruptcy lawyer’s consultation.) But the credit card companies will typically learn of the bankruptcy by other means, like your credit report, and are likely to cancel the account, which they have the right to do. So, there is a chance, but a small one.

Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com

Someone spread derogatory information about me to others, what can I do?

10 January 2010

You might have grounds to sue them for defamation. Defamation is somewhat of a catch all word and specifically means slander and/or libel. Slander is by spoken word, libel is by a writing. Generally, the elements for slander are: 1) a publication (making an oral statement); 2) to at least one third party (not to only the victim himself); 3) that is derogatory; 4) that causes special (economic) damages. (There are additional elements and concerns if the victim is a public official or the statements are considered a matter of public concern.). Although technically it is not an element of this tort in Massachusetts, in all reality the statement made has to be false as well. This is because, generally, if a potential defendant can show the statement is true he is likely to defeat the suit. (Additional concerns may apply to this.)

The statement is considered defamatory if it: "hold[s] the plaintiff up to contempt, hatred, scorn, or ridicule or tend[s] to impair his standing in the community, at least to his discredit in the minds of a considerable and respectable class in the community." Tartaglia v. Townsend, 19 Mass. App. Ct. 693, 696 (1985).

You may be thinking why you don’t see more slander lawsuits, seeing as these elements must be satisfied very often. Maybe you have been a victim more than once. The reason lies with the damages. As stated, a victim must plead in his case economic damages. This means actual “hard” economic damages that can be demonstrated. So, having people stay away from you or not like you really isn’t enough. It may be if you can show people made decisions based on the statements that caused you damages, like losing or not being hired for a job, it may be enough. But in most instances, a victim is unable to allege economic damages.

However, certain types of derogatory statements are considered slander per se. This should be thought of as slander by law. Essentially society has recognized that some statements are so hurtful or damaging to the reputation that a victim should not need to have realized actual (economic) damages to bring forth a claim. Rather, the fact finder (judge or jury) will decide what to award, which includes emotional damages and harm to the victim’s reputation.

Generally, there are 4 types of statements that are considered slander per se. They are statements: 1) in writing (libel); 2) that the victim committed a crime; 3) that the victim has certain diseases; 4) that prejudice the victim’s business or occupation, including that a person lacks the characteristics to perform their lawful business or occupation (and possibly a fifth ---that a women (possibly a man as well) is unchaste. An example of the 4th exception was decided in Ravnikar vs. Bogojavlensky, 438 Mass. 627 (2003). In that case the Massachusetts Supreme Judicial Court decided that it was defamatory to say a doctor was dying of cancer because, they reasoned, it would prejudice the doctor’s practice and occupation.

We have all heard the saying sticks and stones may break my bones but names will never hurt me. But then we grew up, we realized that wasn’t true. Names often include implied derogatory statements that really hurt, and cause damage. If you think you have been the victim of slander, slander per se, or libel, it may be time to call an attorney if you seek to bring a claim.

Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com

What is the Co-debtor (or Co-signer) stay?

13 January 2010

Often debts (loans) have more than one person obligated to repay the creditor (on the hook). These can be loans where the debt is jointly owed by two joint account holders. There are also debts where one person is the primary account holder and receives the money, and another voluntarily becomes obligated despite not receiving any of the money. In these situations the secondary account holder (or co-signer) has agreed to be liable to the creditor in order to allow the primary account holder to get the loan. The most well known situation is a parent who co-signs for an adult child.

The “co-debtor stay” (or “co-signer stay”) arises when one of the debtors files for bankruptcy under chapter 13. It stops the creditor from any collection activity towards the co-debtor and continues until the bankruptcy is either closed or converted. It was created so that a debtor does not feel indirect pressure from a creditor through their efforts to collect from the co-debtor, who is usually a friend or relative.

However, the co-debtor stay does not apply to all situations. For one, the co-debtor must be an individual, and not a business entity like a corporation. Also, it only applies to “consumer debt” as defined under the bankruptcy code and interpreted by the courts. There may also be some variation from jurisdiction to jurisdiction on how the co-debtor stay is believed to apply. The co-debtor stay is a powerful tool for the consumer, but if you want to rely on the co-debtor stay, it would be wise to consult an experienced bankruptcy attorney.

Under chapter 7 bankruptcy, this type of protection of the co-debtor is not available. In fact, when one debtor files for bankruptcy under chapter 7, it may even make the creditor more aggressively pursue the co-debtor. This is one benefit to filing a chapter 13. However, there are a multitude of reasons to consider when deciding what chapter of bankruptcy to file under. It pays to seek counsel to help make that decision.

Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com

Can I tithe during bankruptcy?

14 January 2010

Yes. Under either chapter 7 or chapter 13 a debtor is allowed to regularly contribute up to 15 percent of their gross income to a charitable organization. For example, if a debtor had a gross income of $40,000 a year, they would be allowed to contribute $6,000.00 a year to a charitable organization.

This right has some history to it. At one point in 2006, there was some doubt. In the decision In re Diagostino, No. 06-10384, 2006 WL 2578172 (Bankr. N.D. N.Y. Aug, 28, 2006) a New York bankruptcy court found that above median chapter 13 debtors were not allowed by the recent changes in the bankruptcy code made by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 to contribute anything to a charitable organization. It didn’t help matters that the debtors’ bankruptcy petition stated they had not previously contributed anything to a charitable organization in the year prior to their bankruptcy filing. But they sought to pay $100.00 a month during the life of their chapter 13 plan.

This decision made waves and Congress acted swiftly. Shortly after the decision, Senators Hatch and Grassley, along with Congressman Sessions, made public statements that the Diagostino decision incorrectly interpreted current bankruptcy law. They sought to eliminate any doubt. Congress eventually passed the Religious Liberty and Charitable Donation Clarification Act of 2006, which made it clear that a tithe or continuous gift to a charitable organization is allowed in bankruptcy. So, if someone wants to tithe before or during bankruptcy, they are allowed to and will still qualify under either chapter 7 or 13.

Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com

A debt collector is calling my cell phone using an auto-dialer, what can I do?

16 January 2010

You might have grounds to sue them! It depends on whether you gave the original creditor or the debt collector “prior express consent” to call you on your cell phone. You may want to ask yourself, did you write the cell phone number on your original credit application? (Did you have the cell phone number when you applied for the account?) If the answer is yes, then you may not have a claim, but often debt collectors do research and gather information about you, including your cell phone number, prior to initiating their calls. So, the fact they have your cell phone number may not mean that you gave it to them voluntarily. If they are calling you using an auto dialer without your prior express consent, it is generally illegal.

What is an auto-dialer call? It is a call that is computer generated, that, upon answering, the automated voice engages you until a real human being is available. It may ask you to wait “for an important message.” These are the kind of calls many people simply hang up on once they realize a real person is not on the other line.

The law providing this protection is not found in the Fair Debt Collection Practices Act (FDCPA) (15 USC 1692 et seq.), the Act containing most debt collection law that applies to debt collectors. But interestingly enough under a law that was passed in 1991 aimed towards the telemarketing industry titled the Telephone Consumer Protection Act (TCPA) (47 U.S.C. § 227). The penalties are either the actual monetary loss caused by the violation or $500, whichever is greater, per call. (In all likelihood this will be the $500.00.) A court may also award up to three times this initial penalty (again probably $1,500.00 maximum) in its discretion, if it finds that the defendant acted willfully or knowingly.

If you think you have a claim and are considering taking action, you should contact an attorney that practices consumer protection law.

Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com

Do I have to include all my debts in my bankruptcy?

18 January 2010

Yes. The bankruptcy petition requires that you list all your debts and that you make all statements under the penalty of perjury. There is no way around listing all your debts, but there is a plan you can have to make that special creditor whole despite your bankruptcy, read on.

It is so common for consumers to think that they can pick and choose which debts to include in their bankruptcy and which they do not. People often say “I’m not going bankrupt on that debt” or “I’m not including that debt in my bankruptcy.” But that isn’t acceptable. People often have at least one debt which they really want to pay despite needing to file bankruptcy. Usually this debt is owed to a family member or sometimes to an employer. The person feels terrible about “going bankrupt on” that particular debt because they feel an affinity towards the person or entity that gave them the loan. Sometimes a person preparing to file for bankruptcy doesn’t have the money and figures they will get a loan from a family member or friend in order to pay their attorney. One must think about this and what they are doing, filing bankruptcy. This means they will seek to obtain a discharge of their personal responsibility on their debts. So claiming you intend to pay a loan back that you plan to use to file bankruptcy is saying you intend to jump into a pool to dry off.

If you can’t live with yourself if a particular special creditor is not made whole, what you can do is this. After the bankruptcy case is closed, you may voluntarily give the creditor the amount of the previous (now discharged) loan as a gift out of the kindness of your heart. So, if you really want to ensure that a particular creditor is made whole, you can do it, but just after the bankruptcy is over and in the form of a gift.

Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com

The criminal trespass statute in Massachusetts; how you can address trespassing on your property.

21 January 2010

There may be someone that you don’t ever want to enter your property again. Or there may be someone you don’t want to enter your property at all, even once. In Massachusetts, there is a way to make it a criminal act if a particular person enters your property.

Generally, the public is deemed to have an implied invitation to enter your property. They may walk in areas that would be regarded as usual places to approach the house located on a property. It is perfectly legal for a person to walk up to your front door on the walkway, or even the lawn, and knock on your door to ask you a question, take a survey, or for any lawful reason. (But, nowadays, some towns may have some limited restrictions on widespread door-to-door solicitation or the like.) There are a few ways in Massachusetts to make this activity a criminal act, or a criminal trespass. One is to post conspicuously placed No Trespass signs on your property. This may be effective, but is probably not the type of message you would like to project to the community at large. Most people don’t mind the occasional door knocker, but seek to bar a select individual, or maybe a few, from even stepping foot on their property, let alone knock on their door. The other way is to impose the Massachusetts criminal trespass statute.

The criminal trespass statute in Massachusetts can be found in Mass. Gen. Laws ch. 266 § 120. Basically, to employ this statute, a resident, with “lawful control” of the premises, needs to notify the person or persons they wish to prohibit from entering. Oral notice appears to be allowed. But it is probably safer to provide notice in writing, and in a fashion to be able to prove someday that the notice was given. Once the notice is given, this law applies. The police can arrest the prohibited person without the issuance of a warrant. The penalties upon conviction are: 1) up to $100.00; 2) up to 30 days in jail; or 3) both.

This law also covers the situation when someone is asked to leave the property, and the person refuses. For this there is no prior act you can take to strengthen your rights. But it is good to know in advance to employ later if a situation arises.

If you are the landlord, you may employ this provision as well. However, a tenant is deemed to have a limited easement in common areas, and can convey superior rights to the no trespass notice to their invited guests. Commonwealth v. Richardson, 313 Mass. 632, 697 (1943); Commonwealth v. Nelson, 74 Mass. App. Ct. 629 (2009).

However, this is a brief blog written only for general information. There are exceptions to the law, and some legal complexities that are not covered here. (For example, the differences and application of civil trespass concepts). So, in the event you wish to employ the Massachusetts criminal trespass statute, or have had it employed against you and want to learn more, we encourage you to contact an attorney.

Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguigononlaw.com

Wednesday, January 20, 2010

Is it legal for a debt collector to leave a phone message to collect a debt?

18 January 2010

Maybe not, it depends on the circumstances. In most instances, when a debt collector leaves a message for a consumer to collect a debt they are breaking the law. This is why. The Fair Debt Collection Practices Act (FDCPA) requires a debt collector to disclose in their initial communication with the consumer that the debt collector is attempting to collect a debt and any information obtained will be used for that purpose. Additionally, all subsequent communications with the consumer must disclose that the communication is from a debt collector. This requirement is commonly referred to as the “mini-Miranda” disclosure. The FDCPA also prohibits disclosure that a debt is owed to a third party. To avoid disclosing to a third party, debt collectors routinely omitted the mini-Miranda from phone messages. However, things changed.

In April 2006 the United States District Court for the Southern District of New York decided that a phone message left for a consumer was a “communication” under the Fair Debt Collection Practices Act. Foti v. NCO Financial Systems, Inc., 424 F. Supp.2d 643 (S.D. N.Y. 2006). This meant that debt collectors are required to provide the mini-Miranda in phone messages or be in violation of the law. Of course, if debt collectors indeed do provide the mini-Miranda, they run the risk of violating the third party disclosure law if a third party happens to listen to the message. In subsequent legal conflicts, debt collectors argued that Foti must have been decided incorrectly because the law, as Foti would have it, would have them choose between violating one law or another, which is illogical. This didn’t seem to work. Subsequently most courts exhibited little sympathy and stated that debt collectors had no guarantee they were entitled to leave messages at all.
Debt collectors then tried to leave messages like this:

This is a message for George Berginon. If you are not Mr. Berginon, please hang up or disconnect. If you are George Berginon, please continue to listen to this message. There will now be a pause in this message.
(pause)
By continuing to listen to this message, you acknowledge you are George Berginon. Mr. Berginon, you should not listen to this message so that other people can hear it as it contains personal and private information. There will now be a pause in this message to allow you to listen to this message in private.
(pause)
This is John Smith from ABC Collection Agency. This is an attempt to collect a debt and any information obtained will be used for that purpose. Please contact me about an important business matter at [phone #].


This hasn’t been well received by the courts either.

The debt collectors will continue to call and leave messages because it is the only way they can make money. And if they continue to, they will in all likelihood be breaking law. If you think you may have incurred damages from a violation of the FDCPA stemming from a phone messages or any other possible violation, you should contact a lawyer.

Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguigonon@bourguignonlaw.com
www.bourguignonlaw.com