
Thursday, September 29, 2011
FAQ #22: If I get married after filing for bankruptcy will it affect my spouse?

Tuesday, September 27, 2011
FAQ #21: Is there any way to have a bankruptcy removed from my credit report?

Friday, September 23, 2011
FAQ #20: What assets can I keep (house, car, property)?

In addition certain types of income may also be exempt from the bankruptcy estate. You should consult with an attorney to obtain further information.
Wednesday, September 21, 2011
U.S. Bank v. Ibanez And Beyond: Massachusetts Courts Leading The Way In the Foreclosure Crisis
(Guest Post by Richard D. Vetstein, Esq.)

U.S. Bank v. Ibanez And Beyond: Massachusetts Courts Leading The Way In the Foreclosure Crisis
I’m honored to be guest blogging regarding recent Massachusetts foreclosure and mortgage crisis court rulings. Although not as impacted by foreclosures as Florida or California, Massachusetts has been a hotbed for controversial and landmark rulings in this ever-changing area. And there will be more to come as our Supreme Judicial Court will decide several more important cases in the upcoming months. Here’s a summary of what’s happened in the last year and what’s on the upcoming docket.
U.S. Bank v. Ibanez
In January 2011, the Massachusetts Supreme Judicial Court’s U.S. Bank v. Ibanez decision quickly became a huge national story. CNN-Money called it a “beat down” of the big banks. Reuters said it’s a “catastrophe risk” for banks. The ruling spooked investors, as bank stocks were down in reaction to the ruling.
Ibanez was the first state supreme court ruling to weigh in on the legal ramifications of widespread irregularities and paperwork snafus in the residential securitized mortgage industry. The high court ruled that two foreclosures of sub-prime mortgages were null and void where the lenders could not establish the chain of ownership within the securitized mortgage back securitized pools.
The Ibanez case has been attributable for the recent slowdown in foreclosure activity in Massachusetts, however, as of August the numbers are starting to pick back up as lenders are getting their acts together. It’s important for you and your bankruptcy attorney to verify whether your mortgage lenders has complied with the Ibanez case by recording the proper mortgage assignment paperwork.
Bevilacqua v. Rodriguez
We should find out any day now the SJC’s opinion in the next case in the U.S. Bank v. Ibanez saga: Bevilacqua v. Rodriguez. This case will consider whether a home buyer can rightfully own a property if the bank that sold it to him didn’t have the right to foreclose on the original owner, after the U.S. Bank v. Ibanez ruling in January. This case, which national legal experts are watching closely, may determine the rights of potentially thousands of innocent purchasers who bought property at foreclosure sales that have been rendered invalid after the Ibanez ruling. “The Massachusetts case will have significant repercussions in many states that allow nonjudicial foreclosure,” Alan White, a law professor, commented to BusinessWeek. “The decision in Bevilacqua will not only determine the fate of past foreclosure sale deeds, but hopefully provide guidance so that lenders and their lawyers can get it right going forward.”
Eaton v. Fannie Mae
In a rare “sua sponte” (on their own) direct appellate review, the Massachusetts Supreme Judicial Court has agreed to hear an appeal in Eaton v. Fannie Mae, considering the controversial “produce the note” defense in foreclosure cases and whether a foreclosing lender must possess both the promissory note and the mortgage in order to foreclose. Based on arguments asserted by the lender, the court may also consider the circumstances by which a mortgage granted to Mortgage Electronic Registration System (MERS) can be effectively foreclosed in Massachusetts. This could be a very important decision — potentially as important as the landmark U.S. Bank v. Ibanez. A ruling against the lenders could expose a gaping and fatal legal black hole with many foreclosure-bound mortgages that were hastily bundled and sold to Wall Street during the real estate boom years. A rejection of the borrower’s arguments as recently made by a bankruptcy judge in Worcester, however, could significantly reduce some MERS induced anxiety and heartburn presently being experienced by lenders and foreclosure attorneys.
Bank of NY v. Bailey
In the closely watched case of Bank of New York v. Bailey, the Massachusetts Supreme Judicial Court ruled on August 4, 2011 that the Housing Court may hear a homeowner’s challenge that a foreclosing lender failed to conduct a foreclosure sale in accordance with state law and under the now seminal U.S. Bank v. Ibanez decision. Previous to this decision, foreclosing lenders and their attorneys were quite successful in evicting homeowners even where there were defects in the foreclosures. Watch for the Housing Court to be on the front lines of foreclosure defense now.
Suffice to say, Massachusetts courts have been very busy with foreclosure and mortgage crisis rulings. I’ve been following these cases for a while and there is definitely a marked trend by the courts to a more balanced, pro-consumer approach in these cases. Judges are human beings and no doubt, they are not oblivious to the news and widespread financial distress going on in Massachusetts and the country today.

Richard D. Vetstein, Esq. is an experienced real estate litigation attorney who’s handled numerous foreclosure defense and title defect cases in Land Court and Superior Court. Please contact him if you are dealing with a Massachusetts foreclosure or title dispute.
FAQ #19: Will I still be able to keep my checking account? If I choose to switch banks will they give me a checking account?
You will be able to keep your checking account, provided the balance in the account is below the maximum exemption limits. If you have a checking account that is associated with an overdraft account, or a credit card issued by the same bank and file bankruptcy, the bank cannot seize money from your checking account to cover the other debts. Banks are private institutions, so they can decide that they no longer want to do business with you. However, this does not mean that they can keep your money.
If your account is ever closed by your institution, you must be given the funds in the account by bank check. Some financial institutions will make inquiries into your credit history when opening a new account, although these inquiries are usually for the purposes of extending lines of credit or an overdraft account. In addition some institutions may review your check-writing through a service like TeleCheck to determine if you are a risk of passing insufficient checks.
If your account is ever closed by your institution, you must be given the funds in the account by bank check. Some financial institutions will make inquiries into your credit history when opening a new account, although these inquiries are usually for the purposes of extending lines of credit or an overdraft account. In addition some institutions may review your check-writing through a service like TeleCheck to determine if you are a risk of passing insufficient checks.
Monday, September 19, 2011
FAQ #18: Will I be able to rent an apartment after filing?

The landlord’s ultimate decision may depend on the circumstances that led up to the bankruptcy and a number of other factors, such as recommendations from previous landlords or other personal references. Most landlords will evaluate whether the bankruptcy was caused primarily by an unexpected event, such as medical bills following a serious accident, or by financial irresponsibility.
As a practical matter, the ability to rent an apartment in the future should not be a significant factor in making your decision about whether to file bankruptcy. The amount of your unpaid debts, by itself, may jeopardize your chances, even if you don't file bankruptcy. In that sense, not filing for bankruptcy may make you more of a financial risk due to the size of your outstanding debts. By the same token, using a government-approved means of dealing with your debts may actually be viewed as an indication of financial responsibility.
Honesty is often the best policy. If you know your prospective landlord will be running a credit check, be up-front and honest about what your credit contains, and the reason for your past financial difficulty. While you may need to provide more information to convince a prospective landlord, there are still many landlords who are willing to rent to tenants with a bankruptcy in their past.
Thursday, September 15, 2011
FAQ #17: Would I be able to refinance my home after filing?
Yes, and in many cases, you should. If you keep your home during the bankruptcy and do not reaffirm the debt, any later on-time payments will not be reflected on your credit report. This is due to a technical issue regarding the severability of mortgages and the note, and how debts are reported to the credit reporting agencies. However, paying off the existing mortgage and refinancing will have a much greater effect in rebuilding your credit.
Because bankruptcy (and often, the financial difficulties which gave rise to a bankruptcy filing) will make it difficult to obtain credit, many people will find it difficult to refinance immediately after bankruptcy. However, taking steps to repair credit (such as establishing a good repayment history on other reaffirmed debts or a secured credit card, maintaining a cash reserve, paying debts on time, and borrowing and repaying a small personal loan) can accelerate credit repair. If you take the proper steps to rebuild your credit following bankruptcy, you may be able to qualify for a refinance loan in as little as 2 years after your discharge.
Because bankruptcy (and often, the financial difficulties which gave rise to a bankruptcy filing) will make it difficult to obtain credit, many people will find it difficult to refinance immediately after bankruptcy. However, taking steps to repair credit (such as establishing a good repayment history on other reaffirmed debts or a secured credit card, maintaining a cash reserve, paying debts on time, and borrowing and repaying a small personal loan) can accelerate credit repair. If you take the proper steps to rebuild your credit following bankruptcy, you may be able to qualify for a refinance loan in as little as 2 years after your discharge.
Monday, September 12, 2011
FAQ #16: Who will know about my bankruptcy?

Additionally, many bankruptcies are filed to discharge un-liquidated or contingent claims – claims arising from a lawsuit, for example – so the adverse party in the lawsuit will be aware of your filing.
Co-debtors must also be disclosed and will receive notice of filing; as will anyone that holds a leasehold interest with the debtor, such as a landlord or tenant, regardless of whether the rent is up to date.
In addition, bankruptcy is a court case. The existence of a court filing in any court is a matter of public record, so there will be a public record of a bankruptcy filing. However, this does not necessarily mean that the information will be easily obtainable by the general public. For example, in order to view bankruptcy case documents, one must either go to the Federal Courthouse in the district where the case was filed, or have the requisite credentials to obtain a PACER account (on-line access to Federal Court records). Third-party agencies can also determine that a case was filed through various public records search engines. Credit reporting agencies (Equifax, TransUnion and Experian) are able to obtain similar information. This means that anyone authorized to review your credit report will see your bankruptcy, such as prospective employers conducting an authorized background check or loan officers acting on a credit application.
Friday, September 9, 2011
FAQ #15: What is the difference between secured and unsecured debt?

Unsecured debt refers to any type of debt or general obligation that is not collateralized by a lien on specific assets of the borrower. In other words, in the event that the borrower fails to pay the debt, there is no collateral that the lender may recover to mitigate its financial losses resulting from the debtor’s failure to pay without suing in court.
Wednesday, September 7, 2011
FAQ #14: Do I have to go to court?

The court-appointed Chapter 7 trustee will preside over this meeting. At the meeting, you will be asked to testify under oath as to the accuracy of the statements in your petition. However, most of your creditors will not appear at the meeting, and you will not be before a judge. The meeting is very informal, and in most cases will last no more than 10 minutes. If you do not attend the meeting, your case will be dismissed.
If the trustee or your creditors file objections to your claimed exemptions, or other issues are raised by a creditor or interested party, a hearing will be held in front of the Bankruptcy Court Judge, and you may be required to attend.
Monday, September 5, 2011
FAQ #13: What debts will bankruptcy not erase?

Also, if a creditor can prove that a debt arose from fraud, breach of fiduciary duty, or theft, or from a willful and malicious injury, the bankruptcy court may determine that the debt is not discharged.
Thursday, September 1, 2011
FAQ #12: What is the difference between a Chapter 7 and a Chapter 13 Bankruptcy?

At the end of a Chapter 7 Bankruptcy (usually about 6 months) you receive a discharge of your debts and you no longer owe those debts (except for some debts like student loans which cannot be discharged).
Chapter 13 Bankruptcy involves the repayment of all or part of your debts with your excess monthly income. Chapter 13 is designed for individuals with regular income who can pay at least some of their debts in installments over a period of time.
Under Chapter 13, you must file with the Bankruptcy Court a plan to repay your creditors all or part of the money that you owe them, using your future earnings. The period allowed by the court to repay your debts may be three (3) to five (5) years, depending on your income and other factors. The court must approve your plan before it can take effect.
Provided that you have complied with the plan and made all payments required under the plan, at the end of a Chapter 13 repayment plan (3-5 years) you will receive a discharge of the unpaid portion of your debts (except for some debts like student loans which cannot be discharged).
Because a Chapter 13 requires some payments of your debt, it is not usually a person’s first choice. However there are some good reasons to file Chapter 13:
A Chapter 13 is often filed:
1. To stop foreclosure and cure mortgage arrears, allowing someone to keep a house they might lose in a Chapter 7 case;
2. If the debtor is over the means test limit for a Chapter 7 case, but still wants a fresh start debt after 3-5 years;
3. To pay tax debt over time;
4. To protect property from creditors and avoid a Chapter 7 liquidation of assets;
5. To sell property to maximize price, rather than let it go to Chapter 7 auction; and
6. To avoid dischargability problems with creditors that might occur in a Chapter 7 (although the 2005 changes to the Bankruptcy Code have reduced Chapter 13 filing's ability to avoid dischargability problems).
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