According to Mashable, the first person to go to jail for making a 3-D printed firearm was a 28 year old man from Japan, Yoshitomo Imura. Read more about the story here.
In Japan gun ownership is heavily restricted and there is no exception for 3-D printed guns, though the arrested man claimed he didn't understand he was breaking the law.
In Massachusetts, a 3-D printed firearm will be treated like any other firearm manufactured in your home. Just because the technology has made it easier for more people to manufacture firearms doesn't change the legality of doing so. For more on that subject, and to avoid ending up like Mr. Imura, check out our recent post: Is Making a Firearm in Your Home Legal?
Monday, November 3, 2014
Friday, October 31, 2014
Matthew Trask Accepts Position with Remington Arms Company, LLC
We are very excited to announce that on November 10, 2014, attorney Matthew Trask will assume the role of Compliance Manager for Remington Arms Company, LLC in Ilion, New York. He will be managing the compliance team for their New York facility, and will be responsible for maintaining Remington’s compliance with the Bureau of Alcohol, Tobacco, Firearms & Explosives (BATFE) regulations, including the NFA, GCA, ITAR and other applicable state and federal laws.
Although this departure from Massachusetts will prevent Attorney Trask from directly representing firearms clients in the Commonwealth, Kelsey & Trask, P.C. remains committed to protecting your rights secured by the Second Amendment. In addition to collaborative divorce, mediation and bankruptcy, Kelsey & Trask, P.C. has represented the needs and interests of firearms owners, dealers and manufacturers by assisting them in navigating the numerous local, state and federal firearms regulations.
Firearms cases in our firm were primarily managed by Kelsey & Trask, P.C. partner, Matthew P. Trask, Esq., a lifelong firearms enthusiast and 2A advocate. However, as with any legal endeavor, Attorney Trask was always backed by a team of attorneys, support staff, public interest groups such as Comm2A and GOAL, and fellow colleagues and attorneys sharing similar interests, abilities and devotion to the firearms community.
To continue to serve the firearms community, there are some changes that our clients and prospective clients can expect to see in the coming weeks. However we will continue to assist clients and potential clients either within the firm or through special relationships we have formed with other respected firearms attorneys in the community.
Although not actively engaging in the practice of law in Massachusetts after November 10, 2014, Attorney Trask will remain a resource to Kelsey & Trask, P.C. for developments in the laws pertaining to firearms, self defense, personal protection and BATFE compliance. He will continue to be available for consulting by both our referral and in-house attorneys on firearms related issues.
We hope you continue to consider us a resource through this transition and into the future.
It has always been the goal of Kelsey & Trask, P.C. to provide high quality legal representation to resolve our client’s matters. These changes reflect Kelsey & Trask, PC’s continued commitment to that goal. If you have any questions, please do not hesitate to contact Kelsey & Trask, P.C. partner Justin L. Kelsey, Esq. at 508.655.5980 with any questions.
Although this departure from Massachusetts will prevent Attorney Trask from directly representing firearms clients in the Commonwealth, Kelsey & Trask, P.C. remains committed to protecting your rights secured by the Second Amendment. In addition to collaborative divorce, mediation and bankruptcy, Kelsey & Trask, P.C. has represented the needs and interests of firearms owners, dealers and manufacturers by assisting them in navigating the numerous local, state and federal firearms regulations.
Firearms cases in our firm were primarily managed by Kelsey & Trask, P.C. partner, Matthew P. Trask, Esq., a lifelong firearms enthusiast and 2A advocate. However, as with any legal endeavor, Attorney Trask was always backed by a team of attorneys, support staff, public interest groups such as Comm2A and GOAL, and fellow colleagues and attorneys sharing similar interests, abilities and devotion to the firearms community.
To continue to serve the firearms community, there are some changes that our clients and prospective clients can expect to see in the coming weeks. However we will continue to assist clients and potential clients either within the firm or through special relationships we have formed with other respected firearms attorneys in the community.
Although not actively engaging in the practice of law in Massachusetts after November 10, 2014, Attorney Trask will remain a resource to Kelsey & Trask, P.C. for developments in the laws pertaining to firearms, self defense, personal protection and BATFE compliance. He will continue to be available for consulting by both our referral and in-house attorneys on firearms related issues.
We hope you continue to consider us a resource through this transition and into the future.
It has always been the goal of Kelsey & Trask, P.C. to provide high quality legal representation to resolve our client’s matters. These changes reflect Kelsey & Trask, PC’s continued commitment to that goal. If you have any questions, please do not hesitate to contact Kelsey & Trask, P.C. partner Justin L. Kelsey, Esq. at 508.655.5980 with any questions.
Thursday, October 9, 2014
Is Making a Firearm in Your Home Legal?
The Legal Framework for Manufacturers: The Gun Control Act of 1968 places numerous requirements on firearms manufacturers holding a Type 07 (or similar) Federal Firearms License, including requirements for record-keeping, import/export registration, serialization and marking of firearms. These legally-required markings, including a unique serial number, manufacturer’s name and location, model and caliber are often used by state and federal agencies to track, trace or register specific firearms to specific individuals.
For the most part, the GCA marking requirements meant that nearly every gun produced domestically (and legally imported) bore these markings, and could be relied on by manufacturers, consumers and authorities for their own purposes. This monopoly on marking largely resulted from the fact that the manufacture of a firearm was something best left to the professionals; a skill more appropriately left to the manufacturers, and not the casual tinkerer. In recent years, the firearms industry has seen huge advances in technology that no longer require a machine shop or knowledge of a Bridgeport milling machine. Inexpensive CNC mills, 3D printers and 80% components and their completion kits have made the challenge of building a personal firearm available to the casual builder.
The Legal Framework for Individuals: Making a firearm for personal use is legal. Making a firearm for personal use without a federal manufacturing license is legal. This has always been the case, even after the enactment of the Gun Control Act of 1968 ("GCA"). However, this right has been attacked as of late by gun control advocates – and has been advanced with renewed interest by 2nd Amendment supporters.
Before you begin, however, understand the applicable laws.
Is it legal to manufacture a firearm for personal use?
Yes. Per provisions of the Gun Control Act (GCA) of 1968, 18 U.S.C. Chapter 44, an individual may make a “firearm” as defined in the GCA for his own personal use, but not for sale or distribution.
May I sell, trade, give away, or bequeath a firearm I make if I do not wish to keep it anymore?
No. The GCA prohibits the sale or distribution of a firearm made by an individual. The firearm must be destroyed by approved ATF destruction techniques, and proof of destruction should be retained.
Must my firearm have the required GCA 1968 Markings?
No. Marking requirements for manufactured firearms apply only to federally licensed manufacturers. However, it is both a state and federal crime to deface, remove or modify a firearm serial number if it is already present.
If I Make a Firearm do I have to Register It?
Federally, no, as long as it is regulated as a Title I firearm (most rifles, shotguns and handguns). However, some states, Massachusetts included, require the registration or reporting of the acquisition of a firearm. In the case of Massachusetts, although no federal registration is required, once the firearm were complete and functional, the builder must submit a completed FA-10 or E-FA-10 document within 7 days.
Are there any other laws or regulations I should be aware of if I manufacture my gun?
Yes. The ability to manufacture a firearm for personal use does not permit the manufacture without registration of all types of firearms. Firearms falling under Title II of the National Firearms Act (such as machine guns and machine gun components, short barrel rifles, short barrel shotguns, destructive devices and AOW’s) require compliance with the laws regulating their registration, manufacture and possession, including the National Firearms Act (requiring the payment of a manufacturing tax and registration of NFA firearms) and the Firearm Owners Protection Act of 1986 (banning the individual manufacture of machine guns). For more on this subject see our previous post.
Some states, including Massachusetts, have additional prohibitions on disguised firearms; bans on certain cosmetic features (as found in some state’s Assault Weapons Bans); individual licensing requirements; magazine capacity restrictions and storage requirements. In cases where a firearm is made by an individual, these laws still apply. Be sure you are aware of your state’s laws, and if not, consult with a competent firearms attorney.
What are the legal requirements for becoming a Federally-Licensed Firearms Manufacturer?
If the technological advances make you think you want to jump into the firearms manufacturing world with both feet to make firearms for sale or distribution, you would need to obtain a Federal Firearms License, such as a Type 07 FLL. This process carries with it its own unique federal, state and local considerations, compliance requirements and practices. If you are interested in becoming a 07 FFL, please contact Attorney Matthew P. Trask to discuss the process.
For more information visit Kelsey & Trask, P.C. or Holdover Consulting, LLC.
Thursday, September 18, 2014
Owning an SBR - Part 2: Complying with Federal, State and Local Regulations
The National Firearms Act of 1934, in conjunction with Title II of the Gun Control Act of 1986, regulates the ownership of certain firearms, including Short Barrel Rifles ("SBR"). A Short Barrel Rifle is defined as any rifle having barrel length of under 16 inches, as measured from the face of the closed bolt to the muzzle, and/or having an overall length of under 26 inches.
This is the story of how and why Kelsey & Trask, P.C. Partner and Holdover Consulting, LLC Principal Matthew Trask legally obtained an SBR. Although this process was specific to the acquisition of an SBR, the process would be similar for any other Title II firearm. To read how Matthew chose his SBR read our previous post: Owning an SBR - Part 1: Finding the right SBR for me.
Owning an SBR - Part 2: Complying with Federal, State and Local Regulations
To convert our DF94 into a legally owned SBR, we would next need to obtain the proper tax stamp. Obtaining a tax stamp to own/manufacture a Title II firearm is theoretically straightforward, although a prospective SBR owner should be aware of a few regulatory considerations at the Federal, State and Local levels:
Federal Regulatory Considerations:
The National Firearms Act imposes a statutory excise tax on the manufacture and transfer of certain firearms and mandates the registration of those firearms. These firearms, often referred to as “Title II Firearms” or “NFA Firearms” fall into one of six categories:
a. Short Barrel Rifles
b. Short Barrel Shotguns
c. Destructive Devices
d. Machine Guns
e. Suppressors/Silencers
f. Any Other Weapons (AOW)
The manufacture of any of these types of firearms requires the purchaser or manufacturer to pay the requisite excise tax of $200.00 (or $5.00, for certain AOW’s transferred on a Form 4). Additionally some manufacture or transfer do not require the payment of the excise tax – only registration – in certain cases, such as manufacture by a federal licensee who has paid a Special Occupational Tax or transfers pursuant to the administration of an estate. Generally, if a nonlicensee seeks to acquire a Title II firearm, either by manufacture or acquisition from a Title II dealer, the nonlicensee will be required to pay the $200 excise tax. Submission of registration documents is required in all cases.
The federal government also prohibits the manufacture for civilian sale of new machine guns, and the transfer of any machine gun which was not registered prior to 1986. As before, there are some very narrow exceptions to this rule, and it is best to contact an attorney or knowledgeable NFA dealer if you are considering the purchase of a machine gun.
State Regulatory Considerations:
Some states will limit or restrict the possession of firearms regulated by the National Firearms Act under state law. Some states laws will ban the possession of certain NFA items outright, while other laws will ban the possession of certain NFA firearms indirectly.
For example, legislation in Massachusetts bans the possession of suppressors outright. Short-barrel shotguns are not specifically banned, but Massachusetts does prohibit the possession of a “Sawed Off Shotgun” (a weapon, made from a shotgun that has a barrel length of less than 18 inches). The sawed-off shotgun prohibition does not prevent the registration of all SBS’s; but it is illegal to manufacture a SBS and register it in MA on a Form 1. A purchaser must register an SBS in Massachusetts on a Form 4, and the SBS must have originated from the original manufacturer as a Title II firearm.
In Massachusetts, machine guns are legal, but anyone seeking to obtain a machine gun must hold a MA License to Possess a Machine Gun issued by the Chief Law Enforcement Officer of the purchaser’s town of residence. AOW’s and Destructive Devices are not specifically prohibited in MA, although a prospective buyer would need to be conversant on Massachusetts laws regarding (a) The MA Assault Weapons Ban; (b) MA laws regarding disguised firearms; and (c) Massachusetts laws regarding the possession of explosives or “infernal machines”.
Before purchasing a Title II firearm or attempting to obtain federal approval, ensure that such firearm will not violate your state's laws.
Local Regulatory Considerations:
As of September 14, 2014, if a Title II firearm is to be acquired by an individual (and not a corporation, trust, or other legal entity), the individual must obtain a law enforcement certification on the Form 1 or Form 4, as appropriate. Such certification, by federal law, is not intended to be “discretionary” by the CLEO, but many law enforcement officers refuse to sign the certification, thereby preventing the purchaser from obtaining a Title II firearm. It should be noted that presently purchases of a Title II firearm by a trust, corporation or LLC do not require (a) CLEO certification; (b) fingerprinting of the intended possessor of the firearm; and (c) the submission of photographs to the ATF.
Assuming that you have met all Federal, State and Local requirements, you may now begin the process to make and register your NFA firearm with the following important notes:
NOTE on Form 1: In the case of registration on an ATF Form 1 (Application to Make and Register a Firearm), you MUST have the approved Form 1 back from ATF with a cancelled tax stamp BEFORE you manufacture your Title II Firearm.
NOTE on Form 4: In the case of registration on an ATF Form 4 (Application for Tax Paid Transfer and Registration of Firearm), you MUST have the approved Form 4 back from ATF with a cancelled tax stamp BEFORE you take possession of your Title II Firearm.
Essentially, the NFA registration process is done before a firearm is manufacturer or changes hands. Transferring a Title II firearm without an approved Form 4, or manufacturing a Title II firearm without an approved Form 1 is a violation of federal law.
Therefore, although you may be in possession of certain components for your NFA firearm (a lower receiver or host gun for a Title II conversion), that firearm must remain in Title I configuration until you receive your approved registration documents. Since the Form 1 will request that you provide certain information regarding the firearm, such as overall length, barrel length and caliber, it will be necessary for you to do a bit of research and planning to determine the specifications of the firearm you intend to build. Remember that the dimensions disclosed in the Form 1 are for the configuration of the final Title II firearm.
Our Form 1 experience:
The appropriate document for manufacturing an NFA firearm from an existing Title I firearm is ATF Form 1 (5320.1). The form can be downloaded in .pdf form from the ATF’s website, or completed electronically on via the ATF’s eForms system. If possible, I highly recommend utilizing the ATF eForms system. Electronically-submitted Form 1’s have been approved in as little as 25 days, while “hard copy” forms take more than six months and 8-12 month waits are not uncommon.
We submitted and Electronic Form 1 for manufacture (conversion) of our SBR, and received approval in thirty-nine days.
The completion of the Form 1 itself is fairly straightforward. However, forgetting to attach certain documentation will result in the rejection of your Form 1. In Massachusetts, this additional documentation which should be filed as part of your Form 1 is:
1. All Applications - Copy of your License to Carry Firearms (LTC)
2. If an Individual – 2”x2” photograph
3. If an Individual – Completed Fingerprint Cards, in duplicate
4. If an Individual – Completed Law Enforcement Certification
5. If a Corporation or Trust – Copy of Trust or Articles of Organization
6. All applications – Payment of $200.00
If you would like any assistance regarding the completion of your Form 1 or guidance on the purchase and registration of a Title II firearm, please contact Attorney Matthew Trask at 508.655.5980.
This is the story of how and why Kelsey & Trask, P.C. Partner and Holdover Consulting, LLC Principal Matthew Trask legally obtained an SBR. Although this process was specific to the acquisition of an SBR, the process would be similar for any other Title II firearm. To read how Matthew chose his SBR read our previous post: Owning an SBR - Part 1: Finding the right SBR for me.
Owning an SBR - Part 2: Complying with Federal, State and Local Regulations
To convert our DF94 into a legally owned SBR, we would next need to obtain the proper tax stamp. Obtaining a tax stamp to own/manufacture a Title II firearm is theoretically straightforward, although a prospective SBR owner should be aware of a few regulatory considerations at the Federal, State and Local levels:
Federal Regulatory Considerations:
The National Firearms Act imposes a statutory excise tax on the manufacture and transfer of certain firearms and mandates the registration of those firearms. These firearms, often referred to as “Title II Firearms” or “NFA Firearms” fall into one of six categories:
a. Short Barrel Rifles
b. Short Barrel Shotguns
c. Destructive Devices
d. Machine Guns
e. Suppressors/Silencers
f. Any Other Weapons (AOW)
The manufacture of any of these types of firearms requires the purchaser or manufacturer to pay the requisite excise tax of $200.00 (or $5.00, for certain AOW’s transferred on a Form 4). Additionally some manufacture or transfer do not require the payment of the excise tax – only registration – in certain cases, such as manufacture by a federal licensee who has paid a Special Occupational Tax or transfers pursuant to the administration of an estate. Generally, if a nonlicensee seeks to acquire a Title II firearm, either by manufacture or acquisition from a Title II dealer, the nonlicensee will be required to pay the $200 excise tax. Submission of registration documents is required in all cases.
The federal government also prohibits the manufacture for civilian sale of new machine guns, and the transfer of any machine gun which was not registered prior to 1986. As before, there are some very narrow exceptions to this rule, and it is best to contact an attorney or knowledgeable NFA dealer if you are considering the purchase of a machine gun.
State Regulatory Considerations:
Some states will limit or restrict the possession of firearms regulated by the National Firearms Act under state law. Some states laws will ban the possession of certain NFA items outright, while other laws will ban the possession of certain NFA firearms indirectly.
For example, legislation in Massachusetts bans the possession of suppressors outright. Short-barrel shotguns are not specifically banned, but Massachusetts does prohibit the possession of a “Sawed Off Shotgun” (a weapon, made from a shotgun that has a barrel length of less than 18 inches). The sawed-off shotgun prohibition does not prevent the registration of all SBS’s; but it is illegal to manufacture a SBS and register it in MA on a Form 1. A purchaser must register an SBS in Massachusetts on a Form 4, and the SBS must have originated from the original manufacturer as a Title II firearm.
In Massachusetts, machine guns are legal, but anyone seeking to obtain a machine gun must hold a MA License to Possess a Machine Gun issued by the Chief Law Enforcement Officer of the purchaser’s town of residence. AOW’s and Destructive Devices are not specifically prohibited in MA, although a prospective buyer would need to be conversant on Massachusetts laws regarding (a) The MA Assault Weapons Ban; (b) MA laws regarding disguised firearms; and (c) Massachusetts laws regarding the possession of explosives or “infernal machines”.
Before purchasing a Title II firearm or attempting to obtain federal approval, ensure that such firearm will not violate your state's laws.
Local Regulatory Considerations:
As of September 14, 2014, if a Title II firearm is to be acquired by an individual (and not a corporation, trust, or other legal entity), the individual must obtain a law enforcement certification on the Form 1 or Form 4, as appropriate. Such certification, by federal law, is not intended to be “discretionary” by the CLEO, but many law enforcement officers refuse to sign the certification, thereby preventing the purchaser from obtaining a Title II firearm. It should be noted that presently purchases of a Title II firearm by a trust, corporation or LLC do not require (a) CLEO certification; (b) fingerprinting of the intended possessor of the firearm; and (c) the submission of photographs to the ATF.
Assuming that you have met all Federal, State and Local requirements, you may now begin the process to make and register your NFA firearm with the following important notes:
NOTE on Form 1: In the case of registration on an ATF Form 1 (Application to Make and Register a Firearm), you MUST have the approved Form 1 back from ATF with a cancelled tax stamp BEFORE you manufacture your Title II Firearm.
NOTE on Form 4: In the case of registration on an ATF Form 4 (Application for Tax Paid Transfer and Registration of Firearm), you MUST have the approved Form 4 back from ATF with a cancelled tax stamp BEFORE you take possession of your Title II Firearm.
Essentially, the NFA registration process is done before a firearm is manufacturer or changes hands. Transferring a Title II firearm without an approved Form 4, or manufacturing a Title II firearm without an approved Form 1 is a violation of federal law.
Therefore, although you may be in possession of certain components for your NFA firearm (a lower receiver or host gun for a Title II conversion), that firearm must remain in Title I configuration until you receive your approved registration documents. Since the Form 1 will request that you provide certain information regarding the firearm, such as overall length, barrel length and caliber, it will be necessary for you to do a bit of research and planning to determine the specifications of the firearm you intend to build. Remember that the dimensions disclosed in the Form 1 are for the configuration of the final Title II firearm.
Our Form 1 experience:
The appropriate document for manufacturing an NFA firearm from an existing Title I firearm is ATF Form 1 (5320.1). The form can be downloaded in .pdf form from the ATF’s website, or completed electronically on via the ATF’s eForms system. If possible, I highly recommend utilizing the ATF eForms system. Electronically-submitted Form 1’s have been approved in as little as 25 days, while “hard copy” forms take more than six months and 8-12 month waits are not uncommon.
We submitted and Electronic Form 1 for manufacture (conversion) of our SBR, and received approval in thirty-nine days.
The completion of the Form 1 itself is fairly straightforward. However, forgetting to attach certain documentation will result in the rejection of your Form 1. In Massachusetts, this additional documentation which should be filed as part of your Form 1 is:
1. All Applications - Copy of your License to Carry Firearms (LTC)
2. If an Individual – 2”x2” photograph
3. If an Individual – Completed Fingerprint Cards, in duplicate
4. If an Individual – Completed Law Enforcement Certification
5. If a Corporation or Trust – Copy of Trust or Articles of Organization
6. All applications – Payment of $200.00
If you would like any assistance regarding the completion of your Form 1 or guidance on the purchase and registration of a Title II firearm, please contact Attorney Matthew Trask at 508.655.5980.
Thursday, August 7, 2014
Good Idea, Bad Idea - Cosigning a Loan
There are many good reasons why you may want to cosign a loan. Some typical examples include helping a child obtain their college education by co-signing student loans, or assisting your spouse in purchasing a car. With any good idea, however, a small difference in the situation can make it a very bad idea.
Many people are unaware of the consequences of cosigning a loan, and in many many instances cosigning may be a very bad idea. Take just the two examples described above: If your child is unable to find a job after college and therefore unable to pay their student loan, that loan will be your responsibility. If you and your spouse separate and he or she stops paying their car loan, your credit will be affected as well (even if they still have the car).
In these previous three posts we explored what happens when a cosigner or the primary borrower on a loan declares bankruptcy:
What happens to my Cosigner if I file for Bankruptcy?
I co-signed a loan and the primary borrower has filed for bankruptcy. What should I do to protect myself?
I am the primary borrower on a loan and my cosigner has filed for bankruptcy. What should I do to protect myself?
The short answer is simple: IF YOU SIGN A PROMISSORY NOTE, YOU HAVE A RESPONSIBILITY TO PAY THAT LOAN.
By the numerous comments and questions we receive on all three of those posts it is obvious that many cosignors don't realize how serious this obligation is when they signed the loan. Many people feel that it should matter that they don't have access to the collateral (such as a house or car) or that they don't have a relationship with the primary borrower anymore. These are all the inherent risks in co-signing a loan and it doesn't matter to the lender. If you cosigned a loan, you agreed to pay the money back if the other person doesn't, regardless of the circumstances.
If it isn't paid on time your credit will be affected. If it isn't paid at all, the lender can sue you for the funds. If the primary borrower files for bankruptcy and the debt is discharged so that they no longer owe it, you still do!
Cosigning a loan is not something that should be taken on lightly. There are often good reasons to do it, but you should also consider all of the reasons why you might not want to. In short, if you can't pay back the loan yourself, then you'd better be 100% positive that the primary borrower will pay it back. If the lender was convinced of that, then the primary borrower wouldn't need a co-signor in the first place.
Many people are unaware of the consequences of cosigning a loan, and in many many instances cosigning may be a very bad idea. Take just the two examples described above: If your child is unable to find a job after college and therefore unable to pay their student loan, that loan will be your responsibility. If you and your spouse separate and he or she stops paying their car loan, your credit will be affected as well (even if they still have the car).
In these previous three posts we explored what happens when a cosigner or the primary borrower on a loan declares bankruptcy:
What happens to my Cosigner if I file for Bankruptcy?
I co-signed a loan and the primary borrower has filed for bankruptcy. What should I do to protect myself?
I am the primary borrower on a loan and my cosigner has filed for bankruptcy. What should I do to protect myself?
The short answer is simple: IF YOU SIGN A PROMISSORY NOTE, YOU HAVE A RESPONSIBILITY TO PAY THAT LOAN.
By the numerous comments and questions we receive on all three of those posts it is obvious that many cosignors don't realize how serious this obligation is when they signed the loan. Many people feel that it should matter that they don't have access to the collateral (such as a house or car) or that they don't have a relationship with the primary borrower anymore. These are all the inherent risks in co-signing a loan and it doesn't matter to the lender. If you cosigned a loan, you agreed to pay the money back if the other person doesn't, regardless of the circumstances.
If it isn't paid on time your credit will be affected. If it isn't paid at all, the lender can sue you for the funds. If the primary borrower files for bankruptcy and the debt is discharged so that they no longer owe it, you still do!
Cosigning a loan is not something that should be taken on lightly. There are often good reasons to do it, but you should also consider all of the reasons why you might not want to. In short, if you can't pay back the loan yourself, then you'd better be 100% positive that the primary borrower will pay it back. If the lender was convinced of that, then the primary borrower wouldn't need a co-signor in the first place.
Wednesday, July 23, 2014
Owning an SBR - Part 1: Finding the right SBR for me.
A Short Barrel Rifle is defined as any rifle having barrel length of under 16 inches, as measured from the face of the closed bolt to the muzzle, and/or having an overall length of under 26 inches. This is the story of how and why Kelsey & Trask, P.C. Partner and Holdover Consulting, LLC Principal Matthew Trask legally obtained an SBR. Although this process was specific to the acquisition of an SBR, the process would be similar for any other Title II firearm.
Owning an SBR - Part 1: Finding the right SBR for me.
Ever since I watched Bruce Willis as John McClane dispatching eastern-European terrorists over the side of the Nakatomi Plaza, I’ve had a soft spot for the MP5. I wanted one. With the proper licenses, I could even own one in Massachusetts. Unfortunately, a transferrable, fully-automatic Title II MP5 will cost upward of $22,000.00.
The next best thing was the semi-automatic carbine version of the MP5 produced by Heckler & Koch and imported into the United States from 1982-1991. A total of 15,633 HK94 carbines came overseas from Oberndorf am Neckar, the last one in 1991. HK94 prices have risen steadily, and even a semi-automatic version can fetch close to $5,000.00 today.
After HK stopped importing the semi-automatic derivatives of the MP5, a number of small builders and manufacturers sprang up and started producing clones of the HK94 and HK89. At about the same time, license-built copies produced in other countries were imported to the U.S.
Early models utilized surplus HK parts which were permitted to be imported, but as those supplies dried up, some builders started manufacturing their own components, often with varying amounts of tolerance and degrees of success. Put another way, there were good clones and bad clones. Good builders and bad builders. High volume guys and low volume guys. It was tough to tell the difference. If you chose your builder correctly, you could get a near-perfect clone for around half of what a “genuine” HK cost. If you chose poorly, you could get a two thousand dollar paperweight.
Recently I was discussing these issues with the owner of my local gun shop, who is also a Title II/Class 3 dealer in Natick, MA. He immediately suggested I consider a DF94, an MP5/HK94 clone build by Dave Getz of DJ Getz Firearms Co. I looked at one of the new DF94’s he had, and had to agree it was a very well-built, built-to-spec HK clone. The welds were clean, the machining on the bolt and bolt carrier were smooth and the fit and finish were very nice. As an added benefit, the DF94 shipped with a tungsten filled bolt carrier and other upgrades, making a more than acceptable sear host if I ever (legally!) wanted to down the road.
A day or so after I picked up the rifle, I had a few questions. I emailed Dave Getz with a few questions over components and parts compatibility. Not 15 minutes later, Dave himself called me with an answer to my questions. We chatted about our affinity for Teutonic steel, rapid-acquisition optics and the direction gun laws seem to be heading at a state and federal level. Dave didn’t have to call me to answer my questions, but he did. You don’t see that level of customer service anywhere. That conversation and 600 flawless rounds later, I was a very happy customer.
There was, of course, one problem. The National Firearms Act requires that a rifle have a barrel length of 16 inches, and an overall length of 26 inches. The DF94 I was now the proud owner of had a faux suppressor pinned and welded on the end of the muzzle to bring the overall barrel length of the rifle to over 16 inches. Detective McClean’s MP5 had a barrel of just under 9 inches, so some work would need to be done. Time for an SBR.
Part II will discuss the National Firearms Act and the process for legally manufacturing a Short Barrel Rifle as well as our experience Navigating the ATF's E-Forms System.
Part III will involve dragging the Kelsey & Trask, P.C. team out to the range.
Thursday, June 26, 2014
What are the Restrictions on a Massachusetts Dealer Selling a Handgun?
1. Is the buyer a Massachusetts resident or a federally licensed dealer in another state?
2. Does the buyer have a License to Carry, Class A, Large Capacity?
3. Did the buyer pass the NICS background check, if required?
4. . Is the handgun “Mass Complaint?” (i.e. listed on the EOPSS Approved Firearms Roster and compliant with the Attorney General's regulations)
If the answer to all of these questions is "yes", then the handgun transfer is legal in Massachusetts. However, if the answer to any of these questions is "no", read on, because there are some exceptions described further below.
Question 1: Is the buyer a Massachusetts resident or a licensed dealer in another state?
There is a federal restriction on interstate transfers of handguns. This means that handguns can only be transferred between license dealers or manufacturers across state lines. When selling to an individual, dealers can only sell to residents of their state. 18 U.S.C. 922(a)(3) and (5), 922(b)(3), 27 CFR 478.29 and 478.30.
Exceptions: The only exception is that a dealer may "return[ ] a firearm or replacement firearm of the same kind and type to a person from whom it was received" 18 U.S.C. 922(a)(2), even if the transferee resides in a different state. Otherwise a violation of this rule is punishable by up to five years in federal prison. 18 U.S.C. 924(a)(1)(d).
Question 2: Does the buyer have a License to Carry, Class A?
An LTC/A in Massachusetts permits the holder to possess and concealed carry a handgun, subject to potential restrictions listed on the license. M.G.L. c. 140 s. 131(a).
Exceptions: There are also LTC Class B and Permits to Purchase allowable under the licensing statute, but these are rarely granted. M.G.L. c. 140 s. 131(b); M.G.L. c. 140 s. 131A. An LTC/B would entitle the holder to purchase large capacity rifles and shotguns, as well as non-high capacity handguns only. M.G.L. c. 140 s. 131(b).
Question 3: Did the buyer pass the NICS background check?
The National Instant Criminal Background Check System ("NICS") is operated by the Federal Bureau of Investigation and is used by licensed dealers to instantly determine whether a prospective buyer is federally prohibited under 18 U.S.C. 922(g) and (n) from receiving or possessing a firearm. The NICS check is mandated by the Brady Handgun Violence Prevention Act (Brady Law) of 1993 See, 18 U.S.C. 922(t), 27 C.F.R. 478.102.
Exceptions: Limited. Firearm transfers are exempt from the requirement for a NICS check in three situations. These include transfers: (1) to buyers having a State permit that has been recognized by ATF as an alternative to a NICS check; (2) of National Firearms Act weapons approved by ATF; and (3) certified by ATF as exempt because compliance with the NICS check requirement is impracticable. 18 U.S.C. 922(t), 27 CFR 478.102(d) See also, 27 C.F.R. 478.11. Also, Transfers of curio or relic firearms to federally licensed curio and relic collectors are not subject to the requirements of the Brady law. See also, 27 C.F.R. 478.124 (Form 4473 and NICS check not required if upon the return of a firearm delivered to a gunsmith for the sole purpose of repair or customizing when such firearm or a replacement firearm is returned to the person from whom received.)
Question 4: Is the handgun Mass Complaint?
Handguns which are currently "Mass Compliant" are those which appear on the Approved Firearms Roster and comply with the Attorney General regulations. These represent the majority of handgun transfers between Massachusetts dealers and residents. However, there are some complicated exceptions which allow for transfers of handguns that are not otherwise "Mass Compliant."
Exceptions: There are three primary exceptions to the requirement that a handgun be Mass Compliant:
Exception: Handguns Documented in MA prior to October 21, 1998 - Any Handgun where the owner can show paperwork (such as an FA-10 form) showing that the handgun was lawfully owned or possessed under a Massachusetts license before October 21, 1998, the transfer of that handgun by a Massachusetts licensed dealer is completely exempt from AG and EOPSS regulations. It should be noted that there is no requirement that the handgun remain or be continuously present in Massachusetts since October 21, 1998; only that the owner can show it was registered in Massachusetts prior to October 21, 1998. M.G.L. c. 140 s. 123, 940 C.M.R. 16.09. See also M.G.L. c. 93A s. 2(c).
Exception: Handguns on Approved Firearms Roster and Manufactured prior to October 21, 1998 - Handguns can be sold which appear on the Approved Firearms Roster, but are exempt from the Attorney General’s regulations by virtue of having been manufactured before October 21, 1998. This category pertains mainly to Glock handguns. Note that there is no requirement here that the handgun be registered in Massachusetts prior to October 21, 1998, only that it was manufactured before that date. M.G.L. c. 140 s. 123, 940 C.M.R. 16.09. See also M.G.L. c. 93A s. 2(c).
Exception: Handguns on Approved Firearms Roster sold to Law Enforcement Officers - Handguns which appear on the Approved Firearms Roster when the buyer is a law enforcement officer exempts the dealer from the Attorney General’s restrictions, but not M.G.L. c. 140 s. 123 requirements. In this case it doesn't matter when the handgun was manufactured, only that the handgun appears on the Massachusetts Approved Firearms Roster. M.G.L. c. 140 s. 123, 940 C.M.R. 16.09. See also M.G.L. c. 93A s. 2(c).
Tuesday, June 10, 2014
Rumors and Lies: How does a Law Abiding Resident Determine if a Firearm is Legal to Purchase in Massachusetts?
On April 27, 2014, @MassGov, the official Twitter account of the Commonwealth of Massachusetts, posted the following:
“Before purchasing a firearm, make sure it is on the roster of ones approved in #MA.
This tweet is both a misstatement of the law, and misleading to lawful gun owners in Massachusetts. The link contained in the Twitter post takes you to to the “Commonwealth of Massachusetts Executive Office of Public Safety and Security Approved Firearms Roster”, often referred to as “the EOPSS Roster”. We’d like to take this opportunity to clear up some myths about this list.
MYTH: Handgun purchasers in Massachusetts must ensure that the handgun they purchase is on the approved roster.
REALITY: The requirements of M.G.L. c. 140 s. 123 and 940 C.M.R. 16.00 apply only to licensed dealers in Massachusetts, and govern what firearms the dealer may transfer or sell to a Massachusetts resident. The laws and regulations place no burden on the purchaser of any firearm to ensure that it appears on the Massachusetts Approved Firearms Roster, or is compliant with the Attorney General’s regulations.
MYTH: Anyone selling a handgun in Massachusetts must ensure that the handgun they sell is on the approved roster.
REALITY: The requirements of M.G.L. c. 140 s. 123 and 940 C.M.R. 16.00 apply only to licensed dealers in Massachusetts, and govern what firearms the dealer may transfer to a Massachusetts resident. The above laws and regulations do not govern private transactions conducted on an FA-10 or E-FA-10 form. Therefore, it is legal for a private individual to sell a handgun which does not appear on the Approved Firearms Roster or does not meet the Attorney General’s requirements set forth in 940 C.M.R. 16.00.
MYTH: Any handgun which appears on the EOPSS Roster may be sold by a dealer in Massachusetts.
REALITY: The Approved Firearms Roster is only one-half of the requirements determining what firearms may be sold by a licensed dealer in Massachusetts to a Massachusetts resident. The transfers of handguns by Massachusetts licensed dealers are also subject to the Attorney General’s Handgun Sales Regulations, 940 CMR 16.00, et seq. Firearms on this Approved Firearms Roster do not necessarily comply with the requirements of the Attorney General’s Handgun Sales Regulations. Although handguns manufactured by Glock appear on the EOPSS Roster, those same handguns have been refused certification by the Attorney General’s office.
MYTH: Massachusetts Residents may only possess handguns which appear on the EOPSS Roster and/or are AG Complaint.
REALITY: The requirements of M.G.L. c. 140 s. 123 and 940 C.M.R. 16.00 apply only to licensed dealers in Massachusetts, and govern what firearms may be transferred to a Massachusetts resident. The above laws and regulations do not restrict the firearms which may be owned or possessed by a resident of Massachusetts. Therefore, it is completely legal to possess a handgun which does not appear on the Approved Firearms Roster; the only restriction is that a dealer may not transfer an “unapproved” handgun to a Massachusetts resident.
MYTH: A Massachusetts Resident may only purchase a handgun which appears on the EOPSS Roster and is AG Compliant.
REALITY: The requirements of M.G.L. c. 140 s. 123 and 940 C.M.R. 16.00 apply only to licensed dealers in Massachusetts, and govern what firearms the dealer may transfer to a Massachusetts resident. The laws and regulations do not place any liability on the purchaser of a non-compliant firearm from a Massachusetts dealer, even if the firearm is purchased by a Massachusetts resident. Therefore, it is not illegal to purchase a handgun which does not appear on the Approved Firearms Roster from a dealer, although the dealer may be violating M.G.L. c. 140 s. 123 or 940 C.M.R. 16.00 by selling it to you.
Additionally, there are many exceptions to the EOPSS Roster and Attorney General regulations. Those exceptions will be discussed in a future post.
MYTH: The firearms on the Approved Firearm Roster are the only firearms that may be purchased by a Massachusetts Resident.
REALITY: The M.G.L. c. 140 s. 123 and 940 C.M.R. 16.00 pertain only to the sale of handguns, and not rifles or shotguns which do not fall within the definition of “Firearm” or “Assault Weapon” under M.G.L. c. 140 s. 121. Rifles and Shotguns which are not “assault weapons” are not regulated under M.G.L. c. 140 s. 123 or 940 C.M.R. 16.00. Handguns which are exempt from the testing requirements of M.G.L. c. 123 and 940 C.M.R. 16.00 nevertheless may not be transferred if the handgun is an “assault weapon” as defined by M.G.L. c. 140 s. 121.
A more accurate version of this tweet might have read:
Dealers: Before selling a handgun, first make sure it is on the roster of ones approved in MA, as well as certified by the Attorney General, if selling to a Massachusetts resident.
[Link is a #PDF] ow.ly/wa78k”
This tweet is both a misstatement of the law, and misleading to lawful gun owners in Massachusetts. The link contained in the Twitter post takes you to to the “Commonwealth of Massachusetts Executive Office of Public Safety and Security Approved Firearms Roster”, often referred to as “the EOPSS Roster”. We’d like to take this opportunity to clear up some myths about this list.
MYTH: Handgun purchasers in Massachusetts must ensure that the handgun they purchase is on the approved roster.
REALITY: The requirements of M.G.L. c. 140 s. 123 and 940 C.M.R. 16.00 apply only to licensed dealers in Massachusetts, and govern what firearms the dealer may transfer or sell to a Massachusetts resident. The laws and regulations place no burden on the purchaser of any firearm to ensure that it appears on the Massachusetts Approved Firearms Roster, or is compliant with the Attorney General’s regulations.
MYTH: Anyone selling a handgun in Massachusetts must ensure that the handgun they sell is on the approved roster.
REALITY: The requirements of M.G.L. c. 140 s. 123 and 940 C.M.R. 16.00 apply only to licensed dealers in Massachusetts, and govern what firearms the dealer may transfer to a Massachusetts resident. The above laws and regulations do not govern private transactions conducted on an FA-10 or E-FA-10 form. Therefore, it is legal for a private individual to sell a handgun which does not appear on the Approved Firearms Roster or does not meet the Attorney General’s requirements set forth in 940 C.M.R. 16.00.
MYTH: Any handgun which appears on the EOPSS Roster may be sold by a dealer in Massachusetts.
REALITY: The Approved Firearms Roster is only one-half of the requirements determining what firearms may be sold by a licensed dealer in Massachusetts to a Massachusetts resident. The transfers of handguns by Massachusetts licensed dealers are also subject to the Attorney General’s Handgun Sales Regulations, 940 CMR 16.00, et seq. Firearms on this Approved Firearms Roster do not necessarily comply with the requirements of the Attorney General’s Handgun Sales Regulations. Although handguns manufactured by Glock appear on the EOPSS Roster, those same handguns have been refused certification by the Attorney General’s office.
MYTH: Massachusetts Residents may only possess handguns which appear on the EOPSS Roster and/or are AG Complaint.
REALITY: The requirements of M.G.L. c. 140 s. 123 and 940 C.M.R. 16.00 apply only to licensed dealers in Massachusetts, and govern what firearms may be transferred to a Massachusetts resident. The above laws and regulations do not restrict the firearms which may be owned or possessed by a resident of Massachusetts. Therefore, it is completely legal to possess a handgun which does not appear on the Approved Firearms Roster; the only restriction is that a dealer may not transfer an “unapproved” handgun to a Massachusetts resident.
MYTH: A Massachusetts Resident may only purchase a handgun which appears on the EOPSS Roster and is AG Compliant.
REALITY: The requirements of M.G.L. c. 140 s. 123 and 940 C.M.R. 16.00 apply only to licensed dealers in Massachusetts, and govern what firearms the dealer may transfer to a Massachusetts resident. The laws and regulations do not place any liability on the purchaser of a non-compliant firearm from a Massachusetts dealer, even if the firearm is purchased by a Massachusetts resident. Therefore, it is not illegal to purchase a handgun which does not appear on the Approved Firearms Roster from a dealer, although the dealer may be violating M.G.L. c. 140 s. 123 or 940 C.M.R. 16.00 by selling it to you.
Additionally, there are many exceptions to the EOPSS Roster and Attorney General regulations. Those exceptions will be discussed in a future post.
MYTH: The firearms on the Approved Firearm Roster are the only firearms that may be purchased by a Massachusetts Resident.
REALITY: The M.G.L. c. 140 s. 123 and 940 C.M.R. 16.00 pertain only to the sale of handguns, and not rifles or shotguns which do not fall within the definition of “Firearm” or “Assault Weapon” under M.G.L. c. 140 s. 121. Rifles and Shotguns which are not “assault weapons” are not regulated under M.G.L. c. 140 s. 123 or 940 C.M.R. 16.00. Handguns which are exempt from the testing requirements of M.G.L. c. 123 and 940 C.M.R. 16.00 nevertheless may not be transferred if the handgun is an “assault weapon” as defined by M.G.L. c. 140 s. 121.
A more accurate version of this tweet might have read:
Dealers: Before selling a handgun, first make sure it is on the roster of ones approved in MA, as well as certified by the Attorney General, if selling to a Massachusetts resident.
Are You on the List? What Makes a Handgun "Mass Compliant?"
The First List: the EOPPS Roster:
The “Commonwealth of Massachusetts Executive Office of Public Safety and Security Approved Firearms Roster”, often referred to as “the EOPSS Roster” or the “Approved Firearms Roster” is a list of handguns which have met certain statutory criteria governing the manufacture and sale of handguns to be sold in Massachusetts. The criteria are tested by Massachusetts approved independent testing laboratories to have satisfactorily completed the testing requirements set forth in M.G.L. c. 140, § 123. The reports resulting from those tests are then reviewed by the Massachusetts Gun Control Advisory Board.
In cases where the Gun Control Advisory Board determined that the firearms “passed” the requirements set forth in Section 123, the tested handgun was subsequently approved by the Secretary of Public Safety and Security as having complied with the statutory handgun testing provisions of M.G.L. c. 140, § 123.
The EOPSS Roster, therefore, is a list of all firearms which have completed and passed the testing requirements set forth in M.G.L. c. 140 s. 123.
The Second (Secret) List: the Attorney General's Roster:
The EOPSS Roster does not take into consideration the similar-but-not-identical requirements set forth in 940 C.M.R. 16.00, often referred to as the “Attorney General Regulations”.
I don’t know anyone who has ever seen the Attorney General “list” of approved firearms, and many (including myself) believe that no list actually exists. Rather, firearms manufacturers in Massachusetts are required to “certify their own compliance” with the regulations, and are likely at risk for prosecution by the Attorney General’s office under the guise of a consumer protection action if they don't comply.
The EOPSS Roster and the Attorney General’s Regulations have significant implications for Massachusetts licensed firearms dealers and firearms manufactures, as both sets of rules govern (subject to certain exceptions) what handguns may be sold or transferred by a Massachusetts licensed dealer to a Massachusetts resident.
Our next two posts will review this complicated and potentially contradictory regulatory structure in more depth.
Tuesday, April 22, 2014
Bankruptcy Filing Fees Increase on June 1, 2014
The Bankruptcy court currently charges $306 in total fees to file for Chapter 7 Bankruptcy, and $281 in total fees for Chapter 13 Bankruptcy. These fees include the filing fee, administrative fee and a trustee surcharge. A notice was just sent that the Bankruptcy court filing fees are increasing as of June 1, 2014.
After June 1, 2014, the Bankruptcy Court will charge the following fees to file for Chapter 7 Bankruptcy:
Filing Fee of $335.00, plus
Administrative Fee of $46.00, plus
Trustee Surcharge of $15.00
TOTAL FILING FEE: $396.00
After June 1, 2014, the Bankruptcy Court will charge the following fees to file for Chapter 13 Bankruptcy:
Filing Fee of $310.00, plus
Administrative Fee of $46.00, plus
TOTAL CHAPTER 13 FILING FEE: $356.00
Other fees that will also increase on June 1, 2014 are the filing fees for:
IMPORTANT NOTE: The above fees are in addition to any attorney's fees and/or fees for the preparation of the Bankruptcy Documents, appearance at a Section 341 Creditor's Meeting, or representation in Bankruptcy Court. Any fees for legal services must be agreed to in writing between you and your attorney prior to the commencement of any bankruptcy proceeding.
After June 1, 2014, the Bankruptcy Court will charge the following fees to file for Chapter 7 Bankruptcy:
Filing Fee of $335.00, plus
Administrative Fee of $46.00, plus
Trustee Surcharge of $15.00
TOTAL FILING FEE: $396.00
After June 1, 2014, the Bankruptcy Court will charge the following fees to file for Chapter 13 Bankruptcy:
Filing Fee of $310.00, plus
Administrative Fee of $46.00, plus
TOTAL CHAPTER 13 FILING FEE: $356.00
Other fees that will also increase on June 1, 2014 are the filing fees for:
- Chapter 9: $1717
- Chapter 11: $1717
- Chapter 12: $275
- Chapter 15: $1717
- Adversary Proceeding: $350
IMPORTANT NOTE: The above fees are in addition to any attorney's fees and/or fees for the preparation of the Bankruptcy Documents, appearance at a Section 341 Creditor's Meeting, or representation in Bankruptcy Court. Any fees for legal services must be agreed to in writing between you and your attorney prior to the commencement of any bankruptcy proceeding.
Wednesday, February 26, 2014
Is a sealed criminal record considered in applying for a firearms license?
A sealed criminal record in Massachusetts does not mean the record is sealed for all purposes. While a potential employer would not be able to view a sealed record, there are exceptions. One example of an exception is for a "legitimate law enforcement purpose."
Even if your criminal record is sealed, an application for a firearms license in Massachusetts is deemed to be a "legitimate law enforcement purpose", and the reviewing agency would be able to see that there is a sealed record.
In addition, if the sealed record were a conviction for a disqualifying crime, you would remain ineligible by statute to obtain a license. In addition, if the conviction is not an automatic disqualifier, the existence of that sealed record (and police records pertaining thereto) may still be used by the issuing department to address the issue of the applicant's suitability for a LTC.
Even if your criminal record is sealed, an application for a firearms license in Massachusetts is deemed to be a "legitimate law enforcement purpose", and the reviewing agency would be able to see that there is a sealed record.
In addition, if the sealed record were a conviction for a disqualifying crime, you would remain ineligible by statute to obtain a license. In addition, if the conviction is not an automatic disqualifier, the existence of that sealed record (and police records pertaining thereto) may still be used by the issuing department to address the issue of the applicant's suitability for a LTC.
Tuesday, February 18, 2014
Can I qualify for a License to Carry if I've been arrested?
Firearms licensing (with respect to the License to Carry Firearms) in Massachusetts utilizes a two-prong test, and grants significant discretion to the chief law enforcement officer as to whether the license will issue. Although the offence will not disqualify you as a matter of law under s. 131, the existence of the record and the underlying incident may be considered by the chief as evidence of "unsuitability", which could result in the denial of an LTC/A.
Should the license be denied, you may be able to appeal the denial within 90 days to the local district court. (M.G.L. c. 140 s. 131).
Additionally, depending on the age of the criminal record, and the circumstances of the case, you could consider applying for a Massachusetts Firearm Identification Card. The FID will only permit you to posses non-high capacity rifles and shotguns (no handguns), but such license must be issued by the chief law enforcement officer if the applicant is not statutorily disqualified from obtaining said FID. (See M.G.L. c. 140 s. 129B).
Wednesday, February 5, 2014
How to avoid Objections to a Bankruptcy Petition.
A significant majority of Chapter 7 Bankruptcy filings are completed without any significant problems to the Debtor or objection by Creditors, provided the Debtor (and their counsel) properly and accurately discloses all necessary information required by the bankruptcy laws. However, the bankruptcy laws provide the grounds for creditors to object to the discharge of debts (meaning you will still owe the debt, even after filing bankruptcy) under certain circumstances.
If a creditor objects to the discharge of any of the debts listed in your petition or schedules, such objection must be raised within 60 days after the first scheduled §341(a) Meeting of Creditors. Alternatively, the trustee must move to dismiss your case within the 60-day period following the §341(a) Meeting of Creditors if he or she finds that the granting of relief would be an abuse of the provisions of Chapter 7.
So, what are traps to avoid objections to my petition?
Trap 1: New Debts Immediately Prior to Filing
If you incurred new debt of $500.00 or more for "luxury goods or services" within the 90-day period before your bankruptcy, or if you obtained a cash advance from a credit card or other loan in the amount of $750.00 or more within the 70-day period before your bankruptcy filing, that debt is presumed to be non-dischargeable, absent the debtor's showing to the contrary.
Trap 2: Debtor Dishonesty in Obtaining Debt
A creditor may object to your request to discharge a debt if the debt was obtained or incurred as a result of fraud, embezzlement or larceny, or any willful or malicious injuries you have caused others. If the Creditor establishes by a preponderance of the evidence that the debt was obtained by any of the above means, the debt will be deemed non-dischargeable.
Trap 3: Debtor Dishonesty in Filing for Bankruptcy
Creditors may object to the discharge of certain debts if you have concealed or destroyed any property or financial records; made any false statements in connection with incurring a debt or other financial obligation; withheld financial or other material information; failed to explain losses; failed to respond to material questions permitted under the Federal Rules of Bankruptcy Procedure; or if you were granted a discharge with respect to that debtor in a prior bankruptcy case filed within the last 6 years.
So, in conclusion, the best advice to consider if you are considering bankruptcy is to stop spending, or at least stop incurring new debt, and ensure you understand and completely disclose your financial history. As in the rest of life, honesty is the best policy.
If a creditor objects to the discharge of any of the debts listed in your petition or schedules, such objection must be raised within 60 days after the first scheduled §341(a) Meeting of Creditors. Alternatively, the trustee must move to dismiss your case within the 60-day period following the §341(a) Meeting of Creditors if he or she finds that the granting of relief would be an abuse of the provisions of Chapter 7.
So, what are traps to avoid objections to my petition?
Trap 1: New Debts Immediately Prior to Filing
If you incurred new debt of $500.00 or more for "luxury goods or services" within the 90-day period before your bankruptcy, or if you obtained a cash advance from a credit card or other loan in the amount of $750.00 or more within the 70-day period before your bankruptcy filing, that debt is presumed to be non-dischargeable, absent the debtor's showing to the contrary.
Trap 2: Debtor Dishonesty in Obtaining Debt
A creditor may object to your request to discharge a debt if the debt was obtained or incurred as a result of fraud, embezzlement or larceny, or any willful or malicious injuries you have caused others. If the Creditor establishes by a preponderance of the evidence that the debt was obtained by any of the above means, the debt will be deemed non-dischargeable.
Trap 3: Debtor Dishonesty in Filing for Bankruptcy
Creditors may object to the discharge of certain debts if you have concealed or destroyed any property or financial records; made any false statements in connection with incurring a debt or other financial obligation; withheld financial or other material information; failed to explain losses; failed to respond to material questions permitted under the Federal Rules of Bankruptcy Procedure; or if you were granted a discharge with respect to that debtor in a prior bankruptcy case filed within the last 6 years.
So, in conclusion, the best advice to consider if you are considering bankruptcy is to stop spending, or at least stop incurring new debt, and ensure you understand and completely disclose your financial history. As in the rest of life, honesty is the best policy.
Wednesday, January 22, 2014
Can a Mortgage Prevent you from Filing for Bankruptcy?
A mortgage is a legal instrument typically securing a debt against real property, such as your residence. In our current real estate market, many homes are underwater. Not in the literal sense. Figuratively, when a home is described as "underwater" it refers to the mortgages on said home having a value greater than the current fair market value of the home.
When filing a Chapter 13 bankruptcy, a wholly unsecured second mortgage or even the unsecured portion of an under-secured first mortgage should be listed as unsecured debt. Depending on other circumstances you may or not be able to discharge this "unsecured" debt, however that doesn't change the fact that the Court will consider it unsecured.
Why does this matter?
When filing a Chapter 13 bankruptcy, there are debt limits defined by 11 U.S.C. §§ 109(e). Said debt limits were recently raised, effective April 1, 2010. Under the current limits, a Chapter 13 bankruptcy will be dismissed if the debtor has unsecured debt greater than $336,900 and/or secured debt greater than $1,010,650. As of April 1, 2010, those figures rose to $360,475 and $1,081,400 respectively.
Consider the following scenario:
A debtor owns a $600,000 home but has $900,000 in mortgages. The debtor has a car with a lien of $20,000 (secured debt) and credit card (unsecured debt) of $100,000.
If the entire mortgage debt was considered secured then the debtor would be under the debt limits with a total secured debt of $920,000 and a total unsecured debt of $100,000. Unfortunately, because the Court considers the $300,000 of "underwater" mortgages unsecured, the debtor has a total unsecured debt of $400,000, which is above the debt limits. This debtor would, therefore, be ineligible to file for relief under Chapter 13 and be forced to seek other relief (possibly filing for bankruptcy under Chapter 7 or Chapter 11).
This is the exact scenario articulated by a California Court in an unpublished decision: In re Estrada.
Estrada refers to a Ninth Circuit decision: In re Scovis, 249 F.3d 975, 982 (9 th Cir. 2001). In Scovis, the Court stated that a "vast majority of courts, and all circuit courts that have considered the issue, have held that the unsecured portion of undersecured debt is counted as unsecured for 13 § 109(e) eligibility purposes."
It appears that this is also the law in Massachusetts. In re Marrama, 345 B.R. 458, 472 n.23 (Bkrtcy.D.Mass. 2006) In Marrama the court referenced Scovis and noted that the debtors failed to list the unseured portion of an undersecured mortgage as unsecured debt, which would have resulted in a greater unsecured debt.
Tuesday, January 14, 2014
Don't borrow from Peter to pay Paul, especially if you're planning to file for Bankruptcy!
First, the debt for those funds could be non-dischargeable, meaning you will still owe it after the bankruptcy. An example of how this could arise, was described in a previous post: Should I Pay My Student Loan with a Credit Card? Debts such as student loans, certain judgments for personal injury resulting from gross negligence and or drunk driving and debts obtained by fraud cannot be discharged under the bankruptcy code. If you borrow from another source, such as a credit card, to pay that loan then the new debt will be non-disagreeableness because the funds were obtained with the intention of filing bankruptcy and furthermore, the new loan can be treated the same as the original debt.
This means that even if the credit card company doesn't object to the discharge, they still might be able to pursue you after the discharge, just like a student loan company could (although best practice for the credit card company would be to object prior to the discharge).
Second, if you used these borrowed funds to pay another debt, those funds might be subject to taking by the bankruptcy court as a preference (a debt paid to the disadvantage of other creditors). If that debt was a non-dischargeable debt, then you may still end up owing that debt after the bankruptcy, and the trustee could use those funds to pay other debts.
Third, and even worse, if the bankruptcy court found that you were attempting to commit a fraud upon the Court by moving this debt, the Court could deny your discharge altogether.
Finally, you could even be subject to criminal liability if the borrowing is determined to be a fraud, meaning you never intended to pay it back. Fraud is a state crime and bankruptcy fraud is a federal crime.
Thursday, January 2, 2014
What is the difference between Chapter 7 and Chapter 13 bankruptcy?
A Chapter 13 case places no income restrictions on the debtor, so if you cannot file Chapter 7 because you do not pass the means test, you can likely file Chapter 13. Chapter 13 begins much like a Chapter 7 case, but after the liquidation of non-exempt assets, if any, the debtor will pay a certain amount based on his available income and after deduction of living expenses to the U.S. Trustee, who will distribute payment to creditors on a pro-rata basis. The debtor will make monthly payments for 3-5 years, depending on certain factors, and then, as long as the debtor makes payments every month, the remaining unpaid portion of most debts will be discharged (though some debts, such as student loans may still be owed even after completion of the plan).
Chapter 13 has the benefit of permitting the debtor to spread out the repayment of certain debts over a 3-5 year period that would be otherwise non-dischargeable, such as tax debt, or student loans. Additionally, the debtor could use Chapter 13 to avoid foreclosure and pay back mortgage arrearages over the term of the plan, which is helpful in cases where the lender is demanding a high “cure” amount to voluntarily get a house out of foreclosure.
Subscribe to:
Posts (Atom)
