On March 2, 2010, the Massachusetts Bankruptcy Court issued "Emergency Standing Order 10-2" addressing certain provisions of Loan Modification and Forbearance Agreements.
Emergency Standing Order 10-2 effectively voids any provision of any loan modification or forbearance agreement which states that upon default of the lender, the benefits of the automatic stay are waived. Prior to Emergency Standing Order 10-2, if a modification included such a waiver, the bank or mortgage lender could proceed with a foreclosure or other collection actions despite the filing of a Chapter 7 or Chapter 13 bankruptcy. Any individual considering a loan modification should be very careful when considering the terms offered by the lender in any loan modification. Nevertheless, Emergency Standing Order 10-2 effectively extends the protection of 11 U.S.C. s. 362(a) to cases where lenders have attempted to circumvent automatic stay protections through prior modifications, forbearance agreements or other loan workouts by voiding any provision in any agreement which attempts to waive automatic stay protection.
The full text of the order is available here.
Wednesday, March 3, 2010
Wednesday, February 24, 2010
If my ex-spouse files for Bankruptcy, can they discharge support they owe?
Under the current Bankruptcy Code, a debtor who files a Chapter 7 bankruptcy will not receive a discharge from debts defined in paragraph 5 of 11 U.S.C. § 523(a) as "domestic support obligations" or debts under 11 U.S.C. § 523(a)(15) owed "to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, or a determination made in accordance with State or territorial law by a governmental unit."
"Domestic support obligations" are defined by 11 U.S.C. § 101(14A) as debts "in the nature of alimony, maintenance, or support" owed to a spouse, former spouse, or child.
These limitations on dischargability therefore apply to both child support and alimony, as well as other potential obligations under a divorce decree, such as agreements to pay joint debts or obligation to pay an ex-spouses attorney fees.
If your ex-spouse does file for bankruptcy, you may need to file responsive pleadings and argue this issue in front of a Judge if the debtor seeks to discharge the debt. If you fail to dispute the discharge, that could result in the debt being discharged. Though this is very unlikely, if you are not sure how to protect your rights you should consult with an attorney.
"Domestic support obligations" are defined by 11 U.S.C. § 101(14A) as debts "in the nature of alimony, maintenance, or support" owed to a spouse, former spouse, or child.
These limitations on dischargability therefore apply to both child support and alimony, as well as other potential obligations under a divorce decree, such as agreements to pay joint debts or obligation to pay an ex-spouses attorney fees.
If your ex-spouse does file for bankruptcy, you may need to file responsive pleadings and argue this issue in front of a Judge if the debtor seeks to discharge the debt. If you fail to dispute the discharge, that could result in the debt being discharged. Though this is very unlikely, if you are not sure how to protect your rights you should consult with an attorney.
Thursday, February 11, 2010
When and how do I make Chapter 13 Plan Payments?
The first Chapter 13 Plan payment is due on or before the Section 341 Creditors Meeting and every month thereafter for 36 or 60 months depending on your plan. Most debtors just bring the first payment to the 341 meeting. The payments are made payable to your Trustee, who will provide you with directions at the 341 meeting on where to send your further payments. Plan payments must be made by bank check and not personal check.
Monday, February 8, 2010
What should I expect at the initial consultation meeting?
The initial office visit is intended to acquaint you with basic information about bankruptcy and to assess your current financial situation in order to determine your need and eligibility for the filing of a bankruptcy case.
This will include information about the types of bankruptcy provided by each of the Chapters and how each Chapter works, what types of debts can be forgiven, what property you can keep, what debts you need to keep paying, how to value property in bankruptcy and how to complete the petition, forms, plans, schedules of property, and schedules of your debts. As part of this process, Kelsey & Trask, P.C. will evaluate your financial situation to determine your need and eligibility for the filing of a bankruptcy case.
To schedule a One Hour Initial Consultation Click Here.
This will include information about the types of bankruptcy provided by each of the Chapters and how each Chapter works, what types of debts can be forgiven, what property you can keep, what debts you need to keep paying, how to value property in bankruptcy and how to complete the petition, forms, plans, schedules of property, and schedules of your debts. As part of this process, Kelsey & Trask, P.C. will evaluate your financial situation to determine your need and eligibility for the filing of a bankruptcy case.
To schedule a One Hour Initial Consultation Click Here.
Monday, February 1, 2010
What are Exemptions in Bankruptcy and do I have a choice of Exemptions?
When filing for Bankruptcy certain property of the debtor is exempt from the Bankruptcy estate, which means that it is not subject to being taken by the Trustee and used to pay your debts. In simpler language, exempt property is property you get to keep.
When filing a Bankruptcy as a resident of Massachusetts you can choose to use the exemptions allowed under either State or Federal law, but you must choose one or the other.
There are many exemptions that are similar under both schemes, such as the exemption of most qualified retirement plans. The most significant difference is that under the Federal exemptions you are only allowed to exempt approximately $20,200 in primary residence equity, while under the Massachusetts exemptions you can exempt up to $500,000 in primary residence equity (assuming you have filed a valid Declaration of Homestead). This can be of significant importance if you are trying to stay in your home.
The exact amounts of exemptions are subject to change and you should consult with an attorney to obtain the most current figures and to decide which option you should choose.
UPDATE: The Massachusetts Exemptions have recently changed. For more information read our post on the changes: New Massachusetts Property Exemptions: The Return of 2 Cows, 12 Sheep and 2 Swine.
When filing a Bankruptcy as a resident of Massachusetts you can choose to use the exemptions allowed under either State or Federal law, but you must choose one or the other.
There are many exemptions that are similar under both schemes, such as the exemption of most qualified retirement plans. The most significant difference is that under the Federal exemptions you are only allowed to exempt approximately $20,200 in primary residence equity, while under the Massachusetts exemptions you can exempt up to $500,000 in primary residence equity (assuming you have filed a valid Declaration of Homestead). This can be of significant importance if you are trying to stay in your home.
The exact amounts of exemptions are subject to change and you should consult with an attorney to obtain the most current figures and to decide which option you should choose.
UPDATE: The Massachusetts Exemptions have recently changed. For more information read our post on the changes: New Massachusetts Property Exemptions: The Return of 2 Cows, 12 Sheep and 2 Swine.
Monday, January 18, 2010
What do those "Debt Relief Agencies" Do? Do they work?
It seems every time you turn on the radio, TV, or go online, you see stories of individuals in financial trouble, and plenty of businesses, agencies and organizations offering to help them out. Recently, one particular “debt relief agency” has touted its “quick fix” services by encouraging consumers to stop paying their credit cards and “not more money to those greedy banks”. The service then promises to work with consumers to resolve their debt for “pennies on the dollar”. So, do debt relief companies such as the one described deliver on their promises?
Most debt relief companies operate like so: You pay them a flat fee, usually calculated as a percentage of your total debt, and sign a power of attorney over to the debt agency allowing them to “negotiate with your creditors”. You are then told to stop paying your credit cards. After you have stopped paying the minimum balances, credit card companies begin collection action against you, and may refer your case to a collection agency. Afterward, the “debt relief agency” will step in and make a lowball offer to the collection agency or creditor, which the credit card company may or may not accept.
I have received a number of calls recently from consumers that have paid “debt relief agencies” thousands of dollars to assist them in resolving credit card debt, only to find themselves in a far worse position: liens on property, wage garnishments, even foreclosure. The fact of the matter is that word is getting out about debt relief agencies, and more and more lenders are becoming unwilling to settle with the individual debtors, and rather seek resolution in court or through foreclosure. In most cases, the debt relief agencies are not licensed to practice law, so as soon as a debt collection lawsuit or foreclosure proceedings are commenced, the consumer is left high and dry, still in debt and hundreds or thousands of dollars out of pocket.
The success of any debt relief agency is completely dependent upon the creditor’s willingness to settle the debt at a fraction of what is owed. There is no obligation of a creditor to accept a settlement offer or reduce your debt to any amount other than what is actually owed. Bankruptcy is different, and in a bankruptcy case the Bankruptcy Court is essentially ordering the discharge of certain debts and does not rely on a third party’s ability to settle a case. However, only the United States Bankruptcy Court can compel the discharge of certain debts, and only if the laws and procedures for filing bankruptcy are followed. Bankruptcy is not the only option (or even the first or best option) to overcoming a financial problem, but it may play an important part in the debtor’s strategy, and in certain circumstances, be the last and best option for a fresh start.
Most debt relief companies operate like so: You pay them a flat fee, usually calculated as a percentage of your total debt, and sign a power of attorney over to the debt agency allowing them to “negotiate with your creditors”. You are then told to stop paying your credit cards. After you have stopped paying the minimum balances, credit card companies begin collection action against you, and may refer your case to a collection agency. Afterward, the “debt relief agency” will step in and make a lowball offer to the collection agency or creditor, which the credit card company may or may not accept.
I have received a number of calls recently from consumers that have paid “debt relief agencies” thousands of dollars to assist them in resolving credit card debt, only to find themselves in a far worse position: liens on property, wage garnishments, even foreclosure. The fact of the matter is that word is getting out about debt relief agencies, and more and more lenders are becoming unwilling to settle with the individual debtors, and rather seek resolution in court or through foreclosure. In most cases, the debt relief agencies are not licensed to practice law, so as soon as a debt collection lawsuit or foreclosure proceedings are commenced, the consumer is left high and dry, still in debt and hundreds or thousands of dollars out of pocket.
The success of any debt relief agency is completely dependent upon the creditor’s willingness to settle the debt at a fraction of what is owed. There is no obligation of a creditor to accept a settlement offer or reduce your debt to any amount other than what is actually owed. Bankruptcy is different, and in a bankruptcy case the Bankruptcy Court is essentially ordering the discharge of certain debts and does not rely on a third party’s ability to settle a case. However, only the United States Bankruptcy Court can compel the discharge of certain debts, and only if the laws and procedures for filing bankruptcy are followed. Bankruptcy is not the only option (or even the first or best option) to overcoming a financial problem, but it may play an important part in the debtor’s strategy, and in certain circumstances, be the last and best option for a fresh start.
Saturday, January 9, 2010
New iPhone App: Means Test Calculator
Kelsey & Trask, P.C. is now offering the Chapter 7 Means Test Calculator (already available on our main website and our mobile website) as an application for use on the iPhone and iPod Touch.
Download it now because it will only be available for free for a limited time.
Use this worksheet to determine whether you qualify for Chapter 7 Bankruptcy under the first part of the Chapter 7 Means Test.
The application allows you to save your calculations, e-mail your calculations, or even save them to the clipboard.
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