Category Archives: Filing

Utility Shut-off Solutions

Attorney Ginger B. Kelly

Good advice from Attorney Ginger Kelly, licensed since 2004

Utility Shut-Off Solutions

by Ginger B. Kelly, Esq., January 11, 2019

I’ts that time of year, again.  The time when utility costs sky-rocket into the netherworld of bills you wish you could pay, but can’t.  But wait, don’t be too hard on yourself.  There are a few solutions to help you navigate this rocky road of uncontrollable utility bills.

Mass.gov has multiple solutions for certain people.  For example, if you live in Massachusetts, and if all the people residing in your home are age 65 and over, your electricity or gas cannot be shut off without permission from the Department of Public Utilities (DPU).  If you are experiencing financial hardship and one of the following applies, your electric or gas cannot be shut off without permission from the DPU:

  • You, or someone in your home, is seriously ill;
  • You have an infant under 12 months in your home;
  • All adults in the home are age 65 or older and a minor child resides in the home;
  • It is between November 15 and March 15 and the utility service is needed to heat your home.

If you meet these requirements and your electric or gas has been shut off, you should call your utility company directly. They will ask for proof of your situation, such as a child’s birth certificate, doctor’s note for a serious illness, or income-based proof of your inability to pay. 

If, after speaking with your utility company, your electric or gas service is not restored, you should contact the Department of Public Utilities at (617) 737-2836 or 1-877-886-5066 (toll-free) or complete their online complaint form.

If your water is provided by the city or town where you live, you need to contact the city or town directly to have your service restored. The Department of Public Utilities has a list of all the water district areas in Massachusetts.

If your water is provided by a company, your water cannot be shut off if one of the following applies:

  • Everyone in your household is age 65 or over;
  • You, or someone in your home, is seriously ill;
  • You have an infant under 12 months in your home;
  • All adults in your home are age 65 or older and a minor child resides in your home;
  • You are a tenant whose landlord is responsible for the water bill.

If, after speaking with your utility company, your water is not restored, you should contact the Department of Public Utilities at (617) 737-2836 or 1-877-886-5066 (toll-free) or complete their online complaint form.

Oil, Propane and Wood (Un-Regulated Utilities)

There are no specific legal protections for utility customers who heat with oil, propane, or wood. However, providers of these utilities are often willing to work with consumers who find themselves in difficult situations. You should contact your service provider directly and if you cannot get your utility restored, you should file a complaint with CARD.

How can I get help making my payments?

You may seek help from your local fuel assistance office if you are having trouble paying your utility bills. You do not have to be unemployed to get help. In addition, utility companies are often willing to work out discount, budget, and payment plans. You can learn about your fuel assistance options here.

How can I find out about my other options?

If you are facing a utility shut-off, including your electricity, gas, water, or telephone due to unpaid bills, filing Chapter 7 bankruptcy may help keep your service connected. Under federal law, if you file for bankruptcy, the utility company cannot change, refuse, or disconnect your service.  Contact an experienced bankruptcy attorney to find out your options.

If you are poor and meet certain income guidelines, you may qualify for legal aid.  Another suggestion is not to use your income tax return refund check to pay for your back bills, but use it to pay for your bankruptcy and be free from most all of your crushing debt and back utility bills.

At our office, there are a number of ways to pay for your bankruptcy, including using your federal and/or state income tax return refunds.

If you have other legal questions, especially if you are contemplating bankruptcy or dealing with collections or debt collection law suits, Attorney Ginger Kelly is now accepting clients in the Dudley, Webster, Sturbridge, Fiskdale, Southbridge, Saundersdale, Oxford, North Oxford, Charlton, Charlton Depot, Auburn, Leicester, Rochdale, Spencer, Brookfield, East Brookfield, West Brookfield, North Brookfield, Warren, Brimfield, Wales, Palmer and Holland.  We can explore whether or not bankruptcy is the easy way out for you.  Our office is a quiet and comfortable place to talk, and a free pot of coffee will be waiting for you when you arrive.

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ABOUT ME: Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture. To find out more, visit our website, or call us at (508) 784-1444.

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NOTICE: This is an Advertisement. This post is not legal advice. Consult your attorney. Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet. Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other. We cannot stress enough, if you need personal legal advice, always see your attorney. Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice. Seek legal advice and representation from your own personal attorney.

Copyright © 2018 by Ginger B. Kelly, Esq., all rights reserved

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Filed under Bankruptcy, Chapter 7, Collection, credit card debt, Debt, Debt Collection, Empowerment, Filing, Financial, Financial Planning, Legal, Legal Rights, Massachusetts, Massachusetts law, Massachusetts town ordinance law, payment, practical stuff, Uncategorized, Utility Bills, Utility Shut-Off

Top 4 Reasons NOT to Consider Bankruptcy

 

Top 4 Reasons NOT to Consider Bankruptcy

By Attorney Ginger Kelly, December 24, 2018

It’s not unusual to borrow money and have every intention of paying it back. But for some unknown reason, you can’t pay it back. Maybe you lost your job or your hours got cut. Did your small business just crash or were sick or hospitalized. Sometimes you need to stay home with a sick child or elderly parent. Whatever the reason, it’s very human to find yourself unable to pay back loans and credit cards. When life happens, and you are stuck with debt you can’t pay, it’s OK to talk to an experienced bankruptcy attorney.

Although many people avoid the “B” word, bankruptcy, bankruptcy could be the tool you need to get back on your feet. If you can’t decide what to do, here are the top 4 reasons why you should not consider bankruptcy.

Number #1. The Hole you’ve Dug for Yourself isn’t too Deep to Get Out

Paying and paying on credit card debt without making a dent in the balances is a perfect storm for credit disaster. Another problem is paying a minimum payment on a judgment for years and years and years and the balance just doesn’t go down, it appears to go up. These are problems that may lead you to think bankruptcy is the best option. But what if you are simply annoyed at paying bills? The best plan of action to take is to do the math. Weigh your disposable income and your unsecured debt. Are you making more than your minimum payments? Are you making any progress paying down principal? Even if you can only see a slight dent in the principal, over time, but it’s taking a long time for you, evaluate whether bankruptcy is really the best idea for you right now. If you have no employment or medical issues, no change in family status, keep plugging along. Bankruptcy is probably not for you.
Dennis, a Veteran living by himself on Social Security and a small pension had problems with a judgment on a small debt. Because Dennis did not defend himself in court, so the creditor obtained a judgment against him. This was way back in the 90’s. Dennis had no choice. He started making very small minimum payments of about $30 per month out of his disposable income, which wasn’t much. In 2017, he came to me for help. Dennis paid almost $9,000 to his creditor over the years and he couldn’t see any end in sight. Since Dennis had little monthly disposable income and other medical debt, bankruptcy was a good fit for Dennis.

Tip #1: If you can’t afford to pay all your unsecured creditors in full, over the next 3 years, your current strategy isn’t working.

Number #2: You Have NOT Looted Your Retirement Account to Pay Bills

It can be very tempting to take a loan or an early withdrawal from your retirement funds, simply to keep your head above water. But if you have the means not to do this and to seek help first, even when debtors are filing law suits against you, awesome! Borrowing money against your retirement account is a very big risk, especially if you are close to retirement age. By looting your retirement, you are not getting out of debt easily. You are actually taking from old-age self and using it, hoping you will recover. Most people don’t recover. And don’t forget the consequences of early withdrawals. It’s not worth it. Alternatively, consider making plans to contact a bankruptcy attorney who can help you move forward, not backward, before you decide to loot your retirement accounts.
Steve is currently being sued by a lender for a repossessed vehicle because he suffered road bumps in his career. After several layoffs, he decided he could no longer afford his $400 a month car payment. He surrendered his car. After the lender sold his car at auction, Steve still owes about $10,000. If Steve borrows from his retirement account he can pay off this debt and not have to worry about the law suit. Sounds tempting, doesn’t it?

Steve decides to hire a lawyer and the lawyer negotiates with the lender for a payment plan. He sticks to his monthly payments and pays off this debt within 3 years. Steve still has enough money to save for retirement, repair his current vehicle, eat out every once in a while and pay his mortgage. Steve probably doesn’t need to file for bankruptcy.

Tip: Seniors who need the relief bankruptcy are often tempted to use precious retirement funds to pay off credit card debt. If you find yourself in this situation, consider this a big red flag.

Number #3: Your Family Isn’t Going to Suffer

It’s a known fact that having a child is not easy. Some say that having a child is the single greatest predictor that a single person will end up in financial collapse. When struggling with debt and weighing your options, consider who is dependent upon you. What are their ages? Do you have an “emergency fund” to care for them if something unexpected happens? The larger the number of dependents you have, the more likely you are to need an emergency fund and health insurance.

Karen got slammed with a judgment from one of her credit card creditors. It was from a debt she acquired back in 2006. She was very upset. Karen is a single working mom, supporting two school-aged kids. Their father pays hardly any child support. If Karen’s creditor garnished her wages, or she lost her job, how would she pay her rent, feed her children and buy gas to get to work? With this in mind, Karen worked out a payment plan with her creditor and is now making minimum payments. Karen is also saving for emergencies and has enough disposable income to pay for things like school pictures and activities, clothes, food and gas. If this wasn’t the case, Karen would probably benefit greatly by talking to an experienced bankruptcy attorney. But since her family is doing fine, and she’s paying her unsecured debt and her bills, bankruptcy may not be a good option just yet.

Tip: If you have dependents, be sure to stash some cash into an emergency fund.

Number # 4 You’ve Got Equity on Your Home AND you can Catch up on your Past Due Mortgage Arrears

It’s been estimated the over 7 million Americans are underwater on their mortgages. But there are many ways of finding relief, like negotiating a loan modification and talking to your lender. If you file for bankruptcy these are the 5 things you may be able to do, as a last resort of course.
1. Catch up on past due mortgage payments or negotiate a loan modification so you can stay in your home;
2. Eliminate a second mortgage or home equity loan through bankruptcy;
3. Erase debt that could be due if the lender foreclosed and sold your home for less than you owed;
4. Free up money that you were paying on other debts so you can afford your home loan; and/or
5. Avoid a big tax bill from “cancellation of debt income” that could happen if your home goes into foreclosure or if you negotiate a short sale.

Where to Get Help

A consumer bankruptcy attorney can help you understand how filing may help you. Many offer low-cost or free consultations. Every bankruptcy attorney should tell you of your options and alternatives to bankruptcy before you make those very important decisions.
If you have other legal questions, especially if you are contemplating bankruptcy or dealing with collections or debt collection law suits, Attorney Ginger Kelly is now accepting clients in the Dudley, Webster, Sturbridge, Fiskdale, Southbridge, Saundersdale, Oxford, North Oxford, Charlton, Charlton Depot, Auburn, Leicester, Rochdale, Spencer, Brookfield, East Brookfield, West Brookfield, North Brookfield, Warren, Brimfield, Wales, Palmer and Holland. We can explore whether or not bankruptcy is the easy way out for you. Our office is a quiet and comfortable place to talk, and a free pot of coffee will be waiting for you when you arrive.

The Law Offices of Ginger B. Kelly

167 Carpenter Hill Road

Charlton, MA 01507

(508) 784-1444

AttorneyGingerKelly@gmail.com

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Bankruptcy for Smart People

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Bankruptcy for Smart People

By Attorney Ginger B. Kelly, September 13, 2018

For some people, bankruptcy is a very helpful tool.  Bankruptcy was intended to help people in debt to recover, get a fresh start and begin again to regain financial stability.

Why File Bankruptcy?

People file for bankruptcy for a variety of reasons.  Some want to save their homes from foreclosure.  Some want to keep their wages from being garnished.  Many want to get rid of (or avoid) liens placed on their homes by creditors.  Many are struggling with medical debt, credit card debt and other unsecured loans.  Some have financial trouble due to medical issues, loss of employment, divorce, the death of a family member and a host of unforeseen accidents and problems.  Sometimes people struggle due to poor judgment or in making unwise financial decisions.  Whatever the reason, there are essentially two types of bankruptcies for most individuals and married couples.  Most people (not businesses) file under particular bankruptcy Chapters, Chapter 7 and Chapter 13.

Chapter 7

Chapter 7 bankruptcy is relatively straightforward and is sometimes called a “straight” bankruptcy.  You can file, under Chapter 7, if you are an individual or a married couple but you have to qualify first.  To qualify under Chapter 7, income and expenses must meet certain guidelines and the filers must complete a state approved, online or telephonic credit counseling course.  A Chapter 7 bankruptcy is often called a liquidation of assets, although very rarely are all the assets of a person or a family actually sold, or liquidated, by the Bankruptcy Trustee.  The Trustee is the person working for the US Trustee’s office.  The Trustee is the attorney looking out for the creditor’s side, or working on behalf of all the creditors. Most filer’s assets are exempt or protected under state or federal bankruptcy laws.  Under Chapter 7, most debts are discharged within about six months from the date of filing, provided there are little or no underlying issues or problems.

Chapter 13

Under a Chapter 13, an individual or a married couple must also qualify and take a course before filing, but the difference is that they will need to make payments to creditors into a five or three year repayment plan.  During that three or five year plan period, the filer will need to pay a minimum of 10% of all their debt to most creditors, using whatever disposable income that person or couple has. Disposable income is income that is left over after paying all necessary and reasonable expenses, including things like child support, mortgage and auto loan payments.  Most Chapter 13 Trustees require that you make payments through a payroll deduction, unless there is some sort of hardship or danger of job loss or some other serious consequence.  A Chapter 13 bankruptcy takes longer and during the three or five year period, things may be financially tighter, but most people qualify for bankruptcy under this Chapter.

Chapter 13 also has many advantages over a Chapter 7. For those facing foreclosure or repossession, filing for Chapter 13 bankruptcy can help save a person’s home or vehicle by allowing the individual (or married couple) to catch up on missed payments through the repayment plan.   Sometimes a Chapter 13 will allow a debtor to catch up on missed child support payments.  Credit bureau scores are not as severely affected compared to a Chapter 7.  Also, Chapter 13’s can be filed more frequently, unlike Chapter 7s which cannot be filed less than once every eight years.

Chapter 11

Chapter 11 bankruptcies are typically used by businesses, but some individuals and small business owners may file under Chapter 11 as well. A Chapter 11 allows businesses to restructure debts and to pay them back over time.  Chapter 11 bankruptcies are very useful for someone who does not qualify for a Chapter 13, although this type of bankruptcy is more complex than a Chapter 7 or 13.

Life after Bankruptcy

Whether it’s Chapter 7 or Chapter 13 you are thinking about, keep this in mind. If you want to file because you’ve had some sort of significant event in your life like an extended period of unemployment or lots of medical bills, bankruptcy is a very effective tool.  Bankruptcy may help you catch up or eliminate most of your debt and a great way to reorganize your financial life.

However, if you are experiencing financial hardship because you never learned how to manage money and you tend to spent beyond your means, filing for bankruptcy may not be very helpful. In other words, bankruptcy can get most folks where they want to go, but it won’t keep them financially stable without a little work.  Living within your financial means and tackling the reasons why you tend to spend beyond your means is critical for success.  Although one in every one hundred people may file for bankruptcy each year, only 8% of those people every file again.  This means that most folks figure it out.  They regroup and regain sound financial ground.  You can too.  It’s really quite simple.

Why Smart People File for Bankruptcy

Steve Rhode of the Huffington Post thinks that bankruptcy is not a moral decision, but rather an important strategy for dealing with financial difficulty and getting back on your feet rather quickly.  He says that people who file for bankruptcy are smart.  I agree.  Being honest and upfront, especially about difficult and challenging situations, is the most likely way to reach a positive outcome.

If you have other legal questions, especially if you are contemplating bankruptcy or dealing with collections or debt collection law suits, Attorney Ginger Kelly is now accepting clients in the Dudley, Webster, Sturbridge, Fiskdale, Southbridge, Saundersdale, Oxford, North Oxford, Charlton, Charlton Depot, Auburn, Leicester, Rochdale, Spencer, Brookfield, East Brookfield, West Brookfield, North Brookfield, Warren, Brimfield, Wales, Palmer and Holland.  We can explore whether or not bankruptcy is the easy way out for you.  Our office is a quiet and comfortable place to talk, and a free pot of coffee will be waiting for you when you arrive.

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ABOUT: Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture. To find out more, visit our website, or call us at (508) 784-1444.

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NOTICE: This is an Advertisement. This post is not legal advice. Consult your attorney. Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet. Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other. We cannot stress enough, if you need personal legal advice, always see your attorney. Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice. Seek legal advice and representation from your own personal attorney.

Copyright © 2018 by Ginger B. Kelly, Esq., all rights reserved

 

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Filed under Bankruptcy, Chapter 7, Collection, credit card debt, Debt, Debt Collection, Deficiency Debt, Filing, Financial, Judgements, Law, Legal, Massachusetts, Massachusetts law, Mortgages, Repossession, Rhode Island, Short Sale, Student Loan Debt, tax refund, Uncategorized

Master Medical Debt Lawsuits in 10 Easy Steps

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Master Medical Debt Lawsuits in 10 Easy Steps

By Attorney Ginger Kelly, July 19, 2018

Being sued by a debt collector or service provider over medical debt is no picnic. If you can’t afford to pay the initial debt, it is likely that you still can’t pay it. Going to court is also very stressful, time consuming and costs you time off from work and other more important things. These are things we all worry about.

Although you may be tempted to ignore a medical debt law suit you know you can’t pay, it is always best to show up. If you ignore the law suit, the other side wins, automatically by default.  A default Judgment will haunt you and your credit report for twenty years in Massachusetts.

What happens when you show up for court?  Below are 10 steps that you can take if you are facing a medical debt lawsuit.

  1. Find out where the debt comes from

You cannot properly talk about your lawsuit until you fully understand why you are being sued. Past bills should tell you something about the debt.  Find a date of service and, perhaps, an itemized list of what services were given to you that you are being charged for.

  1. Answer the lawsuit

In most medical debt and other consumer debt cases, people don’t have an attorney. Hiring an attorney is a wise move, so seek a free first consultation with a lawyer before you hire them. Sometimes, a lawyer can help you to represent yourself.

Many times, when people meet certain income guidelines, they can apply for free legal aid. Worcester Community Legal Aid services is an example of one of many nonprofit public service centers, helping clients with free and reduced fee legal services for debt collection law suits. Many times, a limited service lawyer will be at the courthouse to help clients. Call and find out when this free service is available.

  1. Prepare for court

The next step to take is to prepare to answer your lawsuit. In Massachusetts a defendant has twenty days from the date of notice to answer a small claims or civil suit. Answering a law suit involves filling out paperwork at the court, which will involve answering every paragraph and including all your legal defenses along with a certificate of service saying that you mailed a copy to the other side. Then, you have to mail the paperwork to the other side who is suing you.  Next, show up at the initial court date. After you answer the suit, the court will set a date for the discovery part of the trial. It is very helpful to find a lawyer who can advise you regarding this process.

It’s important to make this initial court date.  Traditionally, in Massachusetts, this is called a discovery or pre-trial conference where you have time to talk to the other side and see if you can make a deal.  It’s helpful to ask for a payment plan and a reduction of the debt.  At this stage of the game, it is unlikely that the judge will grant you a continuance that would move the court date further out. It’s probably best not to ask unless you live out of the jurisdiction and you would like to get counsel to move the suit to a better place where you can defend.

At the discovery part of your lawsuit, you will have to file more paperwork about your finances and will need to sit and wait to talk to someone. This is not the time to present evidence that you are not liable for the debt. If you are not liable, you can present this evidence at hearing. This means, you will need to show up another time for hearing.

  1. Know about wage garnishment

If at hearing, you are found liable for the debt, or if you failed to answer the lawsuit and the judge rules against you, the court may issue a judgment order and an execution, giving the lender or collection agency the ability to garnish your wages. Social security benefits, disability insurance payments, unemployment, VA benefits and other things, like public assistance and child support are excluded from garnishment.  If you have any of these forms of income, it’s wise to set up a different bank account where those funds are deposited and keep all garnishable wages in another separate account. Do not mix these funds with other things like regular wages.

By federal law, the lender or collection agency can’t take more than 75% of your income. Based on Massachusetts law, which is more protective, creditors can take only 15% before taxes or other deductions, or they can take your disposable income less 50 times the greater of the federal or Massachusetts minimum wage. Effective January 1, 2017, the Massachusetts minimum wage is $11 per hour.  This means that any amount exceeding $550 per week can be garnished from your wages, in Massachusetts.

Also, under Massachusetts law, some medical institutions can take your tax return refund to pay past due bills.  It’s better to take care of them before your tax refund is levied.

  1. Were you served properly?

Sometimes wages are garnished before the plaintiff is even aware that there’s a lawsuit against them. This happens most commonly when you’re improperly served. Examples of using “improperly served” as a legal defense include papers being only mailed to you and not delivered in person, papers being left at an incorrect residence, or papers being mailed to an old address. Being “improperly served” does not mean that the papers were left with a family member or friend at your residence and they forgot to tell you about it. If that happened, you’re still on the hook.

If you have been improperly served, or if you find out that the court mistakenly started garnishing wages because you have the same name as an actual plaintiff, you should contact a lawyer immediately.  Find out what possible resources there may be for you in your situation.

  1. Get low-cost or free help from financial assistance programs

Under the Affordable Care Act, these hospitals must provide some type of financial assistance program to low-income patients. Even if you aren’t from a low-income household, you should apply, as some hospitals extend their programs far beyond the poverty line. Many hospitals also extend this program to insured patients.

  1. Discriminatory pricing

If you are being sued in court and are uninsured, discriminatory pricing can serve as a defense. If you qualify for the hospital’s financial assistance program, the hospital must legally reduce your bill to the amount generally billed to insured patients.

  1. Look out for balance billing

Balance billing happens when your hospital or medical provider bills you instead of or in addition to Medicaid or Medicare. It’s a forbidden practice, and you are not responsible for any amounts due when this happens.

You may be able to identity balance billing if you receive an “Explanation of Benefits” from your insurer that states the amount they covered and the amount you still owe. If this does not match the bill your medical provider sent you, there is a cause for concern. Additionally, if the bill you receive does not show any payment from your insurance when you are, in fact, on Medicaid or Medicare, it may be a sign that you are a victim of balance billing.

  1. Stop lawsuits before they start

If something about your bill doesn’t look quite right, there are ways to reduce it to its fair amount. Debt collectors, hospitals, and other medical providers don’t want to take you to court. It costs them money, and the odds of them actually getting a full payment at that point are very low. They are almost always willing to work with you before issuing a lawsuit. Negotiate. Apply for financial assistance. Set up a no interest payment plan directly with your health care provider.  Keeping the lines of communication open is the best way to avoid costly litigation and compounded interest and fees.

If you didn’t have insurance at the time of service, a good idea is to contact the doctor or debt collection agency and try to negotiate the bill down to Medicaid/Medicare prices.  This should save you at least one to two thirds the initial cost.  If a provider doesn’t want to negotiated, your attorney can use, “discriminatory pricing: as a legal defense in court.

  1. Weigh bankruptcy

There may come a point in the process to consider bankruptcy as an option.  Filing for bankruptcy may alleviate the medical debt and all your other bills. However, as a cautionary measure, bankruptcy is not a decision to take lightly.  A chapter 7 will remain on your credit reports for up to 8 years and make it difficult to qualify for new credit with a low interest rate.

There are two types of bankruptcy: Chapter 7 and Chapter 13.  Chapter 7 is a form of liquidation.  If you qualify, a Chapter 7 bankruptcy requires you to sell off all of your non-exempt assets to settle what you can of your debt obligations. If you don’t have any non-exempt assets, this part probably doesn’t matter much. What does matter is that most of your debt, if not all, will disappear after you receive your discharge.

A chapter 13 Bankruptcy is a type of reorganization of your debts.  In a Chapter 13, you do not have to sell off any assets, but the debt won’t disappear either.  Instead, you will pay your debt from your disposable income via a 3-5 year payment plan. After the 3 or 5 year plan is over, the rest of any qualifying debt you could not pay out of your payment plan is discharged.

Filing for bankruptcy makes sense if the court has already issued an order to garnish your wages.  However, at any other point in your situation, it makes good sense to try to negotiate and set up a payment plan with the medical service provider or debt collection agency directly.

A debt collection agencies last resort is wage garnishment, but it doesn’t have to come down to this. By knowing your rights and negotiating, effectively, rather than damaging your credit scores, you may have a good chance to work through a win-win situation.

If you are contemplating bankruptcy, and have some questions about wage garnishment or medical debt, Attorney Ginger Kelly is now accepting clients in the Dudley, Webster, Sturbridge, Fiskdale, Southbridge, Saundersdale, Oxford, Charlton, Auburn, Leicester, Spencer, Brookfield, East Brookfield, West Brookfield, Warren, Brimfield, Wales, Palmer and Holland.  We can explore whether or not bankruptcy is the easy way out or not.  Our office is a quiet and comfortable place to talk and a free pot of coffee will be waiting for you when you arrive.

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ABOUT ME: Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture. To find out more, visit, http://www.attorneykelly.com or call us at (508) 784-1444.

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NOTICE: This is an Advertisement. This post is not legal advice. Consult your attorney. Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet. Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other. We cannot stress enough, if you need personal legal advice, always see your attorney. Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice. Seek legal advice and representation from your own personal attorney.

Copyright © 2018 by Ginger B. Kelly, Esq., all rights reserved.

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Filed under Bankruptcy, Chapter 7, Choosing a lawyer, Civil, civil law, Collection, credit card debt, Debt, Debt Collection, Deficiency, Deficiency Debt, Empowerment, Filing, Financial, Hiring Counsel, Judgements, Law, Lawsuits, Legal, Massachusetts, Massachusetts law, Medical Debt, payment, practical stuff, Rhode Island, Uncategorized, Wage Garnishment

Lien Removal via bankruptcy

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Lien Removal via Bankruptcy

By Ginger B. Kelly, Esq. May 23, 2018

Judgment liens on residential real estate or automobile titles can become a big problem for owners who want to sell or refinance. A lien is a type of instrument that secures a debt, similar to the way a mortgage secures a loan or note or a lien on a title can secure an automobile loan. Liens can be created for a number of reasons, like  to pay a judgment on a credit card debt, unpaid taxes, mechanic’s liens for unpaid services or water or sewer charges or any judgment in a lawsuit to pay a debt of any kind, even unpaid car loans or leases.

In Massachusetts, a lien from a judgment in a lawsuit is called an execution. The execution secures the amount that was awarded to the plaintiff and enforces the judgment awarded.  For example, credit card companies like Discover, Synchrony, Citi Bank or Bank of America, debt buyers like Midland Funding, and auto loan companies, like Wells Fargo and Ford Motor Credit, commonly record executions after receiving a judgment. Some companies even record liens before a judgment, if there is reason to believe the property will be sold or encumbered in any way.

There are only a few ways that a defendant may remove an execution, in Massachusetts. One way is if the debtor pays the creditor/plaintiff the amount owed on the execution. Then the creditor may ask the court to release the execution or lien. The other way is to pay the creditor a lesser amount owed, also known as a “settlement.” If the creditor agrees to a lesser amount, the creditor or the debtor can ask the court to remove the execution after the debt is satisfied by payment. Another option is if the judgment secured by the lien is vacated (i.e. thrown out). Without the underlying judgment, the execution can be released.  The only problem with this is that even if the execution is released, the debt won’t necessarily go away. The creditor might be able to re-file the lawsuit. A third option is to have the lien avoided in a bankruptcy.

When a homeowner files for bankruptcy in Massachusetts, he or she can claim a homestead exemption that protects between $125,000 and $500,000 in equity in their personal residence. The Bankruptcy Code allows filers to remove liens, also known as “avoiding” liens, like executions that impair this exemption. Once avoided, the lien can be cleared from the title by recording or registering orders from the bankruptcy court at the registry of deeds.

At the Law Offices of Ginger B. Kelly, we often obtain orders to clear liens from many of our client’s real estate, automobile titles and other personal property.  By obtaining and recording or registering orders from the bankruptcy court, we help many of our clients refinance or sell their homes and other property without problems stemming from a lien. If you have a lien that poses a problem for your property, talk to us (free of charge) and we will evaluate your options.

The Law Offices of Ginger B. Kelly is now accepting clients in the Sturbridge, Southbridge, Dudley, Webster, Oxford, Charlton, Auburn, Spencer, Brookfield, Warren and all of the Worcester County Area. We can explore whether or not bankruptcy is the easy way out or not.  We have a comfortable place to talk and a fresh cup coffee waiting for you.

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ABOUT ME: Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture.

To find out more, visit, http://www.attorneykelly.com or call us at (508) 784-1444.

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NOTICE: This is an Advertisement. This post is not legal advice. Consult your attorney. Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet. Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other. We cannot stress enough, if you need personal legal advice, always see your attorney. Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice. Seek legal advice and representation from your own personal attorney.

Copyright © 2018 by Ginger B. Kelly, Esq., all rights reserved.

 

 

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With No Money, How Do I Pay My Attorney to File My Bankruptcy?

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How do I Pay My Attorney for My Bankruptcy?

By, Ginger Kelly, Esq.  April 10, 2018

The other day, a personal friend asked me (for a friend), whether or not they should she use their tax return tax refund to pay down their credit card bills or to replace the old and leaking roof on their home.  Their roof needed repairing badly.  Their credit card debt was very old and the payments were more than they could afford.  Even though I can’t make that final decision for this friend’s friend (or any of my clients), I can advise most folks of their legal options.  When people need to make a choice between a roof over their head or paying credit card bills, one good option available to most everyone is a fresh start.

In many or most situations, bankruptcy can give an individual or a couple, the fresh start they need. If you are in a position where you need to make important decisions like what to pay and what not to pay, like a roof on your home or to repair the vehicle you need to get to work, talk to a good bankruptcy attorney.  Most give free first consultations, like our office. Bankruptcy might be an option for you, or maybe not.  A person hasn’t lost but an hour of their time discussing their options with a good attorney.  Talking to a professional about options for taking care of debt, sometimes gives the clarity you need to make the right decisions for your future.

A client visited me the other day to discuss her situation. Apparently, she had debt exceeding any amount she could pay.  It wasn’t much debt, but it was a lot for her and that is important. Her earnings were barely more than the poverty level.  So while we had a nice hot cup of coffee, we talked about all of her options.  It was a nice pleasant, casual conversation.  I discovered that my client earned too much money to qualify for a free bankruptcy, through legal aid. She was sad and asked me what can be done.

Because her bankruptcy was not complex, I agreed to lower my fee. I gave her my best  fee option. Still, she was worried. Where would she find the money to pay the attorney fee? I asked her if she was getting a tax refund. She said yes, but it wasn’t enough. She was sickened with the idea of paying creditors all of her disposable income for years to come.

All of a sudden, she had an idea. She said, rather than trying to negotiate and pay down her credit card debt, using all of her disposable income, she said she could ask her uncle for the money. She said that she was thinking of asking him for a gift to help her pay down her loans anyway. Why not ask him for the same gift to pay her attorney’s fees?  Good idea! Sometimes asking relatives to help is a better option than worrying about how to pay overwhelming debt. I’ve had several clients in this kind of situation.

Once, a couple was in the same situation. The wife lost her job due to illness and then one thing led to another. They became deeply indebted, mostly to unsecured creditors (credit card companies). The best option for them was to file for bankruptcy. We talked a little bit and I gave them my best rate.  They were thankful, but without the extra cash, they didn’t know how to pay the legal fees. This was a problem for them.  However, determination overcomes lots of obstacles.

This couple scraped and saved and paid a little along. One spouse sold a baseball card collection and some tools.  The other sold some furniture they no longer needed. They used Craigslist and Facebook Yard Sale to sell a few more things.  They sent checks, one by one, to our office. Sometimes the check was small, sometimes large. We placed all of these funds into our client’s trust account, on hold for them until they finished paying. It didn’t take long. Within about four months, this couple paid all their fees, including the filing fee. This couple couldn’t have been happier.  I was so happy to help them in this way.

Once a person is determined to make a bad situation better, magic happens. There are more options for paying lawyer’s fees than these. Options are only limited by a person’s motivation, determination and imagination. Typically, I ask clients whether or not they have a tax refund coming to them.  This is a very good option for covering fees and things.  Then, I suggest asking friends or relatives for a gift.  At our office we have many ways of making your bankruptcy affordable, sometimes even free or at a reduced rate. Ask us how and perhaps we can help to make your fresh start,more affordable.  It may be easier than you think.

The Law Offices of Ginger B. Kelly is now accepting clients in the Sturbridge, Southbridge, Dudley, Webster, Oxford, Charlton, Auburn, Spencer, Brookfield, Warren and all of the Worcester County Area. We can explore whether or not bankruptcy is the easy way out or not.  We have a comfortable place to talk and a free pot of coffee waiting for you.

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ABOUT ME: Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture. To find out more, visit, http://www.attorneykelly.com or call us at (508) 784-1444.

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NOTICE: This is an Advertisement. This post is not legal advice. Consult your attorney. Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet. Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other. We cannot stress enough, if you need personal legal advice, always see your attorney. Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice. Seek legal advice and representation from your own personal attorney.

Copyright © 2018 by Ginger B. Kelly, Esq., all rights reserved.

 

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Property Transferring No No’s, Before Filing Bankruptcy

Money in an envelope

Property Transferring No No’s, Before Filing Bankruptcy

by Attorney Ginger B. Kelly, February 23, 2018

There are a few types of transfers that will definitely not help if you want to file for bankruptcy to get a fresh start. One of those is types of transfers is called a prepetition transfer or (in other words) a fraudulent or irregular transfer.

Essentially, a prepetition transfer is a transfer of property (money or other things, including real estate) given to a person or creditor within 90 days from the date you file your petition. A prepetition transfer may also be a transfer of any property (money or other things, including real estate) to any insider, like a business partner, family or friend, within one year of your bankruptcy filing. Prepetition transfers are one of the biggest reasons why it is important to consult with a qualified, experienced, bankruptcy attorney, before you file. The prepetition transfer follows something called the 90 day rule.

Basically, the 90 day rule relates to debts that a debtor has paid, while insolvent, within the past 90 days of filing their bankruptcy petition and is set forth in section 547(b) of the Bankruptcy Code. The 90 day rule generally means that the US bankruptcy trustee has permission to avoid, (which means unwind or undo), any transfer made to a creditor or an insider if the transfer had an aggregate value of $600 or more provided that the transfer was made within 90 days from the date of the bankruptcy filing, and for any transfers made up to one year, if the person who received the transfer was an insider.

Here are a couple of examples of a fraudulent or irregular transfer:

Jane wanted to settle a debt before filing. She saved around $3,000 and was successful in negotiating with creditors to pay off one of her credit cards. Jane negotiated a settlement with blue credit company for $700 on October 30, 2017. She negotiated another settlement and paid red credit company $1,000 on November 1, 2017. After Jane negotiated successfully, with blue and red credit companies, she tried to negotiate with orange and green credit companies. She was unsuccessful. So Jane filed her bankruptcy without an attorney. Since she paid $700 to blue and $1,000 to red, her US Trustee avoided these transfers to get the money back. The trustee will allow all of Jane’s creditors to receive an equal share of the $1700 and prevent one particular creditor from benefiting more than the others. This is just one example. There are more.

The second section of the 90 day rule allows bankruptcy trustee to avoid any transfers of property made to any creditor that is also an insider (i.e., business partner, relative or friend) made between 90 days and one year of your bankruptcy filing date and exceeds and aggregate value of $600 or more.

In the next example, Steven bought his daughter Karen, a $15,000 car for graduating college. Steven paid $5,000 from funds he kept in his savings account and made the remainder of the purchase from a $10,000 line of credit on his credit card. On June 30, 2017, Steven transferred the title, over to his daughter.  In September of 2017, Steven lost his job. He was no longer able to make the remainder of Karen’s car payments. After four months without a job, Steven’s debt was piling up. So, in January 2018, Steven decided that he wanted to file chapter 7 bankruptcy to get a fresh financial start. If Steven were to file for bankruptcy before June 30, of 2018, there may be a good chance that the trustee would be able to avoid the car title transfer he made to his daughter, Karen. This would put the vehicle Steven just purchased for his daughter at risk. If Steven’s bankruptcy attorney knew of this transfer, the attorney would have warned Steven of the issues involving the purchase of Karen’s car prior to filing.

The fraudulent transfer rule involves all property, not just cash, and also applies to both chapters 7 and 13 bankruptcies. There are only a few exceptions. One, for example, is the exception for transfers made in the ordinary course of business, in other words, the property was sold to another (not an insider) for a fair and accurate value. But even so, bankruptcy can get complicated and for most folks, an attorney is usually needed to help out. Some people can’t imagine how to pay for a bankruptcy when they have no money. I’ll talk about that more, in my next article.

For now, if you’d like to set up an appointment to talk about affordability and your available options, call me. We can talk, face-to-face, and explore your options over a nice cup of coffee or tea.

The other day, a new client couple asked whether or not they should she use their tax return tax refund to pay down their credit card bills or use their tax refund to replace the roof on their home. Their roof needed repairing badly. Their credit card debt was very old. I cannot make that final decision for any of my clients, but I can advise them of their options. If you are in a position where you need to make important decisions like paying your credit card bills or paying for something extremely important, like a roof on your home, it may be a great idea to talk to a good attorney. Most give free first consultations.

If you are contemplating bankruptcy, and have some questions about a transfer you may have made or the 90 day rule, The Law Offices of Ginger B. Kelly is now accepting clients in the Sturbridge, Southbridge, Dudley, Webster, Oxford, Charlton, Auburn, Spencer, Brookfield, Warren and all of the Worcester County Area. We can explore whether or not bankruptcy is the easy way out or not.  We have a comfortable place to talk and a free pot of coffee waiting for you.

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ABOUT ME: Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture. To find out more, visit, http://www.attorneykelly.com or call us at (508) 784-1444.

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NOTICE: This is an Advertisement. This post is not legal advice. Consult your attorney. Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet. Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other. We cannot stress enough, if you need personal legal advice, always see your attorney. Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice. Seek legal advice and representation from your own personal attorney.

Copyright © 2018 by Ginger B. Kelly, Esq., all rights reserved.

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Bankruptcy Without My Spouse

Spouses

By Attorney Ginger Kelly, January 24, 2018

Bankruptcy is a great way to get a fresh start, but how will it affect your spouse if you want to file individually? Attorney Kelly investigates a few common questions about dealing with a bankruptcy when a spouse might be involved.

Am I required to file bankruptcy with my spouse?

The short answer to this question is no. If only one partner in a marriage owes debt, then only that partner should file for bankruptcy. Debts where spouses are joint and severally liable for payment will remain with the spouse who has not filed for bankruptcy. The exception is in states that follow community property law.  In community property states, single spouse bankruptcy for joint debts may in some situations be advantageous.

What happens to my credit or property if my spouse files bankruptcy?

As a general rule, one spouse filing for bankruptcy will not affect the other spouse’s credit rating or financial situation. Because a debt is a contract between a debtor and a creditor, each debtor must sign the contract to be liable for payment. The spouse not signing the contract would not be liable for the debt.  This is why the bankruptcy of one spouse doesn’t affect the other spouse or cause the other spouse to become bankrupt too.

What happens to joint debts when one spouse files for bankruptcy as an individual?

Under a Chapter 7 bankruptcy, when one spouse’s debts are discharged, or wiped clean, the creditor can go after the other spouse jointly responsible for the debt.  But, in a Chapter 13 bankruptcy, joint debtor spouses have a major advantage.  When the debtor spouse plans to re-pay his or her debts, over the time of the 3 or 5 year plan, the creditor will generally not bother the other spouse, as long as bankruptcy plan payments are deposited on time.

What are the exceptions?

There are some notable exceptions to co-debtor spouses when only one is filing for bankruptcy. For example, there is a possibility that the bankruptcy of one’s spouse may show up on the other’s credit report, but only if joint debt is involved.  If joint debt is involved, your bankruptcy may affect your spouse’s credit scores.  But not paying the debt will also affect your spouse’s credit scores. Another issue might involve applying for a joint loan in the future.  The bankruptcy of one spouse will affect the creditworthiness of both spouses applying for a loan jointly, or together.

Another exception deals with jointly held property. In a regular bankruptcy, the US Trustee may take non-exempt property and sell it to use it to pay creditors.  Even jointly held property can be taken if not exempted.  This is of vital importance in community property states, states where both spouses in a marriage own and are responsible for all the debt and property acquired during the marriage. The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Massachusetts and Rhode Island are not community property states but rather, common law property states.

In common law property states, like Massachusetts and Rhode Island, your individual assets and your interest in any property you own jointly with your spouse (typically half unless otherwise noted) are considered part of your bankruptcy estate. In other words, they split the baby, so to speak. But your spouse’s half or portion is protected, generally. The property your spouse owns in his or her name alone is normally not at risk.

However, it is important to know that in Chapter 7 bankruptcy, the appointed US Trustee may be able to sell the entire jointly owned asset if you can’t exempt the value of your interest, provided that the property can’t be divided. If the trustee sells the property, he or she will pay your spouse the value of her interest and use your portion of the nonexempt proceeds to pay back your creditors. This is what I mean by “split the baby.” Keep this in mind.

What if my spouse gets calls and letters from my collection agencies?

Sometimes collection agencies will pursue both spouses even though only one spouse owes debt. If you feel that the calls and letters asking for payment are only meant for your spouse you can do something at this point. First, ask the collector to prove the debt by requesting proof of responsibility for those debts.  If the debt is solely to your spouse’s name, you can ask the collectors to stop calling you or sending you letters, but you must do this in writing (via letter).  If your spouse has already filed for bankruptcy, the collection agency can be stopped if his/her attorney would motion the court and ask to court to enforce the automatic stay.

Can I file for bankruptcy without my spouse knowing?

Yikes! Yes you can, but no don’t do it. Theoretically and in a legal sense, yes, you can file without your spouse knowing. However, because a Chapter 7 uses household income as part of the Means Test, you will need to report your spouse’s income. Also, in some extreme cases, some bankruptcy courts use income garnishment for debt repayment. Since you don’t want your spouse discovering their paychecks have been garnished, after the fact, it’s a really good idea to let them know from the beginning. Hiding bankruptcy is just a temporary solution, at best, and isn’t a good idea. Besides, secrets like this may wreak havoc on a marriage.

When do I need an attorney to file?

If you are considering bankruptcy, it always best to consult with a lawyer. A bankruptcy attorney will advise you to many things critical to your bankruptcy success. For example, fraudulent transfers come to mind.

Just the other day, while waiting for my client’s meeting of the creditors, I couldn’t help but to notice a pro-se debtor speak to the US Trustee at a subsequent meeting.  It’s an open floor.  Everyone can hear what’s going on.  This poor young man did not realize that he made a fraudulent transfer by giving a sum of cash money to his father within a certain period of time before he filed.  Not only can the US Trustee unwind transfers, quite often a discharge in matters like this are not permissible.  I felt sorry for that debtor.  He worked so hard to get to this point on his own, only to be met with a very unsettling outcome.  This is why most debtors need a good bankruptcy attorney.

A bankruptcy attorney will advise you as to whether bankruptcy is your best course of action, based on your situation. Also, your attorney can advise you as to whether or not your spouse will be affected if you file or whether or not they should file with you.

Filing for bankruptcy is a great way to get a fresh start, but it may affect your spouse if they aren’t filing with you. Find out more about joint debt, keeping your spouse’s property and more by contacting a skilled bankruptcy attorney in your local area.

The Law Office of Ginger B. Kelly is a boutique type law firm located in central Massachusetts. We are not Big Law.  We only handle a small number of clients at one time.  Each client gets personal attention and care.  Each client gets hours and hours of time devoted to their particular case. Our office is in an easy to find location in Charlton. This means you don’t have to drive to the big city of Worcester or Boston and pay for parking. We not only offer free parking, but free coffee in a calm and peaceful place. Your discussion with our senior attorney is very confidential. Your first consultations will last about an hour in a stress-free, homey type atmosphere.

As one client put it, “This is like an old fashioned law office, very comfortable.”

Book your appointment now to explore your best options for this New Year.  We’ll have a nice pot of coffee waiting for you when you visit.

Also, keep in mind that it’s tax return season. Many people use their tax refunds to help pay for their bankruptcy.  There is no better time than now (tax refund season) to talk for free and find out more about ways you might be able to get the bankruptcy that you need now.

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ABOUT ME: Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture. To find out more, visit, http://www.attorneykelly.com or call us at (508) 784-1444.

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NOTICE: This is an Advertisement. This post is not legal advice. Consult your attorney. Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet. Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other. We cannot stress enough, if you need personal legal advice, always see your attorney. Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice. Seek legal advice and representation from your own personal attorney.

Copyright © 2018 by Ginger B. Kelly, Esq., all rights reserved.

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Bankruptcy, the Easy Way Out. Really?

chapter-7-bankruptcy-lawyer-chicago-illinois-790x300

By Ginger B. Kelly, Esq. Posted: May 16, 2017

In 2013 there were over a million bankruptcy filings.  In 2014, there were slightly less than a million.  Based on these filing numbers, something like 1 out of every 200 adults in the US file for bankruptcy (uscourts.gov). That’s a lot of people turning to bankruptcy.  Based on these figures, it appears as if bankruptcy seems like an easy way out, or is it?  Let’s consider a few things before making this assumption, like the implications of a filing and how bankruptcy compares to other debt relief options.

Is Bankruptcy Really the Easy Way Out?

Basically, a typical Chapter 7 bankruptcy (total liquidation) filing involves three basic steps.

#1.  Paperwork: To begin any bankruptcy case, a series of forms outlining your debts, assets, income, expenses, and related information need to be filed.  This is not like your ordinary tax return.  There are multiple papers that need to be filed. It’s a ton of paperwork.

#2. Trustee Meeting: After the petition, the schedules and all the paperwork has been filed, a court hearing date for a 341 Trustee Meeting will be scheduled.  The Trustee Meeting (also known as the Meeting of the Creditors), the bankruptcy trustee will ask you many questions.  In Massachusetts, you will be given notice that the meeting is recorded.  Most of the questions confirm the information in your paperwork.  The Trustee may ask you about how your debts and assets will be handled. For most Chapter 7 filers, the Trustee Meeting goes rather quickly, about 15 minutes or so.

#3.  Discharge – After the Trustee Meeting, assuming nothing goes wrong, there are no issues or complications, most of your debts will be discharged.  A few debts that will not be discharged are Student Loans, some IRS Tax Debt and a few other things.  Now the person filing Chapter 7 can begin their fresh start.

But wait…

Those three steps are an over-simplification of the process.  There is a lot more to it.  Many other important legal considerations must be dealt with, in a typical Chapter 7 bankruptcy case. This is why most people consult with a lawyer before beginning or considering any Chapter 7 or Chapter 13 bankruptcy case.

Even when the case is closed, there’s a lot to consider.  Credit card debts, medical debts, payday loans and most other unsecured debts, are gone, but other debts like student loans may not ever go away.  Secured debts, like car loans and home mortgages can also go away.  But if a person whats to keep their home or car or both, they will need to reaffirm those debts and continue making those payments.  Sometimes, a reaffirmation hearing is required.

So why is Bankruptcy complicated?

Primarily, there are two big potential problems, maybe more.

#1.  Valuable property at Risk.  Because a bankruptcy trustee will evaluate both debts and assets, to determine if some debt could be repaid by liquidating (selling) your assets, a filer runs the risk of losing some important assets.

For most people, the two primary things they don’t want to lose are automobiles and real estate.  These two assets are the easiest to sell.  If the value of a filer’s home or car (or both) is much greater than the loan you used to buy it, that property could potentially be sold to repay creditors.

For more on how this works, and on the exemption laws that protect your property in bankruptcy, see this article, Should I Choose Massachusetts or Federal Bankruptcy Exemptions.

#2.  Effect on credit scores. The other issues most people worry about when it comes to filing for bankruptcy is how this affects credit scores.  Everyone knows any bankruptcy will have a serious impact on a FICO score for several years.  The degree of impact depends upon how good or bad a filer’s credit is the day they file their petition.  The better the credit the more significant the drop will be.  If a filer’s credit was shot to begin with, or on the low side, (which is true for most people who file for bankruptcy), the effect will be significant, but less than a filer with good credit.

To sum it all up, when a person files for bankruptcy, they can expect that obtaining loans right away won’t be so easy.  Often, credit cards and even car loans are available, but typically at very high rates of interest.  However, when a filer sticks to a reasonable budget, and pays their bills on time, they will be off to a fresh start and better credit over time.

Alternatives to Bankruptcy.

It’s been said that bankruptcy is sort of the “ultimate weapon” of debt relief.  But this means that bankruptcy should only be used when other options fail.  A discharge of debt via bankruptcy is only available once every seven or more years; bankruptcy is not something a person should try first.  Some people work with credit management companies to reduce debt, but I do not recommend this in most cases.  Others try asking family for help or they find another source of income, like a second job.  Adjusting one’s budget is always a good plan.  Do this before considering filing for bankruptcy.

Next Steps…

For those who have tried every option and have no realistic alternatives, then it’s time to schedule a consultation with a bankruptcy lawyer. Your first consultation should not cost a dime and it’s a good time to find out if bankruptcy will work in your situation.  When you meet with your lawyer, be sure to ask a few important questions.

  • Based on my income and job situation, do I qualify for bankruptcy?
  • Can I get rid of all my debts in bankruptcy?
  • Is property I own (bring a list of a few big items) unprotected or at risk?

A quick consultation with a good lawyer will help you understand a few things bankruptcy can do to help and what the risks would likely be or whether or not there are better options.

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The Law Office of Ginger B. Kelly is now accepting new clients.  Call and schedule your first appointment.  We are a small law office offering your first confidential consultation, absolutely free of charge.

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ABOUT ME:  Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture.

To find out more, visit, www.attorneykelly.com, visit us at Ginger B. Kelly on Facebook or feel free to call us at (508) 784-1444.

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NOTICE:  Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet.  Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other.  We cannot stress enough, if you need personal legal advice, always see your attorney.  Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice.  Seek legal advice and representation from your own personal attorney.

Copyright © 2017, by Ginger B. Kelly, Esq., all rights reserved.

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Should I choose Massachusetts or Federal Bankruptcy Exemptions?

choice

Should I choose Massachusetts or Federal Bankruptcy Exemptions?

By Attorney Ginger B. Kelly, April 1, 2017

Good news for Massachusetts residents. You have a choice weather or to protect your property using Massachusetts or Federal exemptions.

In many ways, Massachusetts is a great state to live in. Here, Bankruptcy filers have a choice whether to protect or to “exempt” property using Massachusetts bankruptcy exemptions or the federal bankruptcy exemptions.

In a Chapter 7 Bankruptcy, any property not exempted can be sold by the bankruptcy trustee and the proceeds used to pay creditors.  Nonexempted property can be kept, in a Chapter 13 case, but payment must be made for the value of that property, under the terms of a three or five-year payment plan.

For Massachusetts filers who have significant equity in their homes, the Massachusetts exemptions are substantial.  Federal law offers a larger wildcard exemption.  Since it is difficult to examine which exemptions work best, it’s very important to look at each exemption closely.

Mixing Massachusetts Exemptions with Federal Exemptions is not permissible.

In Massachusetts, a filer must choose one set of exemptions only.  When figuring out which set of exemption laws is best for your circumstances, mixing and matching is not allowed.

Doubling Exemptions for Married Couples.

For married couples filing, you can double the exemptions, apart from the homestead exemption for under the Massachusetts and federal exemption rules. In Massachusetts, the rule is typically called Exemption Doubling.

Which to choose, Massachusetts or Federal Exemptions?

The answer to this question depends quite heavily on your specific situation and set of circumstances.  For some filers, more property will be kept using the Massachusetts exemptions. For example, Massachusetts has more favorable exemptions for your house, your car, your clothing, other household items (like appliances and furniture), and tools of the trade. *

How do I keep from losing my home?

For Massachusetts bankruptcy filers, Massachusetts exemptions are excellent for homeowners.  Homeowners who have filed and recorded with the registry of deeds, a properly executed homestead declaration are entitled to receive a $500,000 exemption. If no homestead declaration is recorded, the automatic exemption is still a hefty $125,000.

As mentioned before, just like the federal law exemption, the homestead exemption cannot be doubled for married couples filing jointly.

In the alternative, the federal law exemption for a home is only $23,675 and $47,350 for married couples filing jointly.

So, the key to keeping your home in Massachusetts is, if there is more than $23,675 worth of equity in your home, and you want to keep it, the Massachusetts exemptions are the best choice.

 How do I keep from losing my car?

Under the federal exemptions, $3,775.00 is allowed for automobile exemptions.  This means, that if the Kelly Blue book value of your car exceeds #3,775.00, you may want to choose the Massachusetts exemptions.  Under the Massachusetts bankruptcy exemption law, $7,500.00 is allowed for the motor vehicle exemption. If a filer is over 60 years old or disabled, the Massachusetts exemption allows a $15,000.00 motor vehicle exemption.

If a filer’s car is worth more than $3775.00, or there is more than $3,775.00 worth of equity in that car, and they want to keep it, a filer would be better off using the Massachusetts exemptions.

How do I keep all my clothing?

Under the Federal exemptions, a filer can keep $12,625.00 in personal property, which includes clothing.  But the maximum value for any one piece would be only $600.00.  In Massachusetts, a filer can keep all of their necessary clothing in bankruptcy. So, under the Massachusetts exemption rules, a filer will likely keep more because the $12,625 federal exemption includes all other personal property as well, like furniture, appliances, housewares and other consumer goods.

How do I keep my appliances and furniture?

As mentioned above, the Federal exemption rules allow for only $12,625.00 in personal property. If a filer uses the Massachusetts bankruptcy exemptions, they will be allowed to keep any necessary beds and bedding, one heating unit, one stove and one refrigerator and one hot water heater. An additional $15,000.00 in home furnishings can be exempted, if they are necessary for the filer and the filer’s family.

Using the more plentiful Massachusetts exemption makes sense for most filers.  However, if a filer has an extra refrigerator in their garage, it is unlikely the second refrigerator would be considered a necessity. If the second refrigerator is really that important, the federal exemptions may be a better choice, as long the value is that second refrigerator is less than $600.

How do I keep the tools I use for my job?

Filers in Massachusetts are in good shape when they have tools of the trade or tools used while doing business. The Massachusetts exemptions allow a $5,000 exemption for tools of the trade and an additional $5,000 for any materials used in their business. Federal law allows only a $2,375.00 exemption for tools of the trade. So, if a filer has more than $2,375 of tools and materials, used for their trade or business, then the Massachusetts exemptions would be the better choice.

Are Federal Exemptions Ever Better Than Massachusetts Exemptions?

In their entirety, the federal exemptions are less generous than many Massachusetts exemptions.  However, there are a few exceptions. One exception is that the federal exemption law will protect slightly more jewelry and a larger wildcard exemption.  This may benefit many filers, depending on their situation and what they want to keep.

How do I keep my valuable jewelry?

Since Massachusetts law offers only a $1,225.00 exemption and federal law a $1,600.00, a filer may choose Massachusetts exemptions over federal. $Granted, 375.00 worth of equity in jewelry isn’t a huge savings, but if it is important to the filer that certain jewelry is retained, the federal exemptions may be a better choice.

Which Wildcard Exemption do I chose?

Wildcard exemptions are used to protect assets not listed as exempt. In other words, a wildcard can be used to exempt nonexempt assets.

Per federal exemption rules, the federal wildcard exemption is currently valued at $1,250.00 plus any unused portion of the federal homestead exemption up to $11,850.00. * If a filer doesn’t need to claim their full homestead exemptions, they will be able to use up to $13,100.00 total.  If the filer has no homestead exemption, only $1,250.00 can be used to exempt nonexempt assets.

In Massachusetts, the wildcard exemption is different. Per the Massachusetts exemption rules, the wildcard exemption is $1,000.00, plus up to $5,000.00 of any unused portion of the total exemptions provided under the $15,000 household furniture exemption, the $5,000 tools of the trade exemption and the $7,500 motor vehicle exemption. This is good news for certain Massachusetts filers. Under the Massachusetts exemption rules, filers can keep up to $6,000 in nonexempt assets.

Now that I know more about the exemption rules, why do I need a Bankruptcy Attorney?

In Massachusetts, there is no one-size-fits all bankruptcy.  Even though Massachusetts law offers a more generous exemption package, federal law may be best for different filers for so many reasons. Thorough research of both sets of exemptions and all assets are critical, before making decisions. Attorneys can remove uncertainty, confusion and doubt and help you determine the best way to protect your home, your car and your personal property.

Hiring a competent, experienced bankruptcy lawyer to handle your case will save not only you a headache, but it may also end up saving you money. When everything is completed properly the first time, bankruptcy attorneys save you money. Mistakes are costly. Mistakes not only affect your time, but your finances and may end up costing your case.

Speak to an attorney who offers a free first consultation. Earlier I wrote about, “how to find an experienced and vetted attorney, FREE!”  This offers good advice on how to find an attorney on a budget or pro-bono (which means free).  Best of luck to you.

*NOTE: All the bankruptcy exemptions mentioned, above, may differ and are subject to change on or before April 2019.

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The Law Office of Ginger B. Kelly is now accepting new clients.  Call and schedule your first appointment.  We are a small law office offering your first confidential consultation, absolutely free of charge.

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ABOUT ME:  Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture.

To find out more, visit, www.attorneykelly.com, visit us at Ginger B. Kelly on Facebook or feel free to call us at (508) 784-1444.

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NOTICE:  Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet.  All electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other.  We cannot stress enough, if you need personal legal advice, always see your attorney.  Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice.  Seek legal advice and representation from your own personal attorney.

Copyright © 2017, by Ginger B. Kelly, Esq., all rights reserved.

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