I stole this title from Andy Prescott: “Think Twice Before Taking out a 401(k) Loan”

401K_dead_ground_hog

Image by Mike Luckovich, editorial cartoonist and The Atlanta Journal-Constitution’s Pulitzer Prize winner

Using a 401(k) loan to pay for things may be OK in some instances. However it’s not always a good idea, as stated in an article entitled, “Think Twice Before Taking Out a 401(k) Loan,” written by one of my favorite bloggers Andy Prescott. Andy is a CPA who writes about saving money at artofbeingcheap.com and is also a staff contributor for HowardClark.com. I enjoyed Andy’s article and, as usual, he brought up a few good points from a CPA perspective.

Then I thought about this.  Since I’m a bankruptcy attorney, why not explain how this works based on my experience and training?  Helping debtors make good choices when faced with financial problems is my business.

For quite some time now, as a general word of advice in most circumstances, I advise most clients that taking out a 401(k) retirement account loan to pay off pressing debt is probably not your best option.  Of course this depends.  Everyone’s situation is different.  Even so, especially when a person is considering bankruptcy, taking a 401(k) loan to pay off debt just complicates the whole idea of using this viable option for relief.  Not only does this complicate good decision making, it also complicates a bankruptcy discharge, trustee decisions and more.

Here’s why:

Say the bills are mounting. You are having trouble paying them. Maybe you lost your job, or had an unexpected death in the family, an unusual medical issue or recently became unemployed. Whatever the reason, bankruptcy may seem like an awesome option. Bankruptcy is a useful legal tool.  Bankruptcy is intended to help debtors in need get a fresh start. A fresh start sounds like a really good thing, right?  Well, it depends.

Often, a truly fresh start depends on the decisions a debtor makes pre-bankruptcy filing, like using a 401(k) or other retirement account loan to pay down debt.  Under current federal and local bankruptcy rules, in a Chapter 7 or Chapter 13 bankruptcy case, an ERISA qualified retirement account is a protected asset. This includes a 401(k) savings plan and most ERISA qualified retirement accounts, like IRAs, including Roth IRAs. These types of accounts are exempt from creditors claims. Great! This is the good news! A 401(k) is a protected exemption.

Now for the bad news. Suppose a debtor gets into financial trouble. The debtor is stressed and needs fast easy cash to payoff bills, maybe some medical bills or old IRS debt, maybe even the mortgage payments.  To a debtor under stress, borrowing against a 401(k) and using those funds to pay down debt seems to make sense.  It’s easy.  No credit checks required, no questions asked and there is very little paperwork. Ask and ye shall receive, the bills can be paid.  But wait!

Little did our friend the debtor realize, that if bankruptcy was ever a good option, they may have spoiled a new beginning. Borrowing against a 401(k) retirement account to pay down debt, prior to filing, will seriously jeopardize their fresh start. After all, when faced with serious financial struggles, bankruptcy should be a viable option. It’s the new alternative to the old debtor’s prison. Anyway, depending upon the circumstances bankruptcy is useful, but not if the option is compromised by poor planning and decision-making.

As a general rule, a 401(k) retirement account loan can’t be discharged under Bankruptcy. If you borrow against it, then file for bankruptcy, you have to pay the loan back according to your 401(k) retirement account plan rules. What’s done is done. There’s no going back.

On the other hand, say a debtor facing big financial trouble decides not to pay down bills by borrowing against a 401(k) or other ERISA qualified retirement account, then they find a good attorney and decide that bankruptcy is the best option, they have a great opportunity for a brand new fresh start.

If all goes well, a debtor may decide to file for bankruptcy under this set of circumstances.  The debtor will get to discharge most, if not all, insurmountable bills (most debts are forgiven under chapter 7) or pay for a short time with a reasonable payment plan and then get a full discharge (under a chapter 13).  Additionally, the debtor gets to keep all their 401(k) retirement savings!  Like magic, they get a fresh start.  Presto-chango!

Like I said before, bankruptcy is often a useful tool for those who need it.  Making wise decisions about 401(k) retirement savings accounts and other qualified ERISA retirement accounts is important.  These kinds of accounts are often overlooked valuable exempt (protected) assets under state and federal bankruptcy law.

This is one reason why it’s a good idea to think of your finances like a critically important lifetime project. “Measure twice and cut once.”  Think twice, in other words, before making big financial decisions or taking out 401(k) retirement account loans to pay debt.

Speak to your trusted attorney. Get all the facts. Plan your best course of action so your action doesn’t plan you.

Got it? Got it. Good!

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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 finance and bankruptcy.  However, 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.squarespace.com or http://www.attorneykelly.wordpress.com, or 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 can not 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 © 2015 by Ginger B. Kelly, Esq., all rights reserved.

Slip and Fall, an Icy Tail in Massachusetts

February 19, 2015, (republished February 13, 2017)

It’s official, Worcester County, Massachusetts is the snowiest place in the US.  It’s only February 19th and so far this year we’ve had over 107 inches of snow!  This means that people who live in Massachusetts, particularly in Worcester County, are on double duty to prevent injuries from slip and fall accidents.  Here’s the “scoop” on clearing the snow.

John Cole Northeast American Gothic

In the past, Massachusetts law regarding snow and ice injuries exempted property owners from liability if someone was injured as a result of snow that naturally accumulated and had not been cleared.

However, in 2010 things changed.  Pursuant to Papadopoulos v. Target Corporation, SJC-10529 (July 26, 2010), the Massachusetts Supreme Judicial Court changed this nearly 100-year old rule. Now, Massachusetts property owners must remove snow and ice to protect others and to protect themselves from slip and fall liability.

What does this mean to you?  Homeowners in Massachusetts have a responsibility to clear the snow and ice from their driveways, walkways and other areas of their property. It is important to make sure your family and others, such as friends, postal carriers and delivery workers, can safely visit your property without slipping and falling.  If someone slips and falls on the ice or snow, on your property, you could be held liable for damages even if that person was not invited onto your property.

If you have issues, regarding a slip and fall injury, or snow and ice buildup, ice dams or something under contract, it’s always best to contact your attorney.  If you need an attorney, give me a call.  I always enjoy listening, answering questions and speaking with others.  Your first consultation is free and our driveway and walkway is free and clear of snow and ice. Just sayin’ 😉

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, or 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 can not 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 © 2015, 2016, 2017 by Ginger B. Kelly, Esq., all rights reserved.

Voir Dire: Culling the Masses in Mass

January 12, 2015

With the passage of the Massachusetts Session Laws: Chapter 254 of the Acts of 2014, beginning in February 2015, attorneys licensed in Massachusetts will, for the first time, be allowed to question prospective jurors in civil and criminal trials.  The questioning of prospective jurors to obtain a fair and impartial jury is called, voir dire.

Voir dire, in 17th Century French lingo, means “to speak the truth.”

Jury.jpg.CROP.article250-medium Illustration by Mark Alan Stamaty

Illustration by Mark Alan Stamaty

VOIR DIRE: A NOUN OR A VERB?

In law, voir dire is the act or process of asking questions of prospective jurors for jury selection reasons in civil and criminal trials.   The word “voir dire” may be used interchangeably either as a noun or a verb.  For example, an attorney may voir dire a potential jury member, by asking the person questions (an action verb).  Voir dire may also be conducted prior to trial.  In this context, voir dire is a noun because the word voir dire references the name of a particular pre-trial procedure, a thing.

NEW LAW ON VOIR DIRE IN MA

Chapter 254 of the Massachusetts Session Laws: Acts of 2014, pertains to voir dire in Massachusetts Superior Court, not the Massachusetts venue of federal court.  Federal courts sometimes do things differently than state courts.   Here’s how.

FEDERAL AND STATE VOIR DIRE 

Due to Federalism and the Constitution of the United States, both the US federal government and each US state government each have their own court system.  (Aside: Massachusetts has three federal courthouses, Boston, Worcester, and Springfield.)

Federal courts have jurisdiction over persons, places and legal subjects like appeals claims, bankruptcy petitions, constitutional claims, admiralty matters, issues involving different states, and trials involving the laws and treaties of the US, just to name a few.  State courts have jurisdiction over the persons and issues dealing with state law as well as legal matters that are not federal or international.  Notwithstanding jurisdiction, forum, and venue are also important, albeit often confusing legal terms.

FORUM, VENUE AND VOIR DIRE  

Forum and venue play a part in how voir dire is conducted currently in Massachusetts.  Forum selection pertains to which court a trial will occur in.  Venue selection has to do with the geographic location of the trial.  This is why we have a  state forum and a federal forum.  If a legal matter involves the jurisdiction of the Commonwealth of Massachusetts, the court forum will be located in the venue of Massachusetts, where voir dire is not attorney conducted.

THE TSARNAEV TRIAL VOIR DIRE 

In the trial of Dzhokhar Tsarnaev, the alleged Boston Marathon bomber, (United States v. Dzhokhar Tsarnaev, No. 13-cr-10200), the forum is the federal court system or US District Court.   The venue (location) is the District of Massachusetts.  Hence, the Tsarnaev case is underway in the federal court of Massachusetts, a/k/a the US District Court: District of Massachusetts.  In US District Court (the federal court forum), attorneys are permitted to question individual potential jury members.

Voir dire in the Tsarnaev trial will consist of several phases.  The first phase of voir dire involves potential jury members filling out a typed confidential, multi-page, multi-question,  juror questionnaire.  Attorneys have a week, or so, to go through each group’s questionnaires to confer and agree on which jurors should be excused routinely or dismissed, for cause,  for things like bias or hardship.  In this context, the word “cause” means, as a matter of legal routine or common practice.

On January 15th, the next phase of voir dire involves the Hon. George A. O’Toole, presiding trial judge.  Judge O’Toole will question possible jury members, individually.  After Judge O’Toole completes his investigation, the attorneys for both the defense and prosecution may begin their individual voir dire.  Voir dire in this phase will involve individual questions to potential jury members and 20 attorney challenges, or challenge questions.  The challenges will cull out any who may be disqualified routinely, as a matter of cause.

THE HERNANDEZ TRIAL VOIR DIRE

In the Aaron Hernandez trial, regarding the Odin Lloyd murder, (Commonwealth v Aaron Hernandez, No., 1314CR002057) voir dire will be conducted a little bit differently.  In the Hernandez trial, the forum is not federal court, but state court.  In Fall River Massachusetts, in the Superior Court of Bristol County, the Hernandez trial is now underway.  This state forum affects how voir dire is conducted for Hernandez.

As mentioned earlier, under current Massachusetts state law, legal limitations on vior dire are still in effect.  Attorney conducted individual voir dire is not permitted in state court.  The Hernandez’s attorneys filed a Motion (in December 2014) to ask the court for attorney conducted voir dire.  However, the Hon. Susan E. Garsh, Justice of the Superior Court, denied the motion.  Therefore, the Hernandez trial court is conducting voir dire, not the trial attorneys.   Like in the Tsarnaev trial, the Hernandez questionnaire process of voir dire is similar but the distinction lies in the following phase of voir dire.

For Hernandez, potential jury members will be questioned individually by Judge Garsh.  Defense attorneys and prosecutors will be present and may object and challenge.  However, attorneys will not be permitted to ask potential jury members individual questions.

Had the Hernandez trial started only two weeks later, in February rather than January, attorney conducted vior dire would have been legally available.  Funny how laws change, affecting procedural outcomes.

JUSTICE AND VOIR DIRE  

Whether or not voir dire is conducted by the court or by attorneys, voir dire is part and parcel of the US constitutional right to a fair trial.  Jury selection is critical to any trial.  No matter how strong the case or how proficient the defendant’s attorney or legal team may be, if the right jury is not selected a defendant stands a very slim chance of winning at trial.

Voir dire is an exercise of justice.  Voir dire is important and a very effective way of “culling the masses in Mass” and finding the best possible fair and impartial jury.

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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 finance and bankruptcy.  However, 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.squarespace.com or http://www.attorneykelly.wordpress.com, or 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 can not 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 © 2015 by Ginger B. Kelly, Esq., all rights reserved.

4 Extraordinary and Simple Things to Boost your Financial Health

Financial health… spiral_notebook_red

We all want it.  But how do you get it?

Financial health is relatively simple, but the benefits are many.  It requires us to pay attention to what we are doing and to do the right thing.  Like exercise or anything else, it requires us to work on it, to grow and mature.  Doing this also helps manage stresses in our life, a big part of physical and mental health.

1.  FINANCIALS

Make a simple personal financial record or statement. This is a very simple journal of income and expenses.  Some people call this budget planning or a spreadsheet of income and expenses.  This sort of record is like a food journal or a diary.  Create it on computer spreadsheet or keep a simple notebook. The important thing is to update your journal and keep it going.  Don’t give up.  Your personal financial journal, statement or record is a very important tool.  It will not only help you keep track of where your money’s going, but will aid you in making good sound financial decisions for the rest of your life.

Tip: If you hesitate, estimate!  Estimating your finances is a start. It will help you get going until eventually, you will find value in keeping more detailed, more accurate financial records.  Just get started, the accuracy will come later – easy peasy!

2.  DEBT

Pay down debts. Do this the best way you can now.  Then, do it the smart way eventually, over time.  Prioritize debts by deciding which debt you want to pay down first.  Maybe this is your smallest debt, to give you a quicker reward.  Maybe it’s the one debt accruing the most interest and fees, to give you a larger value for your efforts now.  There is no one right, wrong or perfect way to do this.  Just get started.  Even if you take a different approach, keep at it.  Eventually, you will become better at paying down debt.  Resolution number 1, keeping a Financial record or journal, will help.

TIP:  If at first you don’t succeed, try try again.  After all, inch by inch, everything’s a cinch.  Don’t be overwhelmed, keep it simple.  Ask for help when you need it.  Your trusted financial or legal advisor may be able to help.  Asking for help, especially if you are overwhelmed, is a no-brainer for smart people!

3.  SAVE

Start now, saving for tomorrow.  Start a retirement savings plan.  No, I’m not talking about a tiny little 0% savings account, but if you need to do this to get started, by all means do it.  Retirement savings is a long term savings plan.  There are many ways to do this.  Find the one that works best for you and start.  Start this year, no matter how big or small.  It is never too late to start any kind of long term savings.

Tip:  Many people don’t save because they do not believe it makes much difference, that they can’t save anything or that they will never have enough money.  This kind of thinking is not good.  It’s like telling yourself not to start an exercise plan because it won’t help you now or doesn’t really matter because you can’t see future results.  Look at savings in a similar way.  What will it hurt if you do?  What will it hurt if you don’t?  Think about it.

FYI:  The financial equivalent of Bag of Chips, One Late, One Six Pack of Beer or One Movie Date or One Take Out Pizza, per week, invested, over time (maybe 30 years or so), may bring you a return of $100,000 to $200,000.00?  What will you have saved in 30 years, based on your current plan?

First steps:  Call your financial planner, tax advisor or even your attorney.  Financial planners are usually an enormous resource of help and information.  Just get started, that’s all you have to do.

4.  PLAN

Start an estate plan.  No matter how big or small, plan your estate well, and plan it now.  If you don’t even have a simple will, ask your attorney to draft one, for starters.  Keep your estate planning simple, and you’ll be off to a great start.  It will be worth it in the end.

Do you have small children, a larger estate, elderly parents or even a life insurance policy?  Do you need a guardianship plan, a trust, end-of-life healthcare directive or power of attorney?  There are many legal options and tools.  A good estate planning attorney can help you with this.   Put this on your “things to do” list, now.  It’s one small step, but it’s a step in the right direction.

Financial health need not be difficult.  Just remember these 4 steps, Financials, Debt, Save and Plan, (“FDSP”) Four Ducks Swim Perfectly!

I wish you the best of luck and great financial health and success in 2015 and beyond!

PERSONAL STORY

Once upon a time, I was living hand to mouth.  This is not uncommon, even for an attorney.  For many folks, financial health is a learning curve.  It’s the same for many professionals.

When I was raising a young family, I faced a lot of mental anguish over how to make more money, how to pay the bills and how to get through college, football cleats, sleepover parties and Christmas.  No matter how much money I made, it went in one hand and out the other.  Paying off debt seemed an impossible task.  Saving was off my radar screen.  Not a good place to be.

More often than not, stressful times require strong action.  Since I couldn’t stand the stress, I learned how to get rid of it.   First, I learned how to budget and plan.

Keeping a financial journal was not always easy.  Sometimes I’d make things complicated.  Sometimes I’d forget to update it.  A few times I lost my journal.  Eventually, I learned how to keep things simple and just do it (this was not instant or magical, it took time for me).  I learned to keep my financial journal in a little red notebook, in my kitchen.  When I found it, I updated it.  One simple task of keeping my color-coded financial journal, in one visible place, resulted in big financial gains for me.

Because I updated my journal, at least every month, eventually, a more accurate reflection of what I was doing and where I was going came into focus.  Simple things seemed easier.  My financial journal helped me to understand that making pizza, rather than buying pizza for the kid’s sleepover, would save over $50 dollars in just one week.  I discovered that eating more leftovers would reduce my grocery bill at least $100 each month.  These simple gains motivated me to do better.

I wanted to learn more about how to cut costs on all sorts of things, how to earn extra cash and more.  I learned how to sell things on eBay.  I learned how to have the best yard sales, which helped to pay for my college.  I worked odd jobs and traded babysitting with other moms, partly to keep my sanity, but mostly to save money.  Cutting costs on electricity and fuel, with 4 kids, was not always easy, but we did it.  I also borrowed tools and even learned how to work on my own car, a very big deal for me (I’m not a motor-head).  I car pooled and took the bus, rather than drive to work.  I even found some pretty swanky clothes at yes, a thrift shop.  One of my favorite suit jackets is a “Saks Fifth Avenue” special, found at Salvation Army for $8.  I still wear it.

Eventually, with the extra money I saved and earned, I learned how to start paying down my debt.  In a few short years, I turned financial gloom into boom.  I started saving for retirement, Christmas and vacations.  The only bad thing I can say about all of this is, good things don’t always come easy.  Fear of things like moth-ball smells and grease on one’s hands must be overcome and it’s not always fun becoming the leftover-ogre or the light-switch witch.  No, not easy and not always perfect.  I also made my share of mistakes.  But that’s OK.  Mistakes are lessons to be learned and tools to get you were you want to be.

Good things are usually worth the effort.  So my point is, don’t give up.  Don’t think it’s over and you’re done.  To this day I still work on my financial journal and budget.  I still work on my own personal “kinks” and things.  To me, apathy is a nightmare.  I try to avoid apathy like I avoid bears.  Bears will kill you.  Oh yes, don’t forget or become too proud to ask for help.  This is important.  If you don’t get the help you need, right away, keep asking.

Anyhow, I’ve come a long way since the early days of eBay and yard sales.  It’s not rocket science.  No, I’m not superhuman.  I don’t have a magic wand.  Neither do you.  No matter what you’re your situation, age or income, you can do these things too and there are plenty of people willing to help.

Whatever you do, learn how to gain financial health.  Learn what motivates you.  Learn the things that keep you pointed in a positive financial direction.  Learning more about financial growth and how to become more stable is the right thing to do.  Do it for yourself and your family, this year and beyond.  It’s worth it!

TIP:  Most initial attorney consultations are free.  If your attorney does not offer a free consultation service, just ask.  The worst that can happen is he/she will say no.  Usually, an attorney will help.  If not, and you need an attorney, don’t hesitate to call me.  Maybe I can help.  You never know unless you ask.

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 finance and bankruptcy.  However, 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.squarespace.com or http://www.attorneykelly.wordpress.com, or 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 can not 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 © 2015 by Ginger B. Kelly, Esq., all rights reserved.

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