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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

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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Filed under Bankruptcy, Chapter 7, Choosing a lawyer, Collection, credit card debt, Debt, Debt Collection, Deficiency, Empowerment, Filing, Financial, Judgements, Law, Lawsuits, Massachusetts, Rhode Island, tax refund, tax return, Uncategorized

Student Loan Debt and What to Do about it

Oh the places youd go if you weren't riddled with student loan debt

By, Attorney Ginger Kelly, November 9, 2017

According to US News, about half of all Massachusetts workers have some sort of bachelor’s degree.  That means high rates of student debt plague our state. But even worse, according to the Boston Globe, over 50% of college students in Boston drop out of college. That leaves even more people strapped by student loan debt without a degree.

When the national average for student loan debt almost reaches the $38,000 mark, it’s no wonder why student debt is becoming truly a national crisis. But where there’s a will, there’s a way. For some college grads, the best strategy is to be aggressive with paying back student loans.

For one college grad, Meghan from Boston, who paid  back her student debt within five years, it was all about prioritizing. “It’s possible if you want it badly enough,” she said. Meghan itemized her debt wish list and named her reasons for wanting to be debt free. Writing down your reasons helps to keep you on your journey. Being able to refer back to those reasons helps to overcome challenges and to remember why you’re making sacrifices.

Another college grad, Jason, felt overwhelmed while trying to pay the minimum on his $45,000 student loans.  So he took a different path and got serious about paying down his student debt. He reviewed every portion of his bank account, tightened spending, worked two jobs, and established a “done with debt” deadline. This helped Jason pay off his student loan debt in less than a year. Jason said that he kept spending very low and worked hard at his corporate job and also side job to pay off debt.

Aggressive payment plans are fine for some, but for those with small children and other priorities, aggressively paying off student loan debt is not always practical or attainable. Never the less, a few tips for grads may be helpful, while keeping in mind that every situation is quite different.

Start saving during the grace period: Use the grace period to review repayment options and figure out what is most affordable for your situation.

Choose a short repayment plan: Try to choose the shortest repayment plan you can afford, if you can do this without eating cat food and borrowing your sister’s car constantly. Although extended payment plans have lower monthly payments, the total interest will more than double for doubling the time.

Pay off expensive loans first, with one caveat: Some financial gurus believe that prioritizing paying off loans with the highest interest rate first is a good idea. But because not all situations are the same, this may not be the best strategy for getting out of debt quickly. Each situation is different. More on this to follow.

Trade your service for your debt: Certain programs, such as AmeriCorps, erase part or even all of a federal student loan. A year of service at AmeriCorps can pay for around $5,645 of your loan. Honestly, I know of no one who paid off their student loans by volunteering in AmeriCorps, but it’s an idea that’s out there.

Keep close contact with your lender: Be sure to tell your lender if you plan on moving or changing your phone number or email address. If they need to contact you but you are unavailable, this could add to your costs. Running the risk of missing payments or other important information is not an option.

Enroll in an ACH direct payment withdrawal option: Enrolling in ACH direct payment withdrawals will not only keep you from missing your payments, it allows for a .25% interest reduction rate for all federal loans and most private loans.

Those are the tips most financial gurus tell us.  However, most folks aren’t going to pay off their student debt by volunteering in AmeriCorps. But it’s an option. Most folks don’t work for in a low paying public service job, nor do they want to. Public service is only an option, not the only path.

Most people, graduates especially, have different types of debt and families with children. People in this category may choose to reduce or pay off their overall debt and just pay the minimum on lower-interest student loan debt until it makes sense to pay this off with a more aggressive student loan payment plan in the future.

*More about paying off expensive loans first: Although this makes perfectly good sense in some situations, the reality of life is that this is not always the best plan. Alternatively, it’s may be a better idea to lower your debt using a different strategy, like zero interest transfer options.

To start on the path to a zero interest transfer option, begin by paying down higher balance debt first and watch your credit scores climb. Then, find one or two zero interest transfer options to get rid of expensive debt and provide more time to pay off overall debt. For a little more in-depth discussion about balance transfer options read,  “When balance transfers make good sense” by Attorney Ginger Kelly.

But it’s not always all about paying down student loans; becoming debt free and more comfortable in your own financial shoes is really about analyzing the total debt you have and working a strategy that makes good sense from a credit bureau point of view.

Total debt to income is what really hurts a person’s ability to feel more confident, secure and to enjoy life a little better. If you want to make a change for the better, maybe get out of your parent’s basement quicker, work on your student loans after trying these strategies. Notice, I did not say simple strategies. They aren’t simple and take time. So be patient. Patience is a virtue, so they say.

1. Lower your total debt to credit ratio: Prioritize personal and consumer loans (like credit cards) to lower your total percent of used to unused credit and really make your credit scores soar. Doing this will lower your total debt to available credit ratio. Having higher percentages of unused credit for all your debt will lower your debt threshold and increase your credit scores. Higher credit scores are what you need to get lower high interest rates or no interest credit card introductory rates with low fee balance transfer options. This plan is not instantaneous (like most good things), but over a year or less many college grads, and people in general, can increase their credit scores 50 to 100 points or more. But wait. Besting your best credit scores isn’t all there is to it.

2. Don’t close old credit card accounts. Then, never ever close old credit card accounts. Keep them, at least for a long while until your 100% confident it makes no sense to have better credit scores. Closing old accounts will damage your credit scores. Damaging credit scores while paying off debt can take you back to square one. Keep old credit cards and move on to the next step.

3. Find zero or low interest balance transfer cards, and use them. With a credit score of 700 or better, don’t run out and finance a new car but rather, find the best lower interest or no interest balance transfer cards by looking, very hard, online. Do the research and find the best deals and then transfer balances from higher interest credit cards to lower or zero balance cards.

Many times, frugal websites like Andy Prescot’s “The Art of Being Cheep”
help with the initial research. Nerdwallet.com and MagnifyMoney.com are also helpful websites. Magnify Money has a great chart on the best balance transfer credit cards and an idea of what kind of credit scores you need to get them.

4. Use the zero balance time to aggressively pay down all revolving debt. With a zero or low interest credit card introductory rate, take this time to aggressively pay down all your credit cards. This will help your credit to grow.

5. Now it’s time to say good bye to student loans. At this point, with better than average credit scores, you have placed yourself in the best position possible to become more pro-active regarding paying down student loan debt. Student debt tends to be the lowest interest debt most people have. So why not make the most of the bargain and aggressively pay down this type of debt last and not first. Manage your debt before you debt manages you.

If there is no way to pay down your debt or debt is managing you, or even killing you, talk to a good consumer debt lawyer or bankruptcy lawyer immediately. Sometimes, they can advise you on which debt to pay first or not and whether or not bankruptcy is an option to explore. Most offer free first consultations.

My advice to people is to find at least three lawyers who offer free first consultations. Visit all three and compare. Pick the lawyer that makes the best sense to you, one that you can talk to, and then stick with that lawyer. Not all lawyers are perfect, remember this. But finding a good adviser who can help you manage your finances and deal with overwhelming consumer and student loan debt is like finding gold when you least expect it.
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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 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 © 2017 by Ginger B. Kelly, Esq., all rights reserved.

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Tricky Short Sale Deficiency Judgments

Short Sale KeysTricky Short Sale Deficiency Judgments

By Attorney Ginger Kelly

Agreeing to a short sale may seem like the best way to avoid foreclosure in many situations, but what happens to the money owed, after the short sale?

Quite often homeowners think short sales are the perfect solution to a difficult situation, the silver bullet, so to speak. The bank agrees to accept a sale price for less than the mortgage amount and presto, foreclosure averted!  But the problem with this is, a year or so after a short sale is completed, the mortgage lender can (and often will) seek a deficiency judgment against the former homeowner.

What is a Short Sale?

A short sale is when you sell your home for less than the total debt balance remaining on the mortgage. The sale price is “short” of the full debt amount. The short sale process involves the mortgage lender agreeing to accept the sale proceeds and release the lien on the property and then, the proceeds of the sale pay off a portion of the mortgage balance. Short sales are one way for borrowers to avoid foreclosure.

What is a Deficiency Judgment?

A deficiency is when a foreclosure sale doesn’t produce enough funds to pay the mortgage debt in full. The amount of the deficiency is the difference between the amount of the mortgage debt and the foreclosure sale price. A deficiency judgment is a judgment that the lender may obtain from a Judge, giving the lender the right to collect the deficiency from the borrower.

In a short sale situation, for example, if a homeowner sells their home in a short sale for $200,000, and the amount owed on the mortgage was $250,000, then $50,000 would be the deficiency amount. The lender could get a judgment from a Court Judge for the amount left owing and then some. This includes not only the $50,000 deficiency, but interest, other costs and sometimes attorney’s fees.

Deficiency Judgments in Massachusetts and Why are They So “Tricky?” 

Massachusetts is one of those states where a lender is permitted to seek a personal judgment against a borrower after a short sale to recover the deficiency amount. The tricky part comes in when, in general, once the lender gets a deficiency judgment against a borrower, the lender may collect this amount by using things such as a wage garnishment, bank account levy or by placing liens on titled property, like automobiles and motorcycles.

In Massachusetts, after a short sale, the lender can choose to do one of the following two things about the deficiency:

  1. The lender may choose to forgive the deficiency amount and issue to the borrower a Form 1099-C (Cancellation of Debt), which reports the deficiency as taxable income to the IRS. If this happens, the borrower (former homeowner) will have to pay taxes on the additional income this brings in the year they receive the 1099-C.  For most people, who were struggling to pay their mortgage, this causes tremendous hardship.
  2. The lender may choose not to forgive that part of the debt that has not been covered by the sales price and keep the right to file a court action to obtain a deficiency judgment.

If you are a homeowner and are thinking about negotiating a short sale with your mortgage lender in Massachusetts, it is very important to negotiate with your lender before you agree to a sale, to have the deficiency forgiven.

How Can I Avoid a Deficiency Judgment Following a Short Sale?

There are at least four ways to avoid having to pay back the deficiency.

  1. Negotiate a Waiver of the Lender’s Right to Seek a Deficiency Judgment

When a homeowner finds it necessary to sell their home in a short sale, it is important to try to negotiate with the mortgage lender and ask them to approve not only the short sale, but to a waiver of the right to seek a deficiency judgment. If your lender agrees, this provision must be included in the short sale agreement.  That means, always get the waiver in writing.  The short sale agreement must expressly state that the transaction is in full satisfaction of the debt and/or that the lender waives its right to the deficiency.

  1. Make a Settlement Offer

The second option homeowners have is, if the mortgage lender does not agree to waive the deficiency, the homeowner can offer to settle the deficiency for a smaller amount. Many lenders agree to accept a smaller amount because collecting a deficiency is expensive and typically takes a long period of time.  It’s easier for lenders to accept a reduced lump sum, rather than going through the expensive and lengthy legal process to try to collect.  A homeowner can also negotiate to repay the reduced deficiency debt in installments, over time.

  1. Hope the Lender Won’t Sue for the Deficiency

If the homeowner was not successful in negotiating a waiver of deficiency or a reduced deficiency payment plan, the mortgage lender will likely call and send collection letters stating that the deficiency amount is owed. Collection letters typically come from a lawyer’s office or a collection agency.  However, without taking the homeowner (borrower) to court and getting an actual deficiency judgment, the lender cannot levy any bank accounts, garnish wages, or place judgment liens on other property the borrower may own.

To get a deficiency judgment, the lender must file an expensive lawsuit. Many borrowers, who are forced to complete a short sale of their homes to avoid a foreclosure, are judgment proof.  This means that they don’t have much money, wages or other property (assets) that a creditor can take to pay off the judgment. If a borrower can’t afford to pay the deficiency, there is a possibility that a mortgage lender won’t even bother filing a lawsuit against them.

  1. Declare Bankruptcy

The other possibility is to file for bankruptcy to eliminate the debt.  A Chapter 7 bankruptcy would totally discharge the deficiency relieving the borrower of the entire debt. A Chapter 13 bankruptcy will require a payment plan for 3 or 5 years to pay a portion of the total amount owed. Bankruptcy may also be the most pro-active way to alleviate the tax problem before the lender issues a 1099-C.  Income taxes are not typically discharged in Bankruptcy unless they are very old and a borrower can’t retroactively discharge a recent 1099-C tax debt.

On the other hand, if taxes or the deficiency are all the borrower owes, bankruptcy may not be the best option.  However, Bankruptcy may be something to consider when the borrower is facing a lot of debt they can’t pay, or when a borrower needs to eliminate the possibility facing a tax burden they simply can not afford to pay in the future.  To find out more about whether or not Bankruptcy is really the easy way out, click here.

September 14, 2017

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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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Filed under Bankruptcy, Chapter 7, Debt, Debt Collection, Deficiency Debt, Financial, Financial Planning, Foreclosure, Law, Lawsuits, Legal, Massachusetts, Massachusetts law, Mortgages, practical stuff, Short Sale, Uncategorized

Auto Loans and Chapter 7 Bankruptcy

Auto Loans after Bankruptcy

Auto Loans and Chapter 7 Bankruptcy

By Attorney Ginger Kelly

Going through a bankruptcy can be a stressful experience. And it can get even more stressful if you suddenly need to finance a car.

Clients often ask, “If I file for a Chapter 7 Bankruptcy, can I get a car loan?”

My response is this:  “Well yes, and no.”  Then, I typically say, “Let me explain; yes, you can typically get a car loan after your debts have been discharged under a Chapter 7 liquidation bankruptcy, but your chances of getting a car loan approved is far less before you receive the final discharge disposition.

More about this…

Auto Loans and Chapter 7 Bankruptcy Filing and Discharge

The first thing to know is that a Chapter 7 Bankruptcy Filing is the first thing filed at the beginning of a Chapter 7 Bankruptcy.  The Discharge is the final disposition of the bankruptcy judge.  In other words, the Discharge is typically the last thing.

If you need a car loan, it’s better to wait until your Chapter 7 bankruptcy has been discharged before you apply.  Don’t apply for a loan after a Chapter 7 has been filed.  Wait.  A Chapter 7 bankruptcy is typically discharged around 60 to 75 days after the meeting of the creditors, also known as the 341 meeting. The meeting of the creditors typically happens 30 days after your bankruptcy petition is filed. A good bankruptcy attorney will explain this before you decide to file.  Find out more about whether or not bankruptcy may be right for you by reading, “Bankruptcy, the Easy Way Out. Really?”

Technically, you can apply for a car loan after the meeting of the creditors, but it’s very difficult to get this type of loan before the final discharge.  Almost no lenders and very few subprime lenders loan money to anyone in the midst of a Chapter 7 bankruptcy.

Lenders do not want to give loans to people with open Chapter 7 bankruptcies because of the risk factor involved.  If a new debt was discharged, in the Chapter 7 liquidation process, the lender would lose out big time. Therefore, rather than placing themselves at such great risk, most lenders simply choose not to lend money for any reason, if you’ve filed but not received a final discharge.

Because lenders, including most subprime lenders, will not loan money without a final bankruptcy discharge, it’s best to wait until after the discharge to apply for an auto loan.

Car Loan Approval Post Chapter 7 Bankruptcy Discharge

While credit scores take a big hit after a Chapter 7 bankruptcy discharge, the discharge still offers the best option for a fresh start and a brand new financial beginning.  Most people in financial trouble are unable to rebuild their credit without filing for a Chapter 7 bankruptcy and typically take longer than the 10 years to rebuild.  After 10 years a Chapter 7 bankruptcy is removed from a credit report. This is why most chances are better for getting approved for a car loan after filing any Chapter 7 and receiving a discharge, rather than not filing for bankruptcy at all.

The essential step for getting credit, post-discharge or after the Chapter 7 bankruptcy final disposition, is working with a trustworthy car dealership who knows your situation and a variety of subprime lenders.  Only a few car dealers work with subprime lenders, others do not.  When dealers work only with traditional banks, most people with a Chapter 7 discharge will not get a car loan approved. When the dealer works with a variety of subprime lenders, chances for loan approval are greater. It’s really that simple.

This is why knowing your dealer is important as well as being careful not to get that hard inquiry on your credit report until you are relatively sure you will be approved. Having a hard inquiry “hit” on your credit report only complicates things. You can read more about this in my article, When Balance Transfers Make Good Sense. Unless there is a good chance you will be approved and you are willing to accept the terms of the loan, don’t bother applying for that car loan.  If all the cards are in line and you’ve received your discharge, go for it. Chances are better you will get approved.

August 14, 2017

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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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Filed under Auto Loans, Bankruptcy, Chapter 7, Debt, Financial, Financial Planning, Law, Legal, Massachusetts, Massachusetts law, practical stuff, Uncategorized

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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Filed under Bankruptcy, Debt, Debt Collection, Filing, Massachusetts, Massachusetts law, practical stuff, Rhode Island, Student Loan Debt, Uncategorized

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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Filed under Bankruptcy, Debt, Federal Law, Filing, Financial, Law, Legal, Massachusetts, Massachusetts law, Uncategorized

Documents Needed Prior to the 341 Trustee Meeting (aka Meeting of the Creditors)

documents-required

Just the other day I was driving to my own client’s 341 Trustee meeting in Worcester, Massachusetts and I thought, most people have no clue what documents are needed prior to most trustee meetings.  So, here is the short list.

The documents you will need are generally the same whether you are filing a Chapter 7 or Chapter 13 bankruptcy.  However, specific documentation requirements are something different in most every local jurisdiction.  Be sure to check your local rules or contact your attorney in your specific situation.  Your attorney can notify the trustee and find out what is needed.

Tax Returns

Minimally, and most importantly, your last year’s tax return is required to be delivered to the trustee minimally seven days prior to your 341 meeting.  Local rules and trustees vary on what is required prior to the meeting.  If you do not provide this to the trustee, prior to your meeting, your case could be dismissed.

Other than this, you will typically need to provide copies of your tax returns or tax transcripts for the last two years during your meeting.  I have found, over the years, that it is best if you sign your returns.  If you have tax returns that haven’t been filed, you will need to explain why you were not required to file.  If you did not have a valid reason for not filing, most trustees, especially in Chapter 13 cases, will require you to file your taxes and provide copies before concluding or approving your case.  Again, some trustees may require more tax returns while others may ask only for your most recent one.

Income

If you are an employee, you will need copies of pay stubs (also known as payment advances) for the six-month period prior to the bankruptcy.  You will also need your past two years W-2 forms.  If you collect Social Security or Social Security Disability Income, you will need your award letter.  If you are self-employed, you will probably need to provide a profit and loss statement for the same six-month period as well as business bank statements to verify the amounts on the statement. If you have income from other sources such as rental properties or unemployment, proof of this income is also required.

Real Estate

If you own real estate, a valuation of the property is required.  Generally, I recommend my client’s get a broker’s price opinion, or a full appraisal, but this depends upon the situation.  In some cases, this is not needed.  Mortgage statements showing current loan balances, deeds of trust, and proof of home insurance may also be required.

Vehicles

If you have titled vehicles, such as an automobile, you will be required to provide a recent copy of your vehicle registration.  I also recommend you have proof of insurance, and valuation information, such as a KBB (Kelly Blue Book) valuation (you can get this online). If you have a car loan, a recent loan statement showing how much you owe and what your monthly payment is, will be important.  For other titled property, such as boats or trucks, recent valuation may also be required.

Retirement Accounts and Other Bank Accounts

Recent bank account statements (checking and savings) and retirement account statements are usually very important to provide to the trustee.  Your attorney should have these.

Miscellaneous

If you have any other special circumstances, like child support or alimony, you will need to provide proof of these expenses.  Typically a copy of the judgment, order or agreement will be sufficient

Proof of Identification and Social Security Number   

This is very important.  When you go to your hearing with the trustee, you will be asked to show proof of identification.  So you must have these two things ready for the trustee at the beginning of your meeting.  Identification must be valid and include a recent photo.  Examples are a current state-issued ID card, a current driver’s license or valid passport.  You will also need to show proof of your social security number.  These documents are typically your state-issued social security card or employee-issued W-2 form.

That’s it. Now you are ready for your Meeting with the Trustee. If you have any questions or need any help, please give me a call. My direct line is 508-784-1014 (yes, this is the number that goes directly to me, personally).  I’ll be happy to set up your first free consultation, absolutely free.

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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 © 2015, 2016, 2017, by Ginger B. Kelly, Esq., all rights reserved.

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Filed under Bankruptcy, Debt, Debt Collection, Filing, Financial, Law, Legal, Massachusetts, Massachusetts law, Uncategorized

The Domino Effect: Filing a First and Second Bankruptcy

domino-effect

By:  Ginger B. Kelly, Esq.

If anyone has played dominoes, they realize that one small mistake can cause an entire stack of dominoes to come crashing down.  The same is true for filing first and subsequent bankruptcies.  If a person has received a discharge or has filed for bankruptcy in the past, it’s important to know how soon they can file for bankruptcy again.  Time limitations for discharge under bankruptcy, after filing a prior bankruptcy in a Chapter 7 or Chapter 13 bankruptcy, may be tricky and are different under different circumstances and chapters.  This overview is intended to help potential filers make wise choices before the stack of dominoes collapses.

Technically, Time Limits Do Not Apply to Filings

In theory, there is no minimum time to wait before you can file for bankruptcy the second time around.  However, the dilemma with filing a second time is if a person files too soon after they received a discharge of their debts in a prior case, they can’t get another discharge. Filing too soon makes the second bankruptcy filing a waste of time and money.  This is why time frames apply to receiving a second discharge, not the filing of the case.

Filing Again Under the Same Chapter

If a person is filing under the same bankruptcy chapter, the time frames are different depending on whether they file successive Chapter 7 or Chapter 13 cases.

Filing Again Under Chapter 7

If the first discharge was under Chapter 7, a second discharge is not permitted under Chapter 7 again, until eight years from the date the first case was filed.

Filing Again Under Chapter 13

If the first discharge was under Chapter 13, a second discharge is not permitted under Chapter 13 again, until two years from the date the first case was filed.

The only issue with consecutive Chapter 13 bankruptcy cases filed too closely together is if the court refuses to confirm your Chapter 13 plan in the second case. Ordinarily, if the second plan is not confirmed a person can convert the bankruptcy to a Chapter 7.  However, in this set of circumstances, the rules for receiving a discharge under Chapter 7, after a discharge under Chapter 13 will prevent a person from getting a discharge in the converted case.  This is why converting a case from a Chapter 13 to a Chapter 7 too soon, isn’t a good idea in most situations.

Different Chapter Filings: Order Matters

If the second bankruptcy filing is under a different chapter then the first, order determines the time frame.

First, Chapter 13: Second, Chapter 7

If a person received their first discharge under Chapter 13, they cannot receive a discharge under any Chapter 7 case that is filed within six years from the date they filed the first Chapter 13.  Generally, the six-year waiting period exceptions are:

  •  if all the unsecured creditors were paid in full under the Chapter 13, or
  •  at least seventy percent of Chapter 13 claims were paid, the plan was proposed in good faith and the payments were the best effort possible.

First, Chapter 7:  Second, Chapter 13

If a person received a discharge under Chapter 7 first, they cannot receive a discharge under Chapter 13 filed within four years from the date the initial Chapter 7 was filed.

It’s a bit tricky if a person files the second case under Chapter 13, between four and eight years after they filed the first Chapter 7 when the court doesn’t approve the Chapter 13 plan.  If the Chapter 13 plan was not approved, “technically” a person could convert the case to a Chapter 7, but this isn’t a good idea because the rules for successive Chapter 7 discharges would kick in.  In this situation, if the time frame between subsequent filings is not eight years, a person will not receive a discharge in the converted case. If this happens, it is probably best to ask for a dismissal of the subsequent Chapter 13 case.

When a Second Filing May be Helpful, Even Without a Discharge

In certain situations, filing a Chapter 13 case immediately after getting a Chapter 7 discharge might be beneficial.  This is often referred to as a Chapter 20 bankruptcy.

In this situation, for example, a person wants the protection of the bankruptcy court while paying something like a tax debt or non-dischargeable priority debts, under a Chapter 13 plan. Whether or not they will benefit from this type of Chapter 20 bankruptcy depends on the circumstances and the case law in their jurisdiction.  But despite its benefits, a Chapter 20 has many drawbacks and can be subject to bad faith filing objections.  An experienced bankruptcy lawyer in your area would need to be consulted for advice on this topic.

First Case Not Discharged

If the first bankruptcy case did not result in a discharge, typically, a person can file for bankruptcy again with no limitations on the second discharge.

Discharge vs. Dismissal

First, it may be important to note that there is a big difference between a discharge and a dismissal.  A discharge is an order from the bankruptcy court releasing a person from their debts.  A dismissal from a bankruptcy court is an order removing the case from the docket, typically without a discharge.  

If a person successfully completes a case and obtains a discharge, they are no longer on the hook for debts discharged in the bankruptcy. However, if a case gets dismissed, the person who filed will lose the protection of the automatic stay and their creditors are free to come after them to collect their debts.

First Case Dismissal

If a bankruptcy case was dismissed, a person can file again unless the court orders otherwise.  If the case was dismissed for failure to obey a court order, failure to appear in the case, or voluntarily dismissed after a creditor filed a motion for relief from the bankruptcy stay, a 180-day waiting rule applies.  However, quite often there are different rules regarding the bankruptcy stay.  A stay is an automatic injunction that stops actions by creditors, with certain exceptions, to collect debts from a debtor who has declared bankruptcy.

First Case Discharge Denied

If the discharge was denied in the first case, a person typically may file again but will probably not be entitled to a discharge of the debts from the first case. This is another special circumstance where it is always smart to seek an experienced bankruptcy lawyer for advice.

The take-away from all of this is, as a general rule, if a person files for bankruptcy too soon after they received a previous bankruptcy discharge, they cannot receive another discharge.  Like a neat little stack of dominoes, the second case is very dependent upon the first.  The good news is, avoiding mistakes can be easy.  Consulting an experienced attorney is the first step.

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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, 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 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 © 2015, 2016, 2017, by Ginger B. Kelly, Esq., all rights reserved.

 

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Filed under Bankruptcy, Debt, Debt Collection, Filing, Financial, Hiring Counsel, Uncategorized