Sunday, December 27, 2009

How Can I Afford Bankruptcy if I'm Broke?

Good question, one posed by many in rough financial straights. The quick answer is, you can't, that is if you're truly broke. Bankruptcy is for people seeking to bring some sanity and solvency to their financial affairs, not for those just struggling to survive. So, food, shelter, that sort of thing, must always come first. As the saying goes, bankruptcy is not for paupers. However, if things are tough, but not truly dire (which is usually the case), and would seem to improve without the weight of debt, phone calls, lawsuits, etc., then this is how people tend to pay the couple thousand dollars a typical bankruptcy case costs (sometimes more, sometimes less). People arrange payment plans to get a case filed. They often stop making certain debt payments (like credit cards) in the interim to help raise the money. This is quite a popular strategy and works just fine in most circumstances. However, there are times when a wage garnishment order is about to enter or some other shoe is about to drop, and this just won't work. Those circumstances are difficult, but even in those cases solutions can sometimes be found if the money is not available from a family member, friend, or retirement fund. Moreover, it tends to be quite rare that people wait until the last minute like that to explore their options. So, in the normal case, being on a payment plan for two to three months before filing works quite well. You are able to have a lawyer to go to with questions and help with the pre-filing heat (usually phone calls from debt collectors) and have the guidance to set up a case correctly.
This is just a common way that people scrape together the money to file. There are other ways, like having some savings or a family member to help. I find that this is a popular question and this quick blog post reveals the usual answer.

Monday, November 30, 2009

Massachusetts Mortgage Foreclosure Backlog

To foreclose on a mortgage in Massachusetts it is standard practice for the foreclosing mortgagee to file an action in the Land Court for a declaration that the homeowner isn't in the active duty military. This is done in order for a mortgagee to comply with its duty to get a fair sale price at the foreclosure auction. Due to certain protections under the Servicemembers Civil Relief Act (SCRA), a buyer can't be sure that the sale won't be invalidated due to the military service status of the defaulting homeowner, and therefore might pay less for the house, that is unless there is an order of a court or some other conclusive proof that the homeowner isn't under the protection of the SCRA. The bottom line: in Massachusetts, these Land Court SCRA lawsuits are standard before any foreclosure takes place.
Today I spoke with a contact at the Massachusetts Land Court and was informed that so-called "return dates" were about four and a half months out in cases filed now. What that means is that once a homeowner is served with a SCRA lawsuit, they will now still usually have four to five months before a foreclosure auction. That's a significant backlog when contrasted against the six weeks turn around time from filing to return date that used to be the norm in SCRA actions.

Sunday, October 18, 2009

Massachusetts Land Court Foreclosure Case Affirmed

Judge Long of the Massachusetts Land Court recently reaffirmed his groundbreaking May decision invalidating a foreclosure sale due to a lack of properly-recorded assignment. The assignment issue came down to this. Due to the bundling of mortgages for sale and trading on Wall Street, mortgages have been transfered more and more frequently over the past few years. Under Massachusetts mortgage law, these transfers have to be documented at the registry of deeds, and only the record owner of the mortgage has the right to foreclose. Before Judge Long's ruling the practice had been to backdate the various mortgage assignments after a foreclosure sale to clean up the chain of title. Judge Long held that this was impermissible and that the assignments had be recorded on the date of the foreclosure.
What does all this mean for consumers here in Massachusetts? First, the validity of many mortgage foreclosures over the past few years have been put into doubt. This has the potential to create serious problems for many parties, including the people who purchased the foreclosed properties. For example, it might be possible to challenge the validity of a foreclosure sale with a backdated assignment and seek to cure the mortgage arrears in a Chapter 13 bankruptcy. However, this would be a very challenging case.
This decision will affect consumers who have defaulted on their mortgages in another way. It will create delay. Mortgage lenders will have to obtain and record the evidence of the assignments leading up to the foreclosing lender. This will take time and effort and will inevitably create more delay in the already bogged-down foreclosure process here in Massachusetts.

Thursday, September 17, 2009

Car Repossession in Massachusetts

In the wake of the credit crunch, the highest rate of unemployment in years, and a worst recession since the Great Depression, it is unsurprising that car repossessions have been on the rise in Massachusetts. Any lawyer specializing in debt law will tell you about the increasing calls and complaints related to car repossession.

For those who fall behind on vehicle loans, repossession can be a jarring and embarrassing experience. It's almost always unanticipated when it actually happens and throws plans--involving kids, work, or medical care--dramatically into the lurch. To make matters worse, the laws associated with car repossession are relatively unknown.  They are some of the most difficult consumer protection laws to understand and are commonly violated.  However, there are powerful but little-known remedies for consumers when car repossession procedures are not followed. When an experienced lawyer gets hold of a wrongful repossession case, they can often obtain some of the most dramatic relief available under the consumer laws.   These cases are a sub-specialty of ours, and I'll say a few words about them here.

First of all, keep all your paperwork.  One of the problems--and in many ways the main problem--is that consumers usually throw away paperwork.  If a car lender seizes a car without the right form of notice or auctions a car without crediting the consumer's account the proper amount, the evidence is often right on the face of the papers that the consumer received.   So with that being said, here is a brief primer on the key points of car repossession law in Massachusetts after a vehicle loan default:

1. A car lender must give notice and a right to cure a loan default, and must inform the consumer about the plan to seize the car, at least 21 days before the seizure. This notice should, among other things, include the words "Rights of Defaulting Buyers under the Massachusetts Motor Vehicle Installment Act."  This gives you the right to pay just the amount you're behind on the loan to stop the car from being taken.  This notice does not have to be sent certified mail or in any other special way: it just has to be sent by mail and it can be included with a bill.  Very importantly, you only have the right to three notices during the life of a car loan.  This means that if you are always late on the loan, you may have received the notices already in prior bills.  Once three notices are sent and a further default happens, a vehicle can be taken with no notice.

2. If the loan default isn't cured and the creditor seizes the vehicle, the creditor must still provide a second notice allowing the consumer 20 days to pay the loan in full before auctioning the vehicle.  Assuming you can't pay the loan in full and still want the car, you have two options: call the car lender to negotiate--they will often let you have the car back if you pay the repossession fees and bring the car loan up-to-date--or file Chapter 13 bankruptcy to get the car back without paying and pay the value of the car over three to five years.  Chapter 13 is really the ace in the hole in these situations, but there are timing issues: the case must be filed within the 20-day redemption period, and filing a case takes time, so there is no time to delay.  If the car is worth less than you owe on it, Chapter 13 can provide drastic relief.  You can read more about Chapter 13 bankruptcy here.

3. If the vehicle is repossessed, and the 20 days pass without action, the creditor may sell the car. However, the consumer's account must be credited for the full amount of the vehicle's fair market value, not the lower amount that the car lender may have obtained at auction. This is a very commonly-violated law that can result in significant money awards for consumers.

4.  If there is a breach of peace in the course of the repossession, you can sue your car lender and the repossession company and receive significant money damages. What's that you say?  Yes, this is very little-known, but if your car lender violated the car repossession laws, often you will be able to obtain statutory damages in the amount of finance charge plus 10% of the principal plus your attorneys' fees and costs. This amount can be significant. Let's take an example, say that over the course of a $15,000 car loan you pay $6,000 in interest and other finance charges. If your lender broke the repossession laws, you would be able to make a claim for $7,500 and receive all or some of this money. If you have had a vehicle repossessed, you should see an attorney who specializes in this area of law. Many such attorneys--like me--will not charge you to evaluate your case and can at least recommend some helpful options.

What is a breach of peace?  This is really complicated and depends on the specific facts.  If you had any negative interaction with the repossession agent when your car was seized, you should submit a repo review form.  You might just have a case.

*Note: If your car has been repossessed in Massachusetts, we might be able to help. However, due to high call volume after I posted information here about Massachusetts car repossession, we must first receive the completed form found here: We will review your matter confidentially and free of charge.

Sunday, April 12, 2009

New Massachusetts Medium Income Figures for 2009

The new Massachusetts medium income figures for 2009 are posted on my web site here.