Wednesday, January 12, 2011

U.S. Supreme Court Decides Ransom

The U.S. Supreme Court just decided an important bankruptcy controversy. The question was whether you could take an "ownership" deduction for a paid-off car on the bankruptcy means test. The answer is now, no.

The case is Ransom v. MBNA et al (link opens .pdf version of opinion).

This decision means a slightly higher Chapter 13 payment for some consumers and more consumers having to file Chapter 13 instead of Chapter 7. However, like most things, it will not affect the bottom line for the overwhelming majority of people who need bankruptcy relief. That bottom line is this: If you cannot afford to pay dischargeable debts (like credit cards), you will not have to if you file bankruptcy. If you can afford to pay some, you will have to in an orderly Chapter 13 partial repayment plan.

Monday, January 10, 2011

Massachusetts Governor Signs Exemption Bill

Days ago, Massachusetts Governor Deval Patrick signed the personal property exemption modernization bill into law. I previously wrote about the bill here and provided a list of the updated exemptions that will apply outside of bankruptcy and within many bankruptcy cases.

The Globe's coverage of the signing can be viewed here.

This is a solid victory for consumer advocates and Massachusetts consumers.

Tuesday, January 4, 2011

Massachusetts on Verge of Modernizing Exemptions

Massachusetts has some antiquated exemptions ($700 for a car!). These exemptions allow people to keep certain property when they are in debt. The Massachusetts legislature this week passed a long-awaited update. The bill now awaits the governor's signature. These changes will affect many people but, off the top of my head, two groups will most immediately benefit:
(1) People who have home equity and other property (such as paid-off cars) who need to file for bankruptcy.
(2) And people who own a car, are subject to debt judgments, and do not want their car to be seized by creditors.

Congrats to NACA and NCLC! They worked hard to lobby for these changes.

The full list of the new Massachusetts exemptions in the bill are here:

Money for utilities $75 $500
Furniture $3000 $15,000
Books $200 $500
Tools $500 $5000
Stock in trade $500 $5000
Provisions for family $300 $600
Fishing equipment $500 $1500
Sewing machine $200 $300
One computer & one TV none no stated dollar limit
Rent money $200 $2500
Cash or savings (execution) $125 $2500 on any day
Wages (execution) $125 greater of 85% of gross wages or 50 times min. wage per week
Automobile $700 $7500 wholesale, $15000 for disabled or elderly
Personal property none $1000 to $6000
Jewelry none $ 2500
Wages (trustee process) $125 greater of 85% of gross wages or 50 times min. wage per week
Bank account (trustee process) $125 $2500