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.

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.

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:

Property	Current	New
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

Repossession and Trespass

I've written about this before. What I'm going to comment on here is one of the most commonly violated laws on the books. It just applies here in Massachusetts. It's this: A car repossession agent cannot come onto property you own or rent without your permission. It almost every state they can, but they cannot here in Massachusetts. The law can be read right here: G.L. 255B, s. 20B.

This matters in two main ways.

1. If a repossession agent violates Section 20B, the car lender cannot collect a deficiency from you. Car repossession deficiencies can be large and can sometimes drive people into bankruptcy. Say you owe $10,000 on your car loan, and after repossession and sale are credited with the car's value of $5,000: You would owe a deficiency of $5,000 plus repossession and storage fees. However, if the repossession agent came onto your driveway without your permission, the law states that they cannot collect this amount from you. This can be a powerful weapon to combat a deficiency lawsuit.

2. If you confronted the repossession agent on your property and objected to the repossession, there may have been a "breach of peace." This is a specialized term in the repossession world and can entitle you to statutory damages. These damages are usually 10 percent of the amount of the car loan plus the interest charged for the loan. For an average car loan, this amount can be sizable.

*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: http://www.mass-legal.com/repo_quest.asp. We will review your matter confidentially and free of charge.

Car Repos in Massachusetts: Police Involvement

Car repossession is a private act and cannot be aided by the police. You have the right to demand that a repossession agent leave your property and not take your car. In turn, they have the right to go to court and get a judge's order compelling you to turnover the car if you are behind in payments. If they have such an order (which is very, very rare), a sheriff or constable, and not the police, will come to your residence to take your car. At this point, because of the judge's order, you do not have the right to object. However, it is very rare that a car lender will have one of these so-called "replevin" orders.

If you decide to order a repossession agent off your property and they refuse to go, you should call the police. But be ready for trouble. Often the police are inadequately trained to deal with repossessions. They will sometimes try to judge the dispute and may even order you to hand over your car keys. This is illegal. Contact us if this happens to you. The job of the police if they come to your residence is to remove the trespasser from your property, not act as a judge in a driveway court.

*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: http://www.mass-legal.com/repo_quest.asp. We will review your matter confidentially and free of charge.

Top Complaints from Massachusetts Consumers

Boston.com recently compiled this list of the top consumer complaints in Massachusetts. It's an interesting list because in addition to the perennial favorites--car dealers, home improvement contractors, debt collectors, etc.--two list items relate to foreclosure and loan modification services. It's the wild, wild west right now for those services, with shady operators opening businesses preying consumers needing legitimate relief from burdensome mortgages. Whenever there is a boom in demand for something, scam artists emerge with big promises and flashy ads to trick the credulous public. Be very careful if you are considering answering a TV or radio ad for mortgage-related services. Instead, consider contacting a trusted referral source for a recommendation, or contacting a licensed and insured Massachusetts attorney.

Fraud or Trickery in Massachusetts Car Repossession

As I previously wrote, in the course of a Massachusetts car repossession, it routine (and illegal) for repossession agents to come onto your property late at night, wake you up, and demand your car keys. This is illegal because repo men cannot come onto your property at all or at any time to repossess your vehicle without getting your permission ahead of time.
However, another common illegal practice is that repo agents, when bargaining for your keys, will cross the line and lie to you about what will happen if you don't comply. The ones I have heard most frequently are:
1. We'll damage your car if we have to tow it. First, they cannot tow a car out of your driveway without your permission. Second, they are not allowed to damage your car even if they do. This statement, in itself, subjects a repossession company to liability under the Massachusetts Division of Banks regulations.
2. The creditor will charge you more money if we have to tow the car. Well, taking the car over your objection is illegal in the first place--both as a statutory trespass and a breach of the peace--so as creditor should not be able to impose a charge on your for an illegal act.
3. If you don't give us the keys, we'll just take the car anyway (or call the police). That's a similar threat to those above, but its simplicity and frequency draws attention to a basic fact. A repo agent has no right to do that and due to the the Massachusetts Division of Banks regulations has no right to even make a false threat. If they actually do call the police, this is illegal as a breach of the peace.
False threats, lies, and trickery are not always enough on which to base a case. However, such unlawful act are almost accompanied by others.

*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: http://www.mass-legal.com/repo_quest.asp. We will review your matter confidentially and free of charge.