Although study after study has shown that personal bankruptcies are caused primarily by catastrophic events like divorce, job loss, and, above all, medical bills and that most of us are struggling with a gap between our income growth and the soaring cost of necessities like housing, Suze tends toward psychological causes that invariably blame the victim. Who is struggling these days, according to Suze? "People who grew up without much money and later earn a comfortable living sometimes spend too much to make up for what they didn't get as children. ... People who feel entitled to the good life, or are unconsciously copying a mother or father who lived beyond her or his means. ... If you feel the need to impress people with what you have rather than with who you are, you are at high risk for credit card abuse."
There's more here. It's a good read, but prepare your stomach for the shock and awe of what this financial guru thinks of people who struggle with debt while at the same time offering financial advice that makes me cringe.
I've had some limited exposure to Orman. I a CNBC show where callers ask for her blessing to buy expensive things: a camera, a trip with family, or in the particular show I watched, running stilts. After a quick drive-buy glance at some financial information, the caller then says "I really want these running stilts." Then, the caller waits for either the blessing to buy it, or the chastisement for not knowing better to think otherwise.
I read the article, and decided to take a few minutes and spend some time on her website. The one thing that caught my eye was the promo for the Valentines Day CNBC show (9PM and Midnight ET, 2/14/2009) titled: "Marriage & Money."
On this Valentines Day, the financial pluses to being married. Should a man pay down his fiancée’s Student loans? Viewers ask if they can afford a puppy, a trip to the 2010 Olympics.
Let me first start by saying that if you want to adopt a pet and can handle the responsibility, please do so.
With that said, why does the promo not say this: "Should you pay down your fiancée’s Student loans?" I can guess that the show's demographic is primarily women. But still...even so, why shouldn't the same question be posed to both parties who are planning a life together regardless of their gender? Perhaps I'll have to watch the show to find out. And if I watch the show, I'll probably have more to write about.
]]>The Boston Globe reports that the Massachusetts Attorney General has filed a bill to slow down foreclosures. But the legislation would only protect those in "risky" loans. And if people keep losing their jobs, homeowners with "risky" loans will not be the only ones facing the possibility of losing their home.
Meanwhile, in Washington, a bill that would let some homeowners in Chapter 13 modify the mortgage on their principal residence has cleared the House Judiciary Committee.
While homeowners might be getting a break, recent graduates are finding it tougher and tougher to pay off student loans. An opinion piece in the Minneapolis Star Tribune suggests that a good way to stimulate the economy may be to forgive student loan debt.
The Federal Reserve however, seems to have another idea, although I am not convinced it's a better idea. From CNNMoney.com:
The Federal Reserve is getting ready to launch a new program that should make it easier for consumers to get credit-card and auto loans -- though not necessarily at lower interest rates.
Yikes.
The Federal Reserve Bank will sponsor a second workshop aimed at preventing foreclosures by bringing borrowers and lenders together to find alternatives.The workshop, scheduled for February 14 at the Connecticut Convention Center in Hartford, is modeled after a successful event held at Gillette Stadium in Foxborough in August. More than 2,200 borrowers met face-to-face with lender representatives, and about 35 percent of borrowers received loan modifications or workout offers, according to the Boston Fed.
There's more about this upcoming event here.
If you're thinking about going to this event, contact us. We have access to tools that may lead you to a more affordable housing payment, and we might be able to save you the trip to Hartford.
In related news from Bloomberg:
The Federal Reserve will ease terms on residential mortgages acquired in the rescues of Bear Stearns Cos. and American International Group Inc., seeking to stem foreclosures.The Fed policy is targeting borrowers who are 60 days or more overdue on loan payments and covers modifications of interest rates and payment plans. The program uses the Fed’s authority in the $700 billion Troubled Asset Relief Program and was released today by the House Financial Services Committee.
“It reflects the understandable desire of the Federal Reserve to have some cooperation” with the Obama administration, House Financial Services Committee Chairman Barney Frank told reporters today in Washington. “This is a very big deal.”
In the UK, Debt Collectors are “getting heavy.”
A plan to let homeowners modify their mortgages in bankruptcy may lower foreclosure rates by as much as 20 percent.
Not everyone supports changing the bankruptcy laws to help homeowners modify their loans and plenty of groups are paying lobbyists to kill that bankruptcy legislation. The AP reports who is paying and how much.
]]>Not only do the homeowners lose money, they lose time to productively work with their lender. I heard a lender attorney recently say that homeowners have told them that “…we paid this person to help us.” But the person is not helping them, and as this CNBC story points out, in many cases, the "helper" doesn't even contact the lender. In addition to losing valuable time and money, the homeowner may also lose credibility with the lender.
The story recommends that if your lender is unwilling to relax the payments to help you, seek a qualified real estate attorney or non-profit credit counselor. But there are also local mortgage counselors who will help you with a modification request (click here for ESAC located in Boston). And I also think you should not rule out speaking to a bankruptcy attorney so you can discuss your options. Or, I encourage you to contact us if your lender is unwilling to work with you.
]]>In its February 2, 2009 issue, Forbes looks at the issue of what it calls “The Great College Loan Hoax.”
Census figures show that college grads earn an average of $57,500 a year, which is 82% more than the $31,600 high school alumni make. Multiply the $25,900 difference by the 40 years the average person works and, sure enough, it comes to a tad over $1 million.But anybody who has gotten a passing grade in statistics knows what's wrong with this line of argument. A correlation between B.A.s and incomes is not proof of cause and effect. It may reflect nothing more than the fact that the economy rewards smart people and smart people are likely to go to college. To cite the extreme and obvious example: Bill Gates is rich because he knows how to run a business, not because he matriculated at Harvard. Finishing his degree wouldn't have increased his income.
This (along with the rest of the article) is a refreshing read. I expect in the months and years to come, there will be more discussions over the trend of forcing students into a debt that is nearly impossible to shed (or for that matter, pay) while dangling the carrot of an education and with that, the promise of a better life.
According to the article, the average law school graduate will emerge with over $100,000 in student loan debt. Based on discussions with law students I have met, I do not believe that it is an inaccurate assessment. Law firms are laying off. The economy continues to sour. Jobs will be scarce - and I am meeting more and more recent graduates who find themselves forced (much like I did almost 18 years ago) to hang up a shingle and establish a practice. However, those realities will not be considered an undue hardship.
I’ll put it this way: it’s far easier to walk away (in any chapter of bankruptcy) from a few properties, a few mortgages, and hundreds of thousands of dollars or more in obligations, than it is to walk away from student loan debt. Yet the unlucky, unwise or unfortunate real estate investor likely has the benefit of the societal safety net that bankruptcy offers. It seems that there is less risk to entering into an “exotic mortgage” than to get a degree in a subject area that might – or might not – have a job waiting for me after graduation. Something doesn’t seem right about that.
Today’s Boston Herald reports that credit card delinquencies are on the rise, and collection agencies may be stepping up their collection efforts, and even crossing the line. One such company, Leading Edge Recovery Solutions is reportedly only on the wrong side of a Fair Debt Collection Practices claim after they allegedly harassed a consumer who had trouble meeting obligations because of lost work and health problems.
But in addition to that negative news, the Herald Staff did put together a short list for consumers to watch out for if they are experiencing collection activity. You’ll find it here.
Times are tough enough without bad collectors crossing the line. If you’re getting harassed by debt collectors, speak to an attorney. If you’re in Massachusetts, please contact me. If you’re not, please contact your local bar association for a referral to an experienced consumer protection attorney in your area.
This is again, another reason why we need meaningful reform out of Washington soon. Undoubtedly, the proposed changes to the Bankruptcy Code which would allow judges to reduce mortgages of consumers could help. But some contend that the reform will accelerate “lenders' losses on home-equity, automobile and credit-card loans.” I’m not so that is a particularly bad thing.
About 10 years ago, I had abdominal surgery. As luck would have it, one of the sutures that was designed to dissolve didn’t. Instead, it got infected. It was very painful.
Admittedly, I’m a big baby when it comes to pain (my staff will back that up). This pain was far too much to handle….so my friend put me into a cab and we went to the emergency room. When the doctor came in, he examined the incision, looked at me square in the eye and offered these words:
He was right. But it was brief, and frankly, the only recollection of the pain is the memory of my saying “wow, you were right” and then a “thank you” and then having this amazing smile on my quite relieved face when I walked out into the reception area whereupon I asked my friend if he could hear me scream all the way out there.
My point in relaying this scary, perhaps a tad disturbing, but nevertheless humorous anecdote is that sometimes we have to go through some pain to get where we want and need to be. In hindsight, I guess I could have been upset that the sutures they used did not always work as intended. Rather, I was more relieved that there was still a capable doctor who told me the truth, prepared me for pain, and then sent me on my way with a smile on my face. And in the long run, I was no worse for wear. And to this day, I am grateful for the honesty.
Financial giant Citigroup Inc has agreed to support a controversial rewrite of U.S. bankruptcy law aimed at helping troubled mortgage borrowers, three Democratic senators said on Thursday.
Senators Richard Durbin of Illinois, Charles Schumer of New York and Christopher Dodd of Connecticut said the legal reform would help "millions of families save their homes."
Citigroup has agreed to support, under certain conditions, a rewrite of bankruptcy law. Under the change, known as "cramdown," bankruptcy courts could alter the terms of mortgages, subject to certain conditions, the senators said.
]]>Courts can generally cut through complex mortgage contracts more aggressively than the private sector, said Wade Henderson, head of the Leadership Conference on Civil Rights, who has testified before Congress on the issue."The continued erosion of the housing market has probably made adopting this proposal inevitable," he said.
I also invite readers to check out Calculated Risk, and Tanta's discussions on cram downs. You'll find those links here.
The final version of what the new President will sign remains to be seen. However, any homeowner facing foreclosure should start exploring whether bankruptcy is an option now and plan ahead (and if you're in bankruptcy, you should consider speaking with your attorney about whatever options you may have). I know that no one wants to file bankruptcy. But if it comes down to whether you can actually keep your home, you would be foolish to not keep all of your options on the table, including the option to file for bankruptcy protection.
]]>My client went through a long chapter 13. At times, it was not particularly pleasant. But all plan payments were paid and the discharge was received a few years ago. Now, she’s dedicated to her business and determined to keep make it grow in a difficult economy.
During our brief meeting, I noticed something different. Was it the hair color, I thought? No. Did she have her teeth done? No, not that. Then it dawned on me. It was something more.
She was happy. She was smiling. While she was not a particularly unhappy person while the case was open, I think it’s fair to say the chapter 13 was not a particularly happy period in her life. But now, the chapter 13 case is behind her and yesterday she sat before me smiling, happy, and talking about the future.
As an attorney, while I try to get my client’s perspective, I really can only get so much. I can only put myself so far into a client’s shoes. So I asked her, now that her case is behind her, now that she is moving forward with her life in new directions, what were her feelings about the bankruptcy process now that she was “on the other side of it."
She didn’t hesitate with her response. (I can’t quote, but I did take a few notes.) She told me that going through that difficult process allowed her to dream again. That now she could dream and that making those dreams a reality again seemed possible. Her dreams were no longer mired down in a chaos created by debt that had spiraled out of control. She told me that she felt freer than she had felt in a very long time.
The minute these words flowed, I could feel a smile growing on my face....and a bit of a lump in my throat. And then, it dawned on me: ‘this is what I’ve been itching to write about for the New Year.’
Many are looking at 2009 with a sense of foreboding and trepidation. World events are not exactly fueling optimism about the future. Perhaps 2009 will not be a year when dreams will come true. Perhaps things may get worse.
Or perhaps in spite of that, you can find a way to knuckle down, stand straight, bite your lower lip, bide your time, and get through a journey that brings you to the other side of it: a side where you can dream once again. I know it may all sound silly, but I know this place exists. Yesterday, I was fortunate to be reminded that for my clients in or facing bankruptcy, there can be a life afterwards. And that life can be wonderous. The only assurance I can give you is that the big smile on my client’s face proves that anything is possible.
With that, I wish you all a very Happy New Year.
]]>The debtors filed their case in July 2008. Approximately one month prior to the scheduled Meeting of Creditors, the debtors provided the trustee a copy of their federal tax return. Approximately 10 days prior to the Meeting of Creditors, a creditor sent a letter requesting a copy of the return. Debtors’ counsel brought the copy of the return to the Meeting with the intent to give it to the creditor’s attorney. While the two attorneys spoke, debtors’ counsel did not give a copy of the return.
Creditor then filed a motion to dismiss citing Section 521(e)(2)(c). It argued that the Bankruptcy Code mandated that the case be dismissed and that the Bankruptcy Court had no discretion to allow the case to continue. The Bankruptcy Court however, did not agree.
The court examined the legislative history of this new (post 2005) requirement. Section 521(e)(2) requires a debtor to provide a recent tax return to the trustee at least 7 days prior to the first date set for the Meeting of Creditors. It also provides that a debtor must furnish a copy of the return to a creditor who makes a timely request. However, the section provides that the debtor is obligated to provide the return to the creditor at the same time the debtor provides it to the trustee. Thus, the creditor must request a copy of the tax return/transcript either at or before the time the debtor supplies the return to the trustee. This creditor did not make the request until after the trustee had received the return.
For those reasons, the creditor’s motion was denied to dismiss was denied.
In re Fontaine, US Bankruptcy Court, District of Massachusetts at Worcester, 08-42454
]]>After reading it, I decided it was best to simply point to it. The message is the same. The reasons why I wrote it then have not really changed. If anything, those reasons have become more apparent and obvious to more of us. It's worth repeating. Once you're read it, please read my update after the jump.
]]> And now, in 2008...While my memories of Christmas Eve are with me each year, this year I miss my family more than ever. I wish I had a few moments with my grandparents – just to ask them a few questions about life in the 1930s.
Almost everyone I know has spent less on holiday shopping this year: some out of want, others out of necessity. Things are not quite the same now as they were just a few years ago. And many people with whom I have spoken believe that 2009 holds only more uncertainty in what is already a turbulent and uncertain economy.
We have had money troubles in the past: the recession in the 70s; the real estate crash in the late 80s and early 90s; and more recently, what I coin as the recent B&B (Bubble and Bailout), the drama of which continues to unfold as each week passes. But on Christmas Eve, it is the one night of the year when none of it should matter.
For some, it does. For some it will be difficult to adjust to the fact that Christmas (or any other December holiday) is not the same as it has been in years past. For them, I offer this: I think the universal message of Christmas 2008 may be that we should cherish all the good things that we have, rather than fret about how things are not what they once were. And yes, I do know how hard that can be in these interesting times.
And it is with these additional thoughts in mind that I wish you all a very Merry Christmas.
Annie had these big, brown, doe-like eyes. It was her that I fell for first. She was rubbing against the cage and purring very loudly. I was allowed to open the cage and she jumped into my arms. I recall saying “oh yeah, I’ll take her.” I actually only intended to adopt one – which I think she knew because she then went back into the cage and went to Cissie, who sat towards the back of the cage looking afraid. She somehow made it known to me that they came as a pair. So I adopted them as a pair.
They had this love/hate relationship. When they loved one another, all was well with the world. When they did not….well, let’s just say it got a little crazy. Cissie was fascinated by the house plants, and Annie marveled at the looks and sounds of water going down the drain.
Cissie and Annie would lay close to me when I was studying for exams, including the bar. I did not realize that I would nervously click a pen while concentrating. I really only discovered it when I noticed Cissie looking at me while purring and chirping. She would then approach and then start batting it. She also loved the smell of my highlighters – which she would often pry away from me. And Annie would always let me know when it was time to stop studying: she would simply lay down on my books and give me a look that said “and now, it’s all about me.”
Looking back, I think it took Cissie longer to warm up to me. But eventually, she did. When I moved to Boston, I bought her a harness and would walk her in the Back Bay Fens in between Park Drive and the Fenway. She loved watching the ducks in the Muddy River and loved chattering to leashed dogs as they walked by in amazement. She hated being picked up and carried. She preferred walking by my side...or in many cases, dragging me to what she was interested in.
I had Annie for just over 11 years. Cissie stayed with me for more than 16. And yes, I think about them every day.
Today, I have Kit and Betty. Kit is about 10 – she was a stray. She lived with my mom for a few years until she passed away, and has lived with me ever since. She still has a bit of feral in her...which can sometimes make life surprising...and painful, if Bactine is not around.
With Betty – well – the story with her is this: I went into a pet store to get cat food. Many times, local pet stores will help local rescue agencies and shelters promote adoption awareness and on that day, there I was and there was some rescue group promoting its programs and its kittens. I made eye contact with this little 4 month old kitten (again, the big brown eyes). I asked if I could hold her. She looked into my eyes. And that was it. I said to myself “oh sh*t.” She chose me.
While the first meeting was in a pet store - this was no "impulse purchase" - this was an adoption - and it took some time to adopt her. They checked our references – made sure we could handle the responsibility of adopting a kitten. About two weeks later she arrived. She bonded with Kit immediately. I presume that as I sit here in my office writing this, they are hunched under the Christmas tree wondering when I am going to get home and turn it on (because I believe, much like Annie and Cissie, they understand that it really is all about them).
Now you’re probably asking “where is he going with this”: in today’s Boston Globe, there is this report how the recession/depression is not only forcing people to lose their homes, but it forcing them to surrender or abandon their animals. This is not the first report on this issue, nor is it the first time I have mentioned it here. And as the economy continues its trek into the abyss, I know it will not be the last. Things are tough all around. And it’s tough for the local shelters and rescue programs that come to the help of animals in need.
What can we do?
My animals have taught me many life lessons. And I know that animals, with their ability to give us unconditional love, can be a powerful force to bring reason, order, and a sense of truth and beauty to a complex and sometimes chaotic world. We need them as much as they need us. This is why I support the Animal Rescue League.
Since 1899, the Animal Rescue League of Boston has been dedicated to rescuing domesticated animals and wildlife from suffering, cruelty, abandonment and neglect. With Care and Adoption Centers in Boston, Dedham, and Brewster, the League is a leader in providing rescue and law enforcement services and promoting a compassionate and responsible attitude towards all living beings.
Our friends and neighbors face daunting challenges in this economy. Many are forced to make difficult decisions about their pets. Yet despite these challenges, the Animal Rescue League remains committed to provide shelter and veterinary care. For 109 years, the League has been there - in good times and in bad.
Please join me and McLeod Law Offices in supporting the League and its important mission. Together, we can help the League end overpopulation, rescue animals whose lives are at risk, and ensure that every adoption is a lasting and loving one.
Remember, it's not just the animals; it's the lives they touch.
Click here to donate or call 617.426.9170 x615
To learn more about the other ways you can help, click here.
BOSTON – December 9, 2008 – As part of the Patrick-Murray Administration’s ongoing response to the foreclosure crisis, the Executive Office of Housing and Economic Development and the Office of Consumer Affairs and Business Regulation, with support from Massachusetts Housing Partnership, released a brochure outlining the rights and responsibilities of tenants living in foreclosed buildings. The guide empowers renters with information to ensure that they understand the foreclosure process and are not unfairly evicted after the building they live in is foreclosed upon.
Like homeowners, renters throughout the state and the nation are being affected by the foreclosure crisis in real and dramatic ways. Although there are no exact figures, statistics compiled by the Division of Banks show that approximately 30% of the 7,653 Massachusetts foreclosure sales in 2007 involved multi-family properties.
“Renters need to know their rights,” said Daniel C. Crane, Undersecretary of Consumer Affairs and Business Regulation. “Tenants shouldn’t be pressured to pack their bags because their apartment is in a building that is foreclosed on. This new resource provides information that will help families and individuals affected by foreclosure through no fault of their own.”
Many lenders or servicers try to evict all tenants from a property immediately after a foreclosure, even if the tenants have paid their rent on time and have not violated any terms of their tenancy. If tenants refuse to leave, they may be offered a small amount of money, commonly known as “cash for keys.” Tenants agree to these pay-outs under the assumption that they have no other option.
To prevent renters from being unfairly displaced and coerced into leaving their homes, Governor Patrick signed into law last November a measure ensuring that a tenancy will not be terminated by a foreclosure sale.
According to state law, a tenant is entitled to at least 30 days written notice if the owner wants them to vacate the property. A tenant is then entitled to a court hearing if they wish to remain in their home after receiving the proper 30 days written notice. A judge will determine how much time the tenant will be allocated to vacate the apartment. Without court approval, owners do not have the right to evict their tenants. If a tenant receives state or federal rental subsidies, the terms of their rental agreement will not be affected by a foreclosure sale and the tenant should contact the agency that provided the subsidy to understand their specific rights with the subsidy.
New owners are also legally responsible for posting their contact information on the property and for properly maintaining the building. Tenants are encouraged to contact the building owner in writing if they encounter maintenance issues, and to contact their city or town’s housing inspector if they believe their building to be in disrepair.
Tenants with questions or concerns should contact one of the legal resources listed in the brochure or the state’s Consumer Hotline at (617)-973-8787 or (888)-283-3757. The brochure, which is available in several languages, can be found online at mass.gov/foreclosure. It is also being distributed statewide to housing agencies and foreclosure prevention organizations.