U.S. home repossessions spiked in August to highest level since the start of the U.S. mortgage crisis. The increase in home repossessions came even as the number of properties entering the foreclosure process slowed for the seventh month in a row, foreclosure listing firm RealtyTrac Inc. said Thursday Sept. 16, 2010.

In a not-so-stunning report, RealtyTrac has reported tht banks repossessed 95,364 properties in August, which is up 3% from July. August 2010 numbers are an increase of 25% from August 2009. August makes the ninth month in a row that the pace of homes lost to foreclosure has increased on an annual basis. Banks have been stepping up repossessions to clear out their backlog of bad loans.

With such growing numbers of foreclosure, the housing market recovery could stumble given the continuing high rate of unemployment, the sluggish economy and lack of consumer confidence. Additionally, home sales nationwide have collapsed since the federal homebuyer tax credits expired in April.

More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to RealtyTrac. The firm estimates more than 1 million American households are likely to lose their homes to foreclosure this year.

Economic woes, such as unemployment or reduced income, are now the main catalysts for foreclosures. Lenders are offering a variety of programs to help homeowners modify their loans, but their success rates vary. Hundreds of thousands of homeowners can’t qualify or fall back into default.

The Obama administration has rolled out numerous attempts to tackle the foreclosure crisis but has made only a small dent in the problem. Nearly half of the 1.3 million homeowners who enrolled in the Obama administration’s mortgage-relief program have fallen out.
The program, known as Making Home Affordable, has provided permanent help to about 422,000 homeowners since March 2009.

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Congress Intros Bills to Extend Unemployment Benefits
Washington, D.C. (June 29, 2010)

By WebCPA Staff

After the Senate failed three times last week to pass the mammoth tax extenders and unemployment benefits extension bill last week, the House and Senate have introduced stand-alone bills to extend unemployment benefits.

House Ways and Means Committee Chairman Sander Levin, D-Mich., and Income Security and Family Support Subcommittee Chairman Jim McDermott, D-Wash., introduced H.R. 5618, the Restoration of Emergency Unemployment Compensation Act, on Monday to extend unemployment insurance benefits to millions of Americans.

However, the bill was defeated later in the day with Republicans opposing the bill. “We will persevere,” said Levin. “We will bring this bill up again under regular order and it will pass. Today’s vote should make it abundantly clear to the American people that the Democratic majority in Congress remains committed to providing the benefits and assistance families need while we continue efforts to recover from this recession.”

The Senate was unable to pass the American Jobs and Closing Tax Loopholes Act of 2010 last week after three attempts to overcome a Republican filibuster (see Senate Again Fails to Pass Tax Extenders Bill). The legislation extended about 50 expired tax breaks, including the research credit and the ability to deduct state and local sales taxes. It also would have extended unemployment benefits through the end of November and provided aid to states facing cuts in Medicaid funding, among other provisions.

However, the bill also contained controversial provisions raising taxes on the carried interest of hedge fund managers and private equity firm partners, as well as on certain types of professional services firms set up as S corporations and on multinational corporations using foreign tax credits to shift income abroad. Republicans argued that the bill was not fully paid for and would add $33 billion to the deficit.

The new bill introduced in the House would not include the tax provisions but would extend benefits for the long-term unemployed as emergency spending. An estimated 1.7 million workers will have lost their unemployment benefits by the end of this week as a result of the failure to extend benefits.

    “This is an emergency,” said Levin. “I really can’t believe that Republicans are going to come here and vote ‘no.’ They’re voting ‘no’ for millions.

They’re voting ‘no’ for what I think is best for the United States of America. We are a community of people. When people lose their jobs and can’t find them, we don’t simply stand idly by. This is the time for Republicans to stand up, and the only way to stand up is to vote ‘yes.’ I plead on behalf of the millions of people in this country out of work looking for jobs that Republicans stand with us to provide the unemployment insurance that Americans have worked for and that should be provided. Don’t turn your backs on them. In the end there will be no excuse.”

H.R. 5618 would extend the Emergency Unemployment Compensation and Extended Benefits programs through Nov. 30, 2010. The legislation would retroactively restore benefits to recipients who may have started losing their benefits as early as the end of May.

The bill also includes two beneficiary protections: the continuation of a rule that conditions state eligibility to offer federal unemployment benefits on an assurance that the state is not cutting the level of regular unemployment benefits; and a safeguard included in a jobs package already passed by the House that prevents Emergency Unemployment Compensation claimants from having their benefits cut if their intermittent earnings re-qualifies them for regular state unemployment benefits, which may provide lower payments because the claimant’s more recent wages were lower.

Unlike the House jobs package, however, the legislation does not include an extension of the Federal Additional Compensation program, which increases all unemployment insurance benefits by $25 a week.

In the Senate, Sen. Debbie Stabenow, D-Mich., also introduced legislation Monday to extend unemployment benefits. The bill, S.3520, the Unemployment Insurance Extension Act of 2010, is co-sponsored by Sen. Sherrod Brown, D-Ohio; Al Franken, D-Minn.; and Sheldon Whitehouse, D-R.I. It includes the $25 supplement and extends unemployment benefits through the end of the year.

The bill could attract support from at least two Republicans, Olympia Snowe and Susan Collins of Maine.

Another Senate bill to extend unemployment benefits was introduced Tuesday evening by Senate Majority Leader Harry Reid, D-Nev., and Senate Finance Committee Chairman Max Baucus, D-Mont. It would extend the Emergency Unemployment Compensation program through November.

The bill also contains a provision extending the closing date for the Homebuyer Tax Credit for buyers who entered into a binding contract by April 30, 2010 and close on the home by Oct. 1, 2010. A similar provision passed in the House on Tuesday (see House Extends Deadline for Homebuyer Tax Credit).

If you are a person who sees no way out of your credit card problems, a Chapter 7 bankruptcy might be right for you.  Call Massachusetts Bankruptcy Attorney Kara O’Donnell for a free consultation at (857)526-1355.

Kara O’Donnell, Esq.
O’DONNELL LAW OFFICES                    (857)526-1355
Quincy, Massachusetts

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Posted by Kara O’Donnell

By MA Bankruptcy Attorney, Kara O’Donnell

O’Donnell Law Offices   (857) 526-1355

Last week, the Senate rejected a jobless aid bill, despite President Obama’s push for more spending to bolster the economy.

Emergency jobless benefits, which provide up to 99 weeks of income support, expired June 2. Since then, more than 1.2 million people have had their checks cut off, according to estimates by the Labor Department. That number is expected to rise to more than 2 million people.

White House press secretary Robert Gibbs said the president would not give up on the measure. “The President will continue to press Congress to pass this bill and bring this relief that’s critical to our economic recovery,” Gibbs said in a statement.

Advocates for the unemployed vowed to continue fighting for an extension, saying it makes no sense to abandon people when the unemployment rate is 9.7 percent — far higher than the cutoff points for emergency unemployment benefits after previous recessions.

“We’ve never come close to doing anything like this in the postwar period,” said Andrew Stettner, deputy director of the National Employment Law Project. “This is going to cut . . . consumer spending. If they want to cut short the recovery, this is the best way to do it.”

“I frankly hope when Republicans go home . . . will scratch their heads and say: ‘What were you thinking?’ ” said Sen. Sheldon Whitehouse (D-R.I.), where the jobless rate stands at 12.3 percent, one of the highest in the nation. If Congress fails to extend emergency benefits, Whitehouse said, “It would be pretty bad.”

If you are a person who sees no way out of your credit card problems, a Chapter 7 bankruptcy might be right for you.  Call Massachusetts Bankruptcy Attorney Kara O’Donnell for a free consultation at (857)526-1355.

Kara O’Donnell, Esq.
O’DONNELL LAW OFFICES                    (857)526-1355
Quincy, Massachusetts

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Posted by Kara O’Donnell

By Bankruptcy Attorney Kara O’Donnell
“Chapter 20”

A “Chapter 20” bankruptcy occurs when a Chapter 7 bankruptcy is filed to discharge unsecured debts then a Chapter 13 bankruptcy is filed. This is often done to allow the debtor to catch up on mortgage payments.

If you file a Chapter 7 and get a discharge, three years must pass before a Chapter 13 filing. Whereas if you filed for 13 previously, you must wait 2 years before filing another 13 petition.

However, if you are in the process of a Chapter 7 bankruptcy, you may CONVERT your 7 to a Chapter 13. However, the Supreme Court has held that the right to convert is NOT absolute and may be denied for bad faith. (Marrama v. Citizens Bank of MA)

By Kara O’Donnell, Bankruptcy Attorney

(857) 526-1355       Quincy, MA
www.QuincyLegal.com

In a bankruptcy filing, debtors have the right to claim a generous amount of property as exempt.  (Exempt property is NOT allowed to be taken by the Trustee and sold to pay the creditors.) 

While most debtors choose to use the Federal exemptions,  debtors who have a large amount of equity in their home most often prefer to use the Massachusetts property exemptions instead.  Consult with a bankruptcy attorney to determine which plan of action is right for you.

While there is a set dollar amount of property that can be exempted in Federal exemptions, there also exists ADDITIONAL exemptions to protect almost all of your retirement funds in bankruptcy. This is a very broad protection that applies to all types of plans including 401(k) plans and 403(b) plans. IRAs and Roth IRAs are protected but only up to the amount of $1,000,000.  (There are some exceptions as to rollovers – consult with a qualified bankruptcy attorney.)  

And as mutual funds are not retirement funds, they would be subject to the exemptions mentioned at the beginning of this post.

Kara O’Donnell, Esq.
O’DONNELL LAW OFFICES (857)526-1355
Quincy, Massachusetts
http://www.QuincyLegal.com

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Posted by Kara O’Donnell

A decision to file for bankruptcy should be made only after determining that bankruptcy is the best way to deal with your financial problems.

Many were under the impression that the 2005 change in bankruptcy laws now prevent many individuals from filing bankruptcy. While bankruptcy has become a bit more complicated, at least for the attorneys preparing the filing, most people still find themselves eligible to file and obtain the fresh start that bankruptcy offers.

What Is Bankruptcy?
Bankruptcy is a legal proceeding in which a person who can not pay his or her bills can get a fresh financial start. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. In Massachusetts, these courts are located in Boston, Springfield and Worcester. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.

What Can Bankruptcy Do for Me?
Bankruptcy may make it possible for you to:
– Eliminate the legal obligation to pay most or all of your debts. This is called a “discharge” of debts. It is designed to give you a fresh financial start.
– Stop foreclosure on your house or mobile home and allow you an opportunity to catch up on missed payments.
– Eliminate a 2nd mortgage but only a) in a Chapter 13 filing and b) if your first mortgage is already MORE than your house is valued.
– Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.
– Restore or prevent termination of utility service.
– Allow you to challenge the claims of creditors who have committed fraud or who are otherwise trying to collect more than you really owe.

If you are considering filing for bankruptcy and you live in Massachusetts, contact Bankruptcy Attorney Kara O’Donnell at 857-526-1355.

Kara O’Donnell, Esq.
O’DONNELL LAW OFFICES (857)526-1355
Quincy, Massachusetts
http://www.QuincyLegal.com

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Posted by Kara O’Donnell

Well at least as it applies to the Creditors in bankruptcy cases. You know who Creditors are: banks, credit cards, auto finance companies, school loans, your match.com account (just kidding).

2 weeks ago a unanimous Supreme Court concluded that bankruptcy creditors ought to read their mail once in awhile. Perhaps even pay attention and act upon what they read there. Otherwise, they have only themselves to blame. Seems pretty straightforward, no?

This decision involved a rather straightforward case.

A man filed a Chapter 13 plan in 1993. He included a provision in this plan that would discharge the interest on his student loans — something that normally would require he prove undue hardship through an adversary proceeding. He mailed a copy of this plan to the lender. The lender filed a claim asking to be included in the case but did not object to the plan. So the court approved the plan. The consumer completed his plan, received his discharge and that should have been the end of it. He walks away and thinks all is fine.

But the student loan lender did not agree and sought a ruling from the courts that it should not be bound by the plan. It admitted it received notice of the case and a copy of the plan. It just apparently didn’t read the plan. So several years later, it wanted to go back and “fix” the problem. (NOTE: Does this seems fair to you? Yeah, me neither, but read on . . .)

The Supreme Court disagreed. It said, in effect, the federal rules allowing a party to a case to set aside “void” judgments or decisions should not be used in this way. And this is true, even where the debtor has included a provision in the plan which would normally not be allowed. If the creditors, the trustee and the court do not object, it will be binding on the creditors who receive actual notice and sleep on their rights.

Of course, for most people it doesn’t take the Supreme Court to tell you to pay attention to legal mail. Many children and most adults could grasp this simple logic. But the irony is that multi-billion dollar companies would prefer the courts change the rules so that carefully reading the fine print of documents sent by consumers is not required.

Now, the Chapter 13 trustee has to read the plan, so why wouldn’t the creditors try to get her to absorb the extra costs of objecting to “inappropriate” plans? Could it even happen?

In this case the non-readers Citibank, Chase and Wells Fargo got beat up in court by a single bankrupt consumer and his lawyer.

Kara O’Donnell, Esq.
O’DONNELL LAW OFFICES (857)526-1355
Quincy, Massachusetts
http://www.QuincyLegal.com

Help@QuincyLegal.com

Posted by Kara O’Donnell

In 2004 to 2005, word spread that a new bankruptcy law would soon go into effect.  The fear was that many, if not most, people would be prevented from filing Chapter 7 and getting a full discharge of debts. Because of this fear, the filings just prior to the BAPCPA law coming into effect hit over 2,000,000 for the year 2005!

2006 saw a much lower number, as many of those who had been considering bankruptcy for a few years decided to file before the new law came into effect. 2006 filings? A relatively low 573,151.

2007: Word was spreading that the revised bankruptcy law still allowed many middle to lower income people the help they needed and the number of filings again went up. 2007? 801,880.

2008: The U.S. slips into recession mode and unemployment is climbing. While many ran up credit cards in the mid-2000’s, they were now no longer able to make the minimum payments. Interest rates and late fees on those cards only added to the problem. 2008 filings? 1,060,061.

2009: 10% unemployment and no signs of job creation lead to an economic meltdown for millions of middle income families across the country. 2009 filings? 1,406,125.

Will we see total filings for 2010 hit TWO MILLION? It seems possible given the (still) high unemployment rate and lack of significant job creation.

Kara O’Donnell, Esq.
O’DONNELL LAW OFFICES (857)526-1355
Quincy, Massachusetts
http://www.QuincyLegal.com

Help@QuincyLegal.com

Posted by Kara O’Donnell

The short answer – YES.  And NO.

  Chapter 7 bankruptcy has no limit on the total debt involved.

 As for Chapter 13 bankruptcy filings, since 2007 the limit of debt has been $1,010,650 in  secured debt, and $336,900 in unsecured debt.  But on April 1, 2010, those debt limits will increase in accordance with the Consumer Price Index increase which has occurred over the past 3 years.  The estimated new limits will be $1,081,500 for secured debt, and $360,525 in secured debt.  

Kara O’Donnell, Esq.
O’DONNELL LAW OFFICES (857)526-1355
Quincy, Massachusetts
http://www.QuincyLegal.com

Help@QuincyLegal.com

Posted by Kara O’Donnell

by Attorney Kara O’Donnell
O’Donnell Law Offices
http://www.QuincyLegal.com

A new year brings more changes to the face of bankruptcy in the Boston Bankruptcy Court. 341 Creditor Meetings are now being held at the Post Office Square location in the heart of the Financial District.

As for substantive changes to the bankruptcy law . . . there has been ongoing debate in Washington about a proposed pro-consumer amendment to the Wall Street Reform and Consumer Protection Act.

This Act would change the law and allow bankruptcy judges, in certain cases, the flexibility to not only reduce mortgage interest payments but also the actual principal of the loan. (They already can do this for second vacation-type homes, a loophole benefitting the well-to-do.) Under current law bankruptcy judges may not alter the principal amount due on primary mortgages.

In fact many economists believe that the only real way to slow the number of foreclosures is to allow such a law to be put into place.
But the 2,400 member strong Mortgage Bankers Association is dead set against it and is arguing that the proposed cram-down legislation “will encourage more homeowners to opt for bankruptcy, and it will inject new risk into the mortgage market, thus making it more difficult for borrowers to buy, sell, or refinance a home.” Sound like a bunch of malarkey to you?

Keep an eye on the news for developments. If there’s anything that cash-strapped homeowners could use in 2010, it would be just a little more help from Washington.

Kara O’Donnell, Esq. is a bankruptcy attorney in Quincy, MA. Call 857-526-1355 for help with your bankruptcy filing. http://www.QuincyLegal.com

Kara O’Donnell, Esq.
O’DONNELL LAW OFFICES
Quincy, Massachusetts
http://www.QuincyLegal.com
Help@QuincyLegal.com

Posted by Kara O’Donnell

by Attorney Kara O’Donnell, O’DONNELL LAW OFFICES

In this age of housing prices being LOWER than the mortgage balance, it isn’t too often that I get a bankruptcy client who has alot of equity in their house.

For those who have already done basic research on Chapter 7 bankruptcy, you will already know that Federal exemptions allow you to keep a little over $20,200 of equity in your home. As this exemption is per individual, the amount of equity that can be protected per couple is just over $40,400.

What happens if an individual has more than $20,200 in equity in their home, is he out of luck?
Not at all! In such a case, the individual could use the Massachusetts state exemptions as opposed to the Federal exemptions.
The MA state exemptions protect property that the debtor occupies or intends to occupy, including mobile home up to $500,000. (MGL 188-1) There are special provisions for owners over 62 or disabled, but the same total exemption. (MGL 188-1A)

The only catch is . . .
The Debtor must record a homestead declaration before filing for bankruptcy in order to take a MA homestead exemption (unless the title to the property already contains a statement of homestead). (MGL 188-2)

How do I know if I have a homestead declaration on my house?
Easy. Just call or visit the website of your county’s Register of Deeds. They can tell you if you have one already filed and how to file one if you don’t.

If you are a MA resident and considering filing for bankrupcty, call Attorney Kara O’Donnell at (857)526-1355 for a free consultation.

O’DONNELL LAW OFFICES, Quincy, MA

by Massachusetts Bankruptcy Attorney Kara O’Donnell, www.Quincylegal.com

Costumed Jurors No Reason for Reversal

It was a decision that could have haunted the trial judge for years, had the appeal turned out differently. As the complicated civil trial in Massachusetts Superior Court dragged on into late October, the jurors asked the judge if he would allow them to wear costumes on Halloween. After consulting with counsel for all parties and hearing no objection, the judge allowed their request. On appeal, the defendants argued that the presence of jurors in costumes turned the trial into a circus and denied them due process. In an opinion issued this week (Zabin v. Picciotto), the Massachusetts Appeals Court delivered the defendants a trick rather than the treat they’d hoped to receive.

With or without the consent of counsel to the parties, it is regrettable that the trial judge agreed to the jurors’ request. The introduction of Halloween costumes cannot but have detracted from the seriousness and gravity of formal court proceedings. However, as to the defendants’ claim of a due process violation, the judge did not merely accommodate the jurors’ request; he consulted with counsel for all parties before doing so, and all counsel agreed. The issue is waived.

That wasn’t the whole of it. At one point, plaintiffs’ counsel handed out candy to the costumed jurors. Later, a proposed “cast list” was circulated for a Hollywood movie version of the trial. Neither of these provided grounds for reversal, the Appeals Court said. “The record reveals no objection to counsel to any party handing out candy to the jurors or any indication that the ‘cast list’ was circulated to the jury.” Here, indeed, victory was sweet.

Debt Management Companies

September 11, 2009

by Attorney Kara O’Donnell of Quincy, MA.  www.QuincyLegal.com

As a practicing  bankruptcy attorney in Massachusetts I am asked legal questions almost everywhere I go.  Some of the best are at the bus stop from my neighbors.  They are “everyman” questions, questions that I think alot of people are wondering about but that some are not able to ask if they don’t have an attorney relative or neighbor. . .

Today I ran into a neighbor who brought up an interesting topic: Debt Management Companies.  The gist of her question was, “Who are they and why is it that you can end up owing MORE money by using them?”

My answer went something like this . . .

“Much like the Bird Flu Virus, debt management companies and their ads seem to have come out of nowhere and taken over the airwaves.  Just go to the Legal Services section of Craigslist and you see not only ads by attorneys (which you’d expect to see) but also ads by debt management companies and by attorney referral companies.”  (More on referral companies in the next blog.)

“Basically, the companies have you sign up and you agree to pay them for their services in attempting to reduce your debt (usually a credit card) balance or interest rate.  They can offer no guarantee as to likelihood of success as it depends solely upon the whim of the credit card guy on the other end of the phone.  You are told to STOP paying your credit card bills and to begin sending that money instead to the debt management company.  The company will then hold it in an account while they call your creditors and negotiate better deals for you.  If they are able to get a low payoff on a card, for example, they will pay it off using the funds in your account.”

“Now, the problem lies in that the company doesn’t ONLY withdraw funds out of your account to pay your debtors, but that it also withdraws funds to pay ITSELF for the work it is performing on your behalf.”

My neighbor then asked why is this such a bad thing.  I continued . . .

“First, their fees can quickly escalate and usually are far more than what the customer expects. Second, there are NON-PROFIT companies that perform this service for little to no cost.  Simply search CONSUMER CREDIT COUNSELING and NON-PROFIT in your area. (In MA, it is  Consumer Credit Counseling Service of Southern New England)   Third, you can DO THIS YOURSELF and for FREE.  Just call your debtors and advise that you are in tough financial shape and can’t make payments as scheduled.  Ask for a rate reduction or for a payoff of your whole balance at a discounted rate.  (Ask if they will accept a lump sum payment of half of your balance, for starters.)   Put your negotiation skills to work. If need be, and if it is accurate, tell them you may need to file bankruptcy if you can’t get some help.  Your credit card creditors may be willing to take a portion of the entire debt now rather than have you discharge it all in bankruptcy court and they get nothing.”

Now, in the case of my neighbor’s friend, she ended up owing MORE money than she did before she hired the debt management company for the following reasons: 

a) They were unable to get concessions from the debtors,

b) Their fees for each of the services (calls, letters, emails) were too high

c) They “churned” the account. (Churning is a term often used to describe actions of unscrupulous stockbrokers whom buy and sell client stocks merely to get the per-transaction fee for each action.)  And, because they are paid for each and every action they take, they profit almost every time they touch your file.

d) All of the above.

In summary, there is no easy way out of high balance consumer debt.  If you are fortunate enough to be employed and to be able to meet and maybe even PAY DOWN balances then a renegotiation strategy with creditors may work for you.  However, if you are falling more and more behind every month and see  no way out, it may be time to start looking into bankruptcy options. 

Bankruptcy can wipe out all credit card debt and provide a fresh start.  However, it is not a decision to be made lightly and one must weigh the pros with the cons before arriving at a decision.

Kara O’Donnell, Esq.

Law Office of Kara O’Donnell

www.QuincyLegal.com

Quincy, MA