My new Privacy Law and Policy blog is underway. This blog examines privacy law issues that include:
Debt and bankruptcy lawyers across MA know it's not just Massachusetts bankruptcies, a look at all bankruptcy filings by state shows bankruptcy filings continue to rise. For additional statistics see the American Bankruptcy Institute's News Room and Statistics. The ABI shows a graph alongside their assertion that consumer debt is consistent with bankruptcy filings and also states:
As go consumers (and consumer bankruptcy) so go some retailers, too. Linens-N-Things and Circuit City are only two recent big name business bankruptcies. Some consumers looking for last minute deals may be scouring the "going-out-of-business sales" in search of a bargain price. A Better Business Bureau article, however, is warning shoppers to be on the lookout for false deals. The BBB article cites examples of prices being marked up by the liquidators handling the sale.
Research by the Federal Reserve indicates that household debt is at a record high relative to disposable income. Some analysts are concerned that this unprecedented level of debt might pose a risk to the financial health of American households. A high level of indebtedness among households could lead to increased household delinquencies and bankruptcies, which could threaten the health of lenders if loan losses are greater than anticipated.
Massachusetts consumers beware. This New York Times article gives gift card givers something to think about, especially as the holidays near.
More and more calls and emails have inquired about short sales, among other debt problems and today's credit crisis. The misguided assumption many people seem to be making is that these "short sales" are now routine and easy. This would be an unwise assumption to make. While a short sale can be accomplished in Massachusetts or elsewhere, there are no guarantees your lender will allow a sale for less than what is owed on the mortgage ("short"). There are even times when it is to their benefit not to allow a short sale (perhaps a topic for later).
Further, the administrative logistics involved in getting a short shale approved can prove challenging if not outright discouraging in these transactions. Even in those cases where a "short sale" is ultimately allowed, you must beware because not all short sales are created equal. Are you released from future liability? What do all those contracts mean? Who is paying for what and when? The housing crisis was created in part by a lot of people being told to just sign documents and everything would be just fine. Remember, don't make the same mistake twice.
An issue that has proven to be extremely difficult in short sales has been second mortgages or equity lines, an issue for a later post, but one people should make sure they mention when it applies in their situation.
Driving from Weymouth to Rockland this morning (a short trip) the news was pretty consistent. Things aren't good. You don't need to be a bankruptcy lawyer to know the bankruptcy news is not limited to national stories. Local impacts are being felt throughout Massachusetts. As companies fold or downsize, jobs are eliminated, leaving employees questioning, "What's next?"
For some (not all), perhaps the answer includes starting a business in Massachusetts. The Duct Tape Marketing Blog lists its Top 12 Resources for Start-Ups. In addition to these 12, I thought I'd offer a dozen earlier posts I had written on business law issues or resources in Massachusetts a start-up might consider:
Bankruptcy avoidance vs. filing for bankruptcy in MA has been a recurring theme I've been discussing in my law office with lawyers, debtors, and creditors in several recent discussions. Some are potential bankruptcy clients while others are small business owners worried about debts they're owed. The economy is hitting many hard. Gas prices and public transportation reliance provides a continuing example.
It is being reported that transportation data to be released is revealing 5.2 percent increase in transit ridership during the second quarter, "as record-high gas prices pushed people to take millions more trips on buses and rail systems." While gas prices are certainly one factor in the equation hitting peoples wallets there are others too.
People are struggling and unable to pay their rising debts. Many are worried about their homes, medicine, heating costs, credit cards, collection companies, mortgages, taxes, insurance... This has led to more conversations around places like Weymouth about bankruptcy and bankruptcy avoidance options. Whether they're single, married, kids, no kids, individual consumer, family, business owner..., no two case are the same.
Anyone in debt should not rely on rumors and unsubstantiated advice when it comes to their financial security and future. Instead they should seek the assistance of an attorney or debt relief agency that can find options for a fresh start or a workable plan. Not all plans or proposed solutions, however, are created equal. If something doesn't feel right, get a second opinion. I have a client who has struggled to make payments under a "plan" arranged for him by a credit "assistance" group, but it's obviously only made things worse for him during the last year -- he's in more debt now. Now it's time to file bankruptcy, it probably was the right time a year ago...
Blogs, social networks, and the web extend well beyond Massachusetts borders thus it's often instructive to look around the country and consider how laws are developing elsewhere as they relate to blogging and cyberspace in general. Trial lawyers of both today and of the future will need to be well versed in the law and understand this evolving interactive arena that changes day-by-day. Blogger and California law professor Eric Goldman recently mentions a case involving blog postings being introduced as evidence in a trademark infringement lawsuit. He quotes the court's holding which excluded the blog's comments from evidence.
The Court declines to consider these postings in reaching its decision. The Court is concerned, on this record, that the blog entries lack sufficient indicia of reliability.FN4
Nothing is known about the persons who made the entries, about whether they are related in any way to either party or whether they are describing true events and impressions. Moreover, the authors' meaning and the import of the blog entries are far from clear.
FN4. This should not be construed as a ruling by the Court that entries on Internet blogs could not, on a different record, be reliable and admissible.
(The case was as consumer confusion case on whether "Mooo Tracks" ice cream infringes upon "Moose Track" ice cream. Blue Bell Creameries, L.P. v. Denali Co., LLC, 2008 WL 2965655 (S.D. Tex. July 31, 2008)).
You can look at this from two perspectives, the blog comments were kept out. On the other hand, there were some criteria listed for their exclusion. If these were met, would the comments be allowed into evidence here? It would seem so, why shouldn't they be? Look to the next round of cases to have greater foundations laid down concerning the inclusion of blog comments as evidence.
Like many attorneys I talk with, I'm already seeing more of my clients who are relying on blogs or websites for much of their news. The constantly dwindling size of my newspaper backs this up too. Some do believe, "If I read it, then it's true," but as we know, that's often not the case.
Reliability, validity, authenticity are continuing concerns of justice and in the short term, it seems the web won't make things easier in these areas. Here the law still has much to work out regarding how it's going to keep pace with the web, social media, web 2.0 or whatever name or thing is next. Smart trial lawyers will need to keep pace with these evidentiary possibilities as more and more communications and events are recorded somewhere someplace electronically. Appellate courts and lawyers should see interesting and intellectually stimulaing times ahead in this area of law. While some of the tools of proof may be new, the principles remain the same -- it may just take a little time to connect the two.
Our bankruptcy practice in Weymouth, MA is now online allowing our lawyers to serve people suffering from debt in Massachusetts who would like to work on their bankruptcy qualification questions from the privacy and convenience of their own home. Our clients or potential clients can access their bankruptcy interview from any computer connected to the internet.
Our law office has a number of online offerings we're enhancing and will be rolling out over the next few months as we continue seeking innovative ways of providing quality, efficient, and convenient services in South Eastern Massachusetts and the Greater Boston Area.
Often it's tempting to take an legal document found on the internet (sometimes prepared by a lawyer), make a few changes, and recycle the attorney's language to create any number of legal documents. Massachusetts consumers and businesses are smart and think, "Why pay a lawyer in Massachusetts when it's available for free online?" In some cases perhaps they could be right, in others they could be disastrously wrong. The key is to know the difference and that's where consumers and businesses can often fail. Is it worth the risk? Can what you don't know hurt you? Some examples to consider before answering:
LANGUAGE ISSUES
Real Estate Law - A party signs a "Standard Form" Offer or "Standard" Purchase and Sale Agreement, but later learns there were some key changes made to a few important words in the "standard" agreement. Just because it says "standard" don't think it is.
Employment or Discrimination Law - A company fires an employee and offers a severance package. The employee signs the severance agreement and cashes the severance check. Later the employee sues for age discrimination on the basis that the Older Workers' Benefit Protection Act ("OWBPA") was not explicitly followed. Why? Because the severance agreement made reference to 154 employees being affected by the terminations when, in fact, only 152 employees were. A federal court case covered in a Labor & Employment Law Update, Peterson v. Seagate, No. 07-2502, 2008 U.S. Dist. LEXIS 42179 (D. Minn. May 28, 2008), dealt with these facts. Here the employee's release was void, the employee kept the severance money, and the employee could also sue the employer under the Age Discrimination in Employment Act ("ADEA").
Divorce Law - An unsuspecting spouse signs the divorce agreement with all kinds of technical language concerning taxes and other issues which the other spouse has had reviewed by his or her lawyer, but tells you he or she just got it off the internet.
PROCESS ISSUES
In other cases, it's not just the language but also the process that must be followed to insure your wishes are followed.
Will - A parent has two adult children: one is a loving caregiver and the other hasn't been heard from in years. The parent decides to make a will leaving everything to the caregiver. The caregiver signs the will as a witness. Did you know the caregiver could now receive nothing and the other child everything?
Business Law or Trusts - A couple forms an LLC or Trust but fails to follow the steps needed to treat the LLC or Trust as a separate legal entity. The LLC or trust may end up providing no protection and leading to liability which hadn't been properly planned for.
Real Estate Deed - A simple deed is taken from the internet or copied from the public records at the local Registry of Deeds. Names are substituted and the deal goes forward. Later the buyer learns a probate estate matter was involved and the government has a lien against the property. This would have been found if a customary title exam was conducted. Guess who may now be on the hook for the lien amount?
RULES VS. PRINCIPLES
Last night, after a quick run from Weymouth to Hingham and back, I was reading a Law Practice article discussing the difference between our legal system and the U.K.'s approach to electronic evidence and discovery issues ("e-discovery") ("electronic data discovery" or "electronic data disclosure" known as "EDD"). The article contained a comment that I found interesting:
All the interviewees agreed that in the U.K. EDD is principles based, whereas in the United States it's rule based. Everyone believed that this is the biggest difference-and that the principles-based system is better.While this is a good theoretical point to consider in reviewing this new area of law, it's not a debate you want to find yourself dealing with in a case that involves your interests. As you can see from above, our rules-based laws can lead to results that may not always agree with your principles or your intent. Think twice the next time you cut and paste. Often when a legal document is involved, there's something of real value at stake. Most times when a client asks me to look at "something" they found on the internet, it has serious flaws when applied to their specific circumstances. Luckily, we can fix this before it's too late. Those who come in after the fact and seeking help -- they don't tend to make the same costly mistake twice.
Boston.com article, "Mass. woman kills self before home foreclosure," reports:
A 53-year-old wife and mother fatally shot herself shortly after faxing a letter to her mortgage company saying that by the time they foreclosed on her house that day, she would be dead.According the the article, her husband did not know the foreclosure was scheduled today because his wife took care of the bills and mail. The article also indicates the woman may have thought that life insurance proceeds could be used to pay for the home -- this isn't true. No life insurance company that I'm aware of is going to pay any amount of an insurance policy for a suicide claim. Let me be clear, suicide in not a solution. This tragedy does, however, speak to the problem being faced by many -- times are financially tough and many people don't know what to do.
I'm seeing more despair and anxiety in my Weymouth law office with both new and old clients. Often I'm meeting with distressed individuals, families, and business owners who break down in tears as they tell their story. Many are relieved just by talking to someone or by getting their problems off their chest. Later, when they learn alternatives to bankruptcy and foreclosure may exist for them, they ask, "Why didn't I do this sooner?"
If you are feeling overwhelmed by debt, the harassing phone calls, and threatening letters, then you need to seek help. You deserve the opportunity to explore all of your available options and to do so with an objective adviser. There should be no guilt, or shame, or judgment associated with doing this. Getting help is the responsible thing to do and it can often put you on the path toward a fresh start. A new beginning without the burden and distraction of constant worry and anxiety could be right in front of you without you even knowing it.
This morning my daughter suggested we take the net (from that game where you hit the thing that looks like an empty ice cream cone) and use it to play volleyball. I knew immediately she was talking about the net from the old badminton set because the "empty ice cream cone" was certainly the birdie we hit back and forth about a month ago. In communication and in law context is everything -- both combined can lead to real value.
You shouldn't need to talk in legal mumbo jumbo to get your point across or to achieve the result you desire. Find a lawyer who knows the law but also gets where you are coming from. Seek out an attorney who will invest in building a relationship with you. This is the foundation for providing value -- a real value that seeks to first understand and then meet your needs. Anything else is just an empty ice cream cone...
A previous post discussed Massachusetts short sales. This post explains Massachusetts workout agreements. In Massachusetts an alternative to defaulting on a loan or entering foreclosure is to renegotiate the terms of your loan.
This may be called:
a) A workout agreement,
b) Loan restructuring,
c) Debt workout,
d) Loan modification, or
e) Other names.
Basically the lender (mortgagee) agrees with the borrower (mortgagor) to restructure the terms of a loan or the repayment period. The bank benefits by not proceeding with costly foreclosure and the borrower keeps the property but with loan terms they can handle. These arrangements may be available to residential or commercial borrowers or loans secured by residential or commercial real estate. In general, the sooner you seek a workout agreement, the better your chances of success are.
Can you sell your Massachusetts home or commercial real estate for less than you owe on it without facing foreclosure?
For some the answer is “yes.” After a committee hearing in Weymouth recently (where the topic of foreclosures and the local economy was brought up), I was asked by a board member, “What is a ‘short sale’ of real estate?”
There are times when a borrower can’t make payments on their current loan or mortgage. A short sale is an alternative method of selling a property instead of losing real estate in foreclosure. In Massachusetts a lender may agree to adjust the amount owed to sell a property. This is a “short sale” of real property (real estate). Under this type of sale, the sale’s proceeds fall “short” of what is owed on the mortgage. A lender may allow a “short sale” and forgive the remainder owed under the mortgage. Why?
Foreclosure can take time, be costly, and lead to a decline in sales price at auction (especially in a declining market). A lender may permit the sale of real property (where the fair market sale price is less than the loan balance) for many reasons. Some examples are to prevent abandonment and waste of a property or to avoid the additional costs incurred by upkeep, maintenance, accruing taxes, legal fees, auction fees…
A Massachusetts real estate lawyer can offer a borrower alternatives to consider. A short sale being one of them, and one that an attorney can negotiate with your lender and structure to best protect your interests. A “short sale” is, however, only one alternative to consider. In others instances a lender may accept a deed in lieu of foreclosure or negotiate a workout agreement. These are topics for later posts.
On April 14, 2008, the United States Bankruptcy Court District of Massachusetts announced both a red-lined version and a complete version of the new local rules and forms (effective May 1), have been made available under the Laws, Rules, Fees and Forms Section of their website.
A note states in the red-lined version states,
The amendments have been red-lined except where indicated. Red-lining has not been inserted where a) the provision is new or b) red-lining would, in the opinion of the Court, interfere with the reading of the provision.
Another available resource on local rules in the Bankruptcy Court is the, The Appellant Panel for the First Circuit’s Local Rules
A Massachusetts judge advanced a public policy argument finding it, "…unfair to approve a mortgage loan that the borrower cannot reasonably be expected repay if housing prices were to fall…”
The judge indicated loans are “presumptively unfair” under our consumer protection law (MGL Ch. 93A) when they: include an adjustable rate mortgage (ARM) which is adjustable within 3 years; carry an interest rate of at least 3 percent less than the indexed rate; involve borrowers with debt to income ratios above 50%; and have 100% loan to value ratios, or have prepayment penalties that are significant or which last longer than the initial “teaser” period.
Although the loans weren’t fraudulently induced, the judge issued a preliminary injunction and offered, “Just because we, as a society, failed earlier to recognize that loans with these ... characteristics were generally unfair does not mean that we should ignore their tragic consequences and fail now to recognize their unfairness." See Eric T. Berkman’s article in Lawyer’s Weekly, "Lender's 'subprime' foreclosures require attorney general's OK".
How does the injunction work? In this case the California lender must notify the AG’s Office before foreclosure. The AG’s office has 30-45 days to respond (depending on circumstances). If the AG objects, the lender and AG must attempt to work it out in 15 days. If it’s not worked out, the lender needs Superior Court approval to proceed.
A Suffolk Superior Court judge declared whole classes of mortgages structurally unfair under state law. It is both imprudent and unfair to approve mortgage loans that the borrowers cannot reasonably be expected to repay if housing prices were to fall, Judge Ralph Gants wrote. This is an interesting judicial approach to gain time to evaluate the system in more detail. I anticipate this may leverage lenders into finding more workout deals. What steps will be taken long term? Raises some interesting property right and freedom to contract questions. See Boston Herald Article, http://www.bostonherald.com/business/real_estate/view.bg?articleid=1076243
