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Confront Financial Hardships after Divorce

  
  

Once divorced, people should become accustomed to fewer financial resources. The first step on the road to adjustment should be reviewing cash flow, expenses and reserves. Few money management essentials like preparing and maintaining a budget help the divorced live within their means. Adjust to a more frugal lifestyle by limiting the use of your credit cards. Consult with an accountant to review tax plans. Divorce has always been a painful passage in an individual’ life, so make use of this pause to the greatest extent possible to create the life you want. 

Information 

  1. If possible, consult a financial planner or a daily money manager before or during the divorce. Proper planning will certainly avoid some potentially disturbing financial effects. It is really confusing to deal with the aftermath of a divorce. Know your actual cash inflow, and your debts. Consult a planner to create a realistic budget. Pay down every debt, and stop making use of credit cards as far as possible. You can even liquidate any personal valuable item to increase the cash flow. For instance, you can sell your artwork or fine jewelry (including wedding jewelry) to increase funds to pay down debt. If your employer does not offer health and life insurance, obtain one yourself.
  1. Pay alimony and child support, if this is a part of your divorce judgment. If any job loss or illness prevents your timely payments, notify the court immediately about the incident. The court may, however, reform your financial obligations.
  1. Seek your employer’ Employee Assistance Program (EAP). EAPs are only one of the workplace-provided support systems your employer may offer. An EAP helps employees acquire personal and financial counseling, and supports you with a bunch of information and potential resources for your situation.
  1. You may join a community for assistance while needed. These days, many communities offer support for men, women and children. They also provide assistance while in emergency with funds and food. Seek community programs before your family's requirements become urgent.
  1. Reach out to your friends and ask for help during hardships. As they are well known about your divorce, they might help you accordingly knowing the suffering the divorce has caused. You can also join a divorced persons' meeting in your community. If you talk with persons who are also divorced, it will help you learn how to tap even more into community and employment resources.

This article is by Patricia Briggs.

Massachusetts Property Exempt From Seizure

  
  

On January 7, 2011, Governor Patrick signed into law legislation updating the personal property exemptions for debt collection. The new law increases the value of property, earnings and savings exempt from seizure during debt collection. The law replaces an antiquated version that exempted from seizure things like: $700 of equity in an automobile; and two cows, twelve sheep, two swine and four tons of hay. The significance of the state personal property exemption is enormous. To maintain employment, housing and their general welfare, people need their vehicle, clothing, computers and work tools at today’s values.

The changes made to the law include an increase in the automobile exemption from $700 to $7,500 (wholesale value) and $15,000 for the disabled and elderly; jewelry from zero to $1,225; bank accounts from $125 to $2,500; furniture from $3,000 to $15,000; cash or savings from $125 to $2,500; and rent money from $200 to $2,500.

These updated exemptions can also be used in the proper circumstances to benefit individuals filing bankruptcy. When state exemptions are elected, the Massachusetts Homestead provides up to $500,000 of protection in a residence. The new exemption statute will also provide protection for the debtor’s personal property. Previously, when state exemptions were used to protect equity in a debtor’s home, jewelry including the engagement ring was exposed to turnover since no state exemption existed. Now, $1,225 of fair market value can be protected. Similarly, automobiles that had more than $700 in equity were exposed. Now, a debtor can own a car with $7,500 in equity (wholesale) and protect it.

I won’t be able to joke about protecting a client’s two cows, twelve sheep, two swine and four tons of hay anymore, but I will be able to more efficiently help them keep their property while getting a fresh start.

The Massachusetts Homestead Law - 2011

  
  


On December 17, 2010, a new Homestead Law was signed by the Governor in Massachusetts. This version of the Homestead Law seeks to resolve a number of issues that arose over the years regarding the prior version of the statute and in addition new benefits are provided.

To understand the provisions of the new law it is necessary to understand the concept of tenancies. A tenancy describes how multiple owners hold their interests in relation to each other. The tenancy is stated in the document creating the ownership. If no tenancy is stated, a tenancy in common is created. Joint tenants hold a single unified interest in the entire property. Joint tenants have equal shares in the property and may occupy the property subject only to the rights of other joint tenants. If a joint tenant dies, their interest passes to the remaining joint tenants. A tenancy by the entirety is exclusively available to married couples. It also has a right of survivorship. Neither spouse may independently convey their interest. There is protection for each against creditors of the other. Tenants in common own a fractional interest in the entire property. Upon death, a tenant in commons' interest will pass by the terms of their Will, or if none, by intestate law.

There is now an automatic Homestead in the amount of $125,000 for all individuals owning an interest in real estate used or intended to be used as their home. If multiple owners of such real estate own their property as joint tenants or tenants by the entirety, they will each have an automatic Homestead of $125,000,but the aggregate will be capped at $125,000. Multiple tenants in common and beneficiaries of trusts have the $125,000 automatic Homestead allocated in accordance with their percentage interest.  To illustrate, a tenant in common with a fifty percent interest would have an automatic Homestead of $62,500.00.

The law allows owners to record Homestead Declarations at the appropriate registry of deeds and thereby acquire $500,000 of protection. This is the same amount of protection that a recorded Homestead provided under the prior law and it supersedes the new automatic protection.

An uncertainty in the prior law was whether multiple owners could record Declarations of Homestead without disrupting the Homestead protection of a co-owner who previously recorded a Declaration. Now it is clear: multiple owners may claim a Homestead in the same home. 

Under the prior law, it was unclear if trust beneficiaries could acquire a Homestead estate. The new statute makes it clear they can.

The new law retains a dichotomy of an elderly and disabled Homestead (Section 2) and a Homestead available to all other types of owners (Section 3). Homestead protection amounts are now further defined by the type of tenancy an owner holds.

Under Section 2, a person 62 years of age or older, or a person who is disabled may record a Declaration of Homestead which will secure $500,000 of protection for the owner. A disabled person is defined as one who is medically determined to be permanently physically or mentally impaired to the extent they meet the disability requirements for Supplemental Security Income. If co-owners file under this same section and are tenants in common or trust beneficiaries, they each will receive $500,000 of protection with their filings. If they are joint tenants or tenants by the entirety filing under Section 2 they each will have $500,000 in protection individually but in the aggregate they will have $500,000 multiplied by the number of such declarations, plus $250,000.

Under section 3, an owner may file a declaration and acquire $500,000 in protection. Tenants in common who file such a declaration receive protection in the amount of $500,000 multiplied by their percentage interest in the property. Joint tenants and tenants by the entirety each receive the individual protection of $500,000 but their aggregate protection is capped at the $500,000. There is no stacking of these individual homestead amounts under Section 3.

Homesteads under the new law will continue to protect an owner’s family. Family is defined to include married co-owners, married individual owners and non-titled spouses and unmarried individuals, all with their minor (under 21 years of age) children.

Homesteads are not applicable only to single family homes, accessory building and land. The new law makes it clear that two to four family homes, condominium units, co-operative housing and manufactured homes may have Homesteads declared in them. It was uncertain under the prior law if owners of manufactured homes who were not 62 years of age or older, or disabled, could file a Homestead on such property.

Another clarification was made in regard to the proceeds derived from the sale of a property which was subject to a Homestead and from insurance proceeds acquired from the loss of such a property due to casualty. Sales proceeds are now protected until another home is acquired as a principal residence or one year from the sale date, whichever occurs first. In the event of casualty, protection runs until repair is completed, a new home is acquired or two years, whichever occurs first.

Another issue which existed under the old law was whether recording of a mortgage terminated a homestead. The new law provides that while the existing Homestead of an owner will be subordinate to new mortgages signed by the owner, the Homestead will not be terminated and will remain in place. Mortgage documents need not contain subordinating language and they will be treated as superior to Homesteads for signing owners and their non-titled family members. Mortgage lenders are prohibited from requiring a release of an existing Homestead in connection with making a mortgage loan.

No deeds between spouses, former spouses or other co-owners who hold an estate of Homestead and no deed between a trustee and a trust beneficiary or between a life tenant and a remainderman will terminate a Homestead unless it is expressly released in the deed. This also clarifies an issue unresolved under the prior law.

Finally, the new law requires the closing attorney or settlement agent in all mortgage transactions, to provide the mortgagor with notice of their right to declare Homestead protection pursuant to chapter 188 and to obtain receipt of the notification from the mortgagor in writing. The notice must include, but not be limited to, a summary of the differences between the automatic protection and the enhanced benefits acquired by making a declaration.

The law will take effect 90 days from signing.

Massachusetts Automobile Accidents

  
  

      I recently settled a Massachusetts automobile personal injury case. In evaluating any such case it is important to examine the vital components: liability, damages and insurance coverage.

      Liability is responsibility for causing the accident. The question is whether someone failed to act with due care as a reasonable person would have acted, thereby causing the accident. This is called negligence. The typical rear end collision is often caused by a driver following the vehicles in from of them too closely, or by being distracted. The vehicle in front stops or slows in traffic, and the driver in the rear causes a collision.

      Not all accidents result in bodily injury. Sometimes only property damage is involved. If a person is injured they might be able to pursue compensation for their pain and suffering. In Massachusetts, their medical bills must exceed $2,000 or there must be broken bones or scarring. The value of compensation will equate to the severity of their injuries. The more serious the injury, the more valuable the case. Length of hospitalization, time lost from work and duration of medical treatment, medical costs, scarring and permanency of injury will all contribute to valuing damages.

      If there is a negligent party causing an individual to be injured and there are damages, the case might have value. The next question is whether the negligent party has insurance coverage or assets from which to pay compensation. In Massachusetts, the base, mandatory automobile liability insurance coverage is $20,000 per individual and $40,000 per accident.

      Richard Traina of Tuttle & Traina Insurance notes that the mandatory minimum amount of automobile insurance coverage is rarely adequate. Automobile owners can protect their assets by buying higher amounts of liability coverage. Richard also notes automobile owners should also protect themselves and their families by purchasing underinsurance coverage, uninsured motorist coverage and Medical Payment coverage. Underinsurance coverage will protect an automobile owner if they are injured in an accident caused by another who has minimal, mandatory coverage. Uninsured coverage would provide coverage to the injured owner if the driver who caused the accident has no liability coverage. Finally, Medical Payment coverage helps pay for medical bills resulting from the accident. If your health insurer pays these bills the insurer will seek reimbursement from the settlement or judgment. This is not true for the Medical Payment coverage.

      Always review the automobile insurance coverage on your vehicles with a qualified insurance agent. Know and understand the coverage available to protect you and make an informed decision on what coverage to purchase.

      If you are ever injured in a Massachusetts automobile accident, retain an experienced attorney to protect your interests.

Death on the Job

  
  

      Most people realize that when an injury occurs in the course of their employment Worker’s Compensation will pay their medical bills, compensate them for lost wages lost due to a resulting inability to work, and may compensate them for loss of function of body parts and scarring on some body parts. What if the accident occurring during employment is bad and a death results? Massachusetts Worker’s Compensation Attorney Theresa M. Meltzer notes that if the deceased employee leaves a spouse and/or minor children then they are likely entitled to Worker’s Compensation benefits. These benefits would be paid based upon the deceased worker’s average weekly wage, just as if he survived.

Whenever someone is injured or dies on the job they should contact a Worker’s Compensation Attorney.

Children's Bank Accounts and 529 Savings Plans in Bankruptcy

  
  

      Debtors filing Massachusetts Chapter 7 and Chapter 13 bankruptcy cases are frequently concerned about their children's bank accounts and 529 college education savings plans. The question is whether these assets must be listed in the parent's bankruptcy filing.

      For bank accounts, it depends on how the bank account was opened. If the bank account has only the debtor's name on it there may be an issue as it would appear such an account is the debtor's and not the child's. It can be argued that account is held in trust for the benefit of the child, but the debtor will have to document and prove the monies are truly the child's. An account set up under the Uniform Gift to Minors Act will mean the monies will not be part of the parent's bankruptcy filing.

      529 Education Accounts are not considered the property of the child. They belong to the individual who opened the account and is named on it. Notwithstanding, the entire balance may not be an asset of the bankruptcy estate. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 excludes from the bankruptcy estate funds contributed to a 529 savings account more than 720 days before filing the bankruptcy petition. Contributions made between 365 and 720 days before the bankruptcy filing are limited to an exclusion amount of $5,000. Amounts contributed to a 529 plan within 365 days before the bankruptcy is filed are not excluded from the debtor's bankruptcy estate. In each instance, the amount considered is the contribution and not the account balance.

      Finally, while anyone can contribute on behalf of a designated beneficiary, only amounts contributed to the accounts of a child, stepchild, grandchild, or step-grandchild of the debtor for the taxable year for which funds were placed in such account are excludable as described above.

Bankruptcy and After Foreclosure

  
  

      When a debtor files a Massachusetts Chapter 7 bankruptcy there is an automatic stay that stops most collection actions, including foreclosure and eviction proceedings. Notwithstanding, the bankruptcy will protect the debtor for only a short time. Holders of mortgages that are delinquent may file motions for relief from the stay for the purpose of foreclosing, and for permission to evict the owner after foreclosure. If such a motion is allowed, Massachusetts state law is followed to complete the foreclosure sale. This can take months. After the foreclosure auction, the holder of the mortgage may have ownership, but it must acquire possession via a summary process action, otherwise known as an eviction. This can lead to further delays in the lender recovering possession. To save time, the lender will often negotiate with the former property owner. A former Chapter 7 debtor-client who experienced foreclosure was recently offered $4,000 to move out and allow the bank to have immediate possession.

 

 

 

 

 

To Buy or Not to Buy Owner's Title Insurance?: That is the Question!

  
  

 

      I'm often asked whether a buyer of Massachusetts real estate should spend the money to purchase owner's title insurance on their new home. This is a type of insurance policy protecting a homeowner when problems arise regarding their rights of ownership in their real estate. My response is the answer often lies in how the property owner generally manages risk, but considering the purchase of real estate is often the greatest investment they've made to date, it is a wise purchase.

      In the past few years, I've been able to assist homeowners to access their owner's title insurance coverage to remedy problems with undischarged, prior owner mortgages still on their title. The coverage allowed sales of homes to proceed without delay while the problems were later fixed. Another client was unable to tear down a small home existing on their lot to build a bigger house because an easement ran through the width of their property which prevented rebuilding a larger home. That owner was paid over $45,000 for the loss in value he suffered. Finally, another client tried to build a new home on his vacant lot, only to be told by his bank's lawyer that a probate had once been done in the wrong procedure and the bank wouldn't continue with the loan until the correct procedure was corrected. I was able to do the correct probate and his owner's title coverage payed for the legal fees and costs.

      Given the substantial value of the real estate investment and the low, one time, premium I believe Owner's Title Insurance Coverage is a good value.

I Surrender!

  
  

      When a debtor files a Massachusetts Chapter 7 bankruptcy case or Chapter 13 bankruptcy case their intention as to property must be stated. If the debtor does not wish to attempt to keep property an intention to surrender the property is stated.

      If a debtor states an intention to surrender, the property does not automatically transfer to a secured creditor. To obtain title, a secured creditor must obtain relief from the bankruptcy stay of collection proceedings and then follow state law to obtain title to the present owner's interest in the property.

      I advise all of my clients that ownership translates to liability for injuries sustained on the property. A bankruptcy filing will protect a debtor for such claims existing before the filing, but not those arising after the filing. Therefore, it is imperative to keep the property insured until legal title transfers.

 

 

Showtime

  
  
I want to give the subsribers to my blog advanced notice that William DiAntonio of Dollarbill911 will partcipate in the radio show "Money Matters with Scottie McCall" to be broadcast on WBNW AM 1120, WESO 970 and WPLM AM 1390, Friday, January 29, 2010 at 5:00PM. Bill will discuss elimination and control of debt, credit counselling and bankruptcy. Stay tuned for more information shortly.
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