Thursday, December 15, 2011

A New Year's Resolution

As the holiday season gets into full swing this December, health and fitness is likely the last thing on your mind.  With Christmas cookies and other assorted baked goods arriving at home, work or in the store, you are probably just as distracted as I am.  The holiday season is the time we forget about our master plan for healthy living and we enjoy ourselves and the friends and family around us.  As the holiday goes by we start to focus on the next year to come and what it will bring for changes in our lives, good or bad.  We make resolutions for these changes.  New Year’s resolutions are part of our annual vow to change certain parts of our life for the better. 

Monday, November 28, 2011

Friday, November 18, 2011

Facing Foreclosure? Let me help!

Is Your House Underwater?
Recent national statistics indicate that one in seven homeowners currently owns a distressed property. These are homes that have either gone through foreclosure or are being marketed as "short sales." In a short sale, the homeowner can't afford to maintain the mortgage, but the lender - rather than foreclosing - agrees to the sale of the property for less than the balance of the loan. As an attorney, the combination of my law firm’s experience in real estate, title and bankruptcy has culminated in spending a great deal of time advising homeowners, who owe more on their mortgages than their homes are now worth, what options they have in this real estate market. I recently spent several days in Massachusetts becoming certified as a distressed property expert and remain one of the few attorneys in Maine to currently hold that designation to assist distressed homeowners with foreclosure alternatives at no cost to them.

Tuesday, October 11, 2011

Way Too Much Debt? Is Filing Bankruptcy Right for Me?

Is Filing Bankruptcy Right for Me?

Understanding the “B” Word: Debunking the Myth of Bankruptcy

Mary-Anne E. Martell, Esq.

            In my law practice, I spend a great deal of time speaking to consumers, who are their wits end, about the possibility of filing bankruptcy. Hardworking people, they have historically always paid their bills but an event, whether divorce, illness, or an unexpected expense, have finally pushed them over the financial brink. The harassing creditor telephone calls, unopened mail, sleepless nights and the certified foreclosure complaint leave little hope.

 It is no secret our national economy continues to be in a downward spiral with unemployment hovering at 9% and foreclosures at a all time high. The cost of living continues to escalate beyond our means and healthcare coverage is unattainable for many of us. More and more people are finding themselves struggling to adequately provide for their families without incurring significant more debt and having to tap into their credit lines. This “perfect storm” has resulted in a 40% rise in bankruptcy filings nationwide. The people of Maine are no exception.             

The bottom line is that, over the past twenty years, lenders have substantially extended credit to significantly increase their own profits with little or no regard for the economic impact on the individual consumer. America runs on credit, but what choice do we have? Tightening the belt is one thing, however, there has to be something there to tighten.

As people struggle to maintain the basics, credit limits are increased exponentially and people, in an effort to care for their families and maintain their homes, are forced to use it. No matter what the circumstance, one missed payment often results in numerous fees, possible rate changes and a subsequent drop in your credit score. Then there is the mortgage mess with Lenders promising loan modifications that run simultaneously with your foreclosure only to end up not being approved and you having run out of options. Let’s face it; it is bad out there.

A lot of people who call me are uncomfortable talking about the “B” word. For many people, it continues to have significant stigma attached to it. However, the significant rise in bankruptcy filings statistically acknowledges that more and more people are utilizing this option. For years, large corporations, advised by a bevy of lawyers, have sought protection from their creditors under the federal Bankruptcy Code. Over the last few years, individual consumers have come to understand that they too are afforded that same creditor protection under the federal Bankruptcy Code.

When the Bankruptcy Code was modified in October of 2005, it purported two main objectives. The first objective was to provide debtors with a fresh start in their financial lives.  Whether it is the crushing interest, late or over-limit fees of credit cards or mounting arrearages from adjustable rate mortgages, there comes a point where it is virtually impossible to ever overcome that mountain of exponential debt. The second objective of the Bankruptcy Code provided some equity to creditors by mandating a verification process for bankruptcy eligibility.

            There are two options available to individual consumers under the federal Bankruptcy Code. The first is Chapter 7, which is a complete liquidation or what is termed as a straight bankruptcy. If you are current on your secured debts, such as a mortgage or vehicle, it is possible to discharge your unsecured debt such as credit cards or medical bills. The second options is Chapter 13, which is a reorganization of your debt and allows you to roll your secured debt arrearages into Court supervised payment plan from anywhere from 36 months to 60 months depending on your disposable income and your secured debt load.

In both Chapter 7 and Chapter 13, Maine has opted out of the federal Bankruptcy Code and has its list of statutory exemptions that are not attachable by creditors.  Contrary to public opinion, it is not the intention of the federal Bankruptcy Code to leave you without a home or a vehicle to get to work. Many times, depending on your circumstances, those items, as well as others, fall well within Maine’s exemptions and are retained by the debtor.
There is a significant emotional component when facing the decision to file bankruptcy. People believe that they have somehow financially failed. Nothing could be further from the truth. Those individuals who contemplate filing bankruptcy often do so out of necessity and are held to a federal standard that attempts to mitigate abuse of the system. When the new bankruptcy laws were implemented in the fall of 2005, it included a new “means test.” This “means test” was a formula designed to keep debtors with higher incomes from filing for Chapter 7 and under the reorganization scheme of Chapter 13, debtors must repay a portion of their debts. Many people mistakenly believe that they must be completely penniless in order to seek protection from their creditors under the federal Bankruptcy Code. This is not true. People can earn significant monthly income and still qualify for Chapter 7 bankruptcy.
Another concern for people is the impact that a bankruptcy filing has on your credit report. However, if you are not making your credit card payments, behind in your mortgage or facing repossession of your vehicle, your credit score has already taken a significant hit. After two years, the impact of a bankruptcy filing on a credit report begins to wane and rebuilding your credit is much easier when you are not longer liable for mountains of debt.
If you have questions on whether a bankruptcy filing may be right for you, the law firm offers a free one-half hour consultation. It does not cost anything to educate yourself on your options and you may find, filing bankruptcy may be right for you.

Friday, September 2, 2011

Why Smart Women Invest in Estate Planning

It is important for us to ensure that our families and financial goals are met after our death. As an attorney, it is my opinion that we as women face unique challenges when it comes to estate planning. Beyond our inherent emotional attachments, we are often financially responsible as mothers, wives, sisters, aunts, widows, employers and friends. Culturally and biologically, women are caretakers. We are often confronted with tough choices about finances, beneficiaries and health care. We do not always have the benefit, during these confrontations, of possessing all the knowledge that we need to make informed decisions. As wives, we do not always know or understand what estate planning our spouses already have in place. As single mothers, we are confronted with the dilemma of the continued care of our children without the benefit of partners. We are all faced with a variety of important decisions that result from different life circumstances and choices. As varied as those life circumstances and choices may be, there is one common goal. After we die, what are our wishes? What do we want for the people that we love?
After fifteen years of practicing law, I have found that conversations discussing death can be difficult for many of my clients depending on what stage of their life they are currently in. The gamut of emotions I see ranges from humor to sadness and from acceptance to fear. But death is a reality for all of us and timed without our control. Estate planning is better dealt with now than not at all for the sake of our loved ones..
In 2009, the estate tax hit $3.5 million. It was completely phased out in 2010 and was reinstated in 2011 at $5 million. Many people think that estate planning is not necessary or applicable to them if they do not currently have $5 million in assets. Nothing could be further from the truth. Estate planning is not just about tax planning. Tax consequences are always an important consideration in estate planning and people should seek competent legal and financial counsel in these matters. But estate planning is so much more. After we die, what are our wishes? What do we want for the people that we love?
It is about planning for our children and naming their guardians. It is about planning to protect and care for our spouse, partner, relative or dear friend after our death. It is about planned charitable giving to a great cause that is close to our heart. It is about planning to effectively manage assets received from the divorce or death of our spouse. It is about planning for the future of our businesses, whether by sale or its transfer to our family.
Estate planning is a legal vehicle to dictate how, to whom and when we want our estate assets to be distributed. I know my children would not have been financially mature enough to manage a substantial amount of inherited wealth upon turning eighteen years old. I shuddered at that possibility and urged my parents to extend the age to twenty-five when I hoped they would be possibly more mature.
Whether for the benefit of children, spouses, partners, businesses, charities or churches, your estate assets must be set to transfer in a legally effective manner mirroring your desires. No matter what a person’s net worth is, it is important to have a basic estate plan for all the fore –mentioned reasons. It is also important to discuss your wishes with your heirs to avoid confusion and minimize conflict after you die. It is a necessary conversation that is conducive to effective estate planning.
At a minimum, a basic estate plan should include a will, a financial power of attorney and an advanced care directive. These basic estate documents address after-death issues such as who the asset will goes to, who is handling the financial affairs and who is responsible for making medical decisions upon an individual’s medical incompetency. A trust may be the chosen vehicle for some people depending on their estate planning goals. More and more people are using trusts as an estate planning vehicle. Trusts allow people to put conditions on how and when their assets are to be distributed. Trusts are often used to reduce estate and gift taxes. Trusts are also private documents and avoid the delay and publicity of probate court. 
Every individual should have a will. A will indicates exactly where you want your assets to go upon your death. Dying without a will, or dying intestate, leaves it up to the laws in the state where you die on how your assets are to be distributed which may not coincide with your own personal wishes and adds delay to the administration of your estate. A will is also the best place to indicate who you want to be the guardian of your minor children if you die before the children reach the age of majority. Even if you have a trust, a will is used to distribute assets outside of the trust. A person’s assets may include real estate, bank accounts, business interests, insurance policies, investments and retirement accounts.
Estate planning is as individual as we are as women. It is a necessary reality of our lives to effectively carry out our wishes in our deaths. It may be the final chapter for us as caretakers.
Mary-Anne E. Martell, Esq., is Senior Legal Counsel and Founder of Seacoast Law & Title, a three-attorney law firm in Westbrook specializing in estate planning, real estate, business and family law.  Mary-Anne welcomes comments or questions at or (207) 591-7880.

Wednesday, February 23, 2011

Before You Say "I do"

For many people the thought of a prenuptial agreement leaves a bad taste in their mouths.  Images of rich old men trying to keep their vast wealth out of the hands of their young trophy wives come to mind.  But in reality there are many reasons for average, everyday, “regular” couples to consider prenuptial agreements before they take the big walk down matrimony aisle.

            Since many more people are waiting until they are established in their careers before they marry and more people are entering into second marriages, it is not uncommon for one or both halves of a couple to own a home, be invested in stock portfolios and/or retirement accounts, and have other assets, that they are bringing into a relationship.  On the other side of the same coin, it is also not uncommon for one or both halves to have collected significant debt prior to entering into a marriage.  While at the outset of a marriage, these assets or debts may fall into the category of things the law considers “premarital” it is easy to co-mingle assets or debts during a marriage.  Consequently, what was once owned by or the responsibility of one spouse may becomes owned by or the responsibility of both spouses in the event of a divorce.  A prenuptial agreement is an effective means of preventing such a situation from occurring.

            A similar misconception is that prenuptial agreements should be feared or resisted by a spouse who is in the more vulnerable financial position prior to a marriage.  In truth, the spouse who has less financial standing may be able to better their position through a prenuptial agreement and ensure greater financial stability should the marriage end.  While divorce law may offer some protection, litigation is timely, expensive and uncertain.  A conversation and negotiation prior to entering into the marriage can provide each spouse with certainty, financial security, and a sense of fair dealing should they find themselves in the situation of divorce.  Additionally, couples can determine in advance the financial value of child-rearing and domestic contributions should one spouse decide to leave the workplace or forgo education in order to raise children.  Prenuptial agreements can also provide financial protection for a spouse’s children of a prior relationship in the event the new marriage should end or that spouse should die. 

            In conclusion, couples should not so simply dismiss the concept of a prenuptial agreement out of fear or misconception.  While one may feel a bit uncomfortable raising the topic, couples must get used to communicating about financial issues and concerns.  Discussion of a prenuptial agreement is only a beginning to such a conversation that should and will continue throughout a marriage.  

Tuesday, January 25, 2011

Short Sales

It is not a secret that the real estate market values have decreased dramatically. Your house may not be worth what you paid for it just a few years ago. If you are experiencing difficulties keeping current on your mortgage, there are various options for you. If you are in the market to sell your home and/or are being foreclosed upon, consider a short sale.

What is a Short Sale?

A short sale is the lender accepting less then what is owed for full payment on a loan. If you borrow $250,000 and sell your home for $200,000 and the lender agrees to accept the $200,000 as full payment on the loan, then that is a short sale.
Short Sales have become a necessary fact for many, many Americans. Most don’t even realize this is an option instead of foreclosure. As a matter of fact, 1 out of 172 mortgages are in foreclosure today; 1 in 100 mortgages are on the foreclosure spectrum; and 1 in 11 people are late on their mortgage payments.
When is a short sale allowed?
It is up to the lender. You must be in a hardship. Hardship is defined by the Lenders as circumstances out of one’s control. Some examples would be: job loss, job relocation, family illness, divorce, significant increase of mortgage payment due to an interest adjustment, and an unforeseen increase in living expenses. One of the first steps in applying for a short sale is the hardship letter. You must explain why you are unable to no longer live up to your financial obligations. The point is that a lender will need solid reasons to allow a short sale.
Where do I start?
First of all, it is more likely than not that the Lender does NOT want your house and will be willing to consider a short sale. In today’s market, Lenders are flooded with inventory of homes. You will have to prove your hardship. You should do a monthly budget which proves why you can’t afford your payment and other documents required by your lending institution.
Should I continue to make my mortgage payments?
The short sale process is for those who are unable to make their loan payments, not people who would rather spend their money elsewhere. Contact us to set up a consultation to discuss your options including credit counseling or bankruptcy, if need be. Once you stop making loan payments, you will receive a delinquency notice and technically enter the “pre-foreclosure” period. This is the period that your legal counsel will contact your lender and their Loss Mitigation Department.
How will this affect my taxes and credit?
The Mortgage Debt Forgiveness Act of 2007 allows gains on a short sale to be forgiven up to $1 million on a primary residence if sold in 2007 through 2010. Believe it or not, if you sell your $250,000 home for $200,000 and the lender accepts that amount for full payment, it is considered a gain of $50,000. Prior to the Mortgage Debt Forgiveness Act of 2007, you would have to pay income tax on that gain. On the other hand, if you have refinanced and used that money to pay off debt or purchase items, the $50,000 will be reported as income. Of course you should always consult your accountant for details and eligibility. A successful short sale will bring your credit score down 80-100 points, whereas a foreclosure will bring your credit score down 200-250 points.
When can I apply for another loan?
Typically, if the short sale is successful (meaning the short sale has closed and the property is sold) you can expect to be eligible for another loan in approximately 18 months with a reasonable interest rate. If you were to be foreclosed upon, the expected wait before you can apply for another loan would be 3 years. Seacoast Law & Title is currently partnered with a credit repair company that will assist you in rebuilding your credit.
Bottom Line!
Don’t despair! If you have exhausted all avenues to try to make your mortgage payments and are unable to do so, then it’s time to contact the attorneys at Seacoast Law & Title and inquire about the benefits of a short sale or any other option that is available to you in these tough economic times.