Wednesday, July 31, 2013

Don't Let Creditors Leave You Homeless

Protecting Your Home from Creditors both Present and Future

by Frances Rahaim, Ph.D.
aka "The Money Doctor"

Any homeowner in danger of becoming delinquent on credit cards or other loans, knows the added stress and worry of losing their home in the process.  While I am not an attorney, I do feel there are some highlights which may be of benefit, and warrant further research, and so I will attempt to point them out here in layman’s terms.

Although the Homestead Act, which underwent many changes in 2011 may be well-known by attorneys, it seems the general public is often unaware of the protection this act may offer from creditors when filing a bankruptcy, or in a judgment or lien status.

The revised Homestead Act provides for automatic protection of $125,000 of equity in your home. For greater protection, the homeowner must file a “Declaration of Homestead” with the Registry of Deeds in the area the home is located, and may benefit from the full $500,000 of equity homestead protection. This applies to principal residences only. Homeowners age 62 and older, or who are disabled may be eligible for additional protection of up to $1 million.

It may be important to note that the declaration will not protect against liens imposed by the Massachusetts Department of Transitional Assistance (formerly known as Public Welfare) as a result of Medicaid benefits. Therefore this act may not protect the equity in your home in the event you enter a nursing home for which Medicaid is paying. However, it may be possible for a surviving spouse to remain in the home until death, at which time Medicaid may seek reimbursement from the estate for the benefits paid.

One area that the Homestead Act may be particularly helpful is in a bankruptcy, where it may allow the homeowner to retain a much greater portion of the proceeds from a liquidation sale than they would be allowed under federal bankruptcy law exemptions. This could decrease or even in eliminate the possibility that the homeowner would be required to sell their home due to a Chapter 7 filing.  In a Chapter 13 bankruptcy, it may even reduce the percentage of unsecured debt that the homeowner would be required to repay.

Perhaps the most important revision in the act, is that the Declaration now protects   against pre-existing debt without the need to file for bankruptcy.

But bankruptcy or delinquencies are not the only reason to file under the Homestead act.  There are other instances where filing a declaration of Homestead on your principal residence may be prudent. For instance, protection against future law suits or other liabilities. In short, this act is designed protect some or all of the equity in your home against present and future financial risk.

The Declaration form is simple to complete, and should be recorded the Registry of Deeds in the County where the property is located. The cost to file is a mere $35.00.

As always, when considering this type of decision, it is advisable to seek legal counsel.  A good resource to begin your research is Secretary of the Commonwealth William Francis Galvin’s website at

For more information about dealing with creditors and managing debt properly, visit

For questions or comments, please email
or call 413-774-5555.

Thursday, July 25, 2013

Old Debt - New Tricks

Old Debt, New Tricks

by Frances Rahaim, Ph.D.aka "The Money Doctor"

Tax refunds may bring debt collectors, salivating at the possibility of a financial windfall.

The idea of collecting on dead-in-the-water debt is very appealing to a debt collection company. The fair debt collection practices act (FDCPA) defines debt collection companies as any entity which collects debt on a regular basis.  This could be a debt collection agency, attorney’s office, or a company buying unpaid debt.

Before you give up your refund to a collection company, there are a few things you should know. The first to consider is the statute of limitations in your state. In Massachusetts, it is six years, Rhode Island ten, and New Hampshire is three years. If the clock ticks past the statute of limitations, with absolutely no payments being made to the creditor, the debt is considered to be time-barred.  This means that a debt collection agency may no longer sue you for the debt. This is not to say you no longer owe the debt, only that you may not be sued for it.

The company may, however, continue to try and collect from you, and many collection agencies become increasingly aggressive as the statute deadline approaches.

Should you be contacted by a collection agency regarding a debt that you believe is time-barred, you should ask directly if the debt is time-barred, or the date of the last debt payment received. If they decline to answer or you believe the answer is not truthful, you should send a letter within 30 days asking that they verify the debt. They are not allowed to continue to collect until the debt is verified.

            The most important thing to remember is that in most states, absolutely any payment starts the clock ticking again on the statute. In some states even the promise to pay is enough to revive the debt.

            For more information about time-barred debt, you may contact a legal aid lawyer, your state Attorney General’s office, the Federal Trade Commission, or PowerDownDebt, Inc.

Disclaimer: the above blog entry is the opinion of PowerDownDebt, Inc., and Frances Rahaim, Ph.D. , and should not be considered as legal or tax advice. Please seek the advice of a qualified attorney or tax professional. PowerDownDebt, Inc. is a debt management company located in western Massachusetts, and advocates for good credit etc .And asetc.

For more information about debt and improving your relationship with money, visit or call 413-774-5555.

For questions or comments, please email:

Wednesday, July 17, 2013


How to Manipulate Your FICO Credit Score
by Frances Rahaim, Ph.D.
aka "The Money Doctor"

For more information about keeping your credit clean while getting out of debt quickly, visit

For questions or comments, please email us at