Bankruptcy reform is needed to resolve the student loan crisis

Monday, April 21st, 2014

student loan debtThere are so many young Americans who today are facing crushing consumer debt problems due to the fact that they tried to better themselves by going to a top-flight college or graduate program in order to put themselves in a position to obtain a good job.  The problem is that those who attend a great school in almost every case can not do so without incurring close to if not more than $75,000 in debt.  Many of these students no doubt enter into a student loan in order to finance these degrees with the best of intentions of paying the money back.  However, the sad truth of the matter is that colleges are charging so much money to finance higher education that very few students will be able to ever pay back these loans without living a life of a bare minimalist.

If a consumer had any other type of significant unsecured debt if $75,000 and they came to my office, I would at the very least have a serious discussion about filing for bankruptcy.  The problem is that Congress has put various limitations on Title 11 and the Federal Bankruptcy Code which restricts almost everyone from obtaining any type of debt relief on student loans.  There has certainly been a lot of talk in Congress about amending the bankruptcy laws as it relates to discharging student loan debt.  Yet, talk is all that we have really seen come out of the government over the past decade since the Bankruptcy Reform Act was passed in 2005.

Perhaps most disturbing are comments by far too well-off members of the legislature that try to shift the blame to the former students who are now hard working members of the American workforce.  For example, House Republican, Dennis Reboletti of Illinois recently made a comment that he worked two jobs to put himself through college.  Well, Congressman, you may have worked two jobs to pay for your education, but students in this day and age could work 5 full time jobs and still not even earn 10% of the funds needed to pay for their schools costs and living expenses at most major American universities.

In today’s reality, filing for bankruptcy is not an option because of the large barriers to discharge that the law imposes on student loan discharges, where a consumer needs to prove to a Federal Judge that they can not pay for the loan today and it is unlikely that they will ever be able to pay back the loan due to a medical condition.   I do think that we need to have real bankruptcy reform to avoid the need to go through adversary proceedings in order to discharge huge student loan bills, but we also need to address the overriding issue that major universities and colleges are acting like pigs with respect to the fees they are charging, simply because they realize the government will continue to allow students to borrow more and more money, and then turn around and generate large profits on the interest.

This article was written by Attorney Michael Goldstein, a consumer bankruptcy attorney for the Law Office of Goldstein and Clegg, LLC.

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When are you an Independent Contractor or an employee?

Wednesday, April 9th, 2014

Many companies are trying to save on paying employees by improperly classifying them as independent contractors.  Why do they do this?  If a company hires an Independent contractor, the company does not need to pay various benefits, such as health insurance, tax with holdings, social security contributions or vacation and sick time, when an  employee is out of work.  This can become a problem for the contractor as well due to the fact that their legal rights and tax liability is affected by the classification of an independent contractor vs. an employee.

In Massachusetts there are specific rules that must be followed in order to properly classify an employee as an independent contractor.  More specifically, Massachusetts General Laws, Chapter 149, § 148(B) outlines the criteria used to determine the proper status of someone who works for a third party.   The law is actually quite clear on the subject in that under Massachusetts law, creates a presumption that “an individual performing any service … shall be considered to be an “employee” unless the three part is passed.  In order to overcome this presumption that the persona is an employee, the employer must demonstrate that, “the individual is free from control and direction in connection with the performance of the service, both under his contract for the performance of service and in fact; and the service is performed outside the usual course of the business of the employer; and, the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.”

What this means in plain simple English is that if a company tells you what to do, where to do it and how to do it, they are in control of your employment and the test fails.  If the test fails, then the person is properly considered an employee.  If this is the case, then the employee may have recourse against the company for damages including taxes and insurance paid for by the employee, where certain contributions should have been made by the employer.  If you find yourself in this situation, it is a good idea to contact a local employment discrimination or labor law attorney who can fully analyze your situation and determine what rights you have and if you have in fact incurred damages that can be recovered.

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How often does a commissioned employee need to get paid?

Thursday, April 3rd, 2014

Many people work in an industry where it is very common to get paid based upon performance rather than simply showing up to work. It does not matter how many hours you work, but rather the employee’s compensation is based upon sales and marketing or at least a portion of revenue that comes into the business. This type of wage is called a commission. However, it is important to note that in Massachusetts, the payment of commissions are regulated by the same laws as hourly wages, M.G.L. c. 149 § 148.

Under the Massachusetts Wage Act, every person having employees in his service shall pay weekly or bi-weekly each such employee the wages earned by him within 7 days of the end of the pay period. With respect to when commissions are due is a little different though. They must be paid but are subject to the commission plan agreement. Typically an employer will offer a plan to pay based on a specific period of time. If they don’t do this, then you need to rely on past history and conduct of the employer. A commission can be paid, weekly, monthly or even more sporadically depending upon when the commission is earned. Often times, a retailer will need to hold back payment for a period to allow for return of merchandise too.

What happens in the event that the time an employee works in order to generate commission does not result in a commission fee equal to or greater than the minimum wage? The law in Massachusetts and typically across the county sets the minimum wage that is meant to protect workers from unfairly low compensation. However, for an employee who is paid at least half of their compensation in commissions are exempt from the minimum wage laws if your earnings average one and a half times the minimum wage per hour.

It should be noted that commissions are looked at in the same way as hourly pay, and if your employer either fails or refuses to pay your commissions, then they can be subject to having to pay 3 times the money you are owed, and all of your attorney fees, and court costs, should a law suit be filed and a judgment entered in favor of the employee.

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Does my employer have to pay me all vacation and sick time when I quit?

Monday, March 10th, 2014

Often times, when an employewagese is faced with a hostile work environment, he or she simply can not tolerate the working conditions and feels they have no option but to quit.  Other times, an employee may simply leave a job for another opportunity.  In either event, under Massachusetts law, your employer is required to pay you not only all of the wages you have earned, but also must pay you for your vacation and sick time.   The only exception to this rule is if there is an employment contract which clearly and unambiguously states otherwise, and even then, such an agreement, may violate public policy and not be upheld by a Court if challenged.

Pursuant to Massachusetts wage law, (Chapter 149 § 148) when an employee who is subject to Massachusetts law quits their job, the employer must pay the employee wages for all hours worked, including tips, earned vacation pay, holiday pay, and definitely determined and due commissions by the next regular payday, or, if the employer does not have a regular payday, on the next Saturday.  As a matter of fact, In 2009, The Supreme Judicial Court of Massachusetts held in the case of Electronic Data Sys. Corp. v. Attorney Gen., 440 Mass. 1020 (2003), that the statute requires an employee to be paid for unused vacation time remaining at the time their employment ends.  More specifically, the state Attorney General stated as far back as 1999,

“Employers who choose to provide paid vacation to their employees must treat those payments like any other wages under    [the Wage Act]…. Like wages, the vacation time promised to an employee is compensation for services which vests as the employee’s services are rendered. Upon separation from employment, employees must be compensated by their employers for vacation time earned `under an oral or written agreement.’”

It should also be noted that if an employee is fired then the employer must payout all of the earned compensation on the day their employment is terminated.  Should the employer fail or refuse to do so, they could be subject to very serious consequences including having to pay the employee three (3) times the owed wages in addition to any and all reasonable attorney fees incurred in pursuing the employer.

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Can a lender sue you for debt after they take your home in a foreclosure?

Tuesday, February 18th, 2014

Many homeowners in Massachusetts have found themselves in the position of owing more money on their homes they the current fair market value of the property. Additionally, many of these homeowners have suffered from some sort of financial difficulty which has made it nearly impossible to afford their current monthly mortgage payments. As a result, they have simply stopped paying and either sold their home in a short sale, or plan to allow the mortgage company to foreclose and take the property back. When this happens, often the lender will not stop at simply selling the house, but continue to pursue the homeowners for their personal assets, vehicles, and even a potion of their weekly wages. When this happens, what do you do?

The problem becomes even more complex when the original lender either allegedly sold or assigned their rights in the mortgage to another lender. When this happens, the homeowner has the right in Massachusetts to challenge a foreclosure, but due to the legal fees required to fight this, and the desire to let the home go, they simply ignore that option.

When such a situation arises, there are a number of issues to consider and possible options to help the homeowner. The first is who is the real the holder is in due course. In simple English this means, even if a lender wants to foreclose who has the right to do this? With all of the transfers, you may be able to challenge a lenders right to bring any action against you if they do not have the proper paperwork, and can prove all of the transfers were conducted pursuant to Massachusetts law. Even after the foreclosure, a claim for a deficiency judgment still needs to be supported with standing by the Plaintiff (Lender). If the proper lender does move against you, they have the right to foreclose. Additionally, in Massachusetts even if you do a short sale, depending upon the specific language of the short sale and acceptance by the lender, they may still have the right to come after you for the deficiency.

In most situations, the bank will then transfer its right to sue you to some third party collector. If a debt collector does come after you for the difference in price between what the lender gets and what it is owed, they have the right to come after 15% of your weekly wages, and some personal property. However, they must first send you a letter, and give you 30 days to dispute the debt. Moreover, they must tell you in this letter that you have a right to demand proof of ownership of the debt, a full accounting of the debt, and a demonstration of all calculations as to how the debt collector believes you owe a specific amount of funds.

Perhaps even worse, the lender could forgive the debt, which as of January 2014 can create a taxable event, where you would owe the IRS a third of the forgiven debt, due to the expiration of the Mortgage Forgiveness Debt Relief Act. There are options including discharging your financial obligation through filing for a bankruptcy case or negotiating directly with the lender and or debt collector. Due to all of the above, it is a very good idea before you get to this point, you speak to an experienced debt relief or bankruptcy attorney in the area. There are options you have including filing bankruptcy, or working a deal with the proper lender to avoid future issues. Many law firms including the Law Offices of Goldstein and Clegg, LLC do offer free initial consultations

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Do Employers need to follow their own employee handbooks?

Monday, February 3rd, 2014

handbook that contains all of the rules that must be followed in the workplace. This is similar to a member of a union, who has a collective bargaining agreement, with the exception that a handbook is not in and of itself considered a binding contract. However, if the employer violates the terms and conditions of that handbook, and as a result, the employee suffers some adverse or hostile treatment at work, the employer may be found liable for breach of contract.

The Courts in Massachusetts have shown an ever increasing willingness to bind employers to the terms and conditions of employment set forth in employee handbooks and personnel manuals. See e.g., O’Brien v. New England Tel. & Tel. Co., 422 Mass. 686 (1996); Jackson v. Action for Boston Cmty. Development, 403 Mass. 8 (1988); Ferguson v. Host Int’l., Inc., 53 Mass. App. Ct. 96 (2001). The Courts take a functional approach when considering whether a handbook or personnel manual may form an implied contract requiring the employer to follow progressive discipline or conflict resolution policies. See O’Brien, 422 Mass. at 692. This includes considering whether employees could reasonably consider the manual to create a binding promise on the part of the employer. Id. at 691. In this vein, the courts look to whether the manual was implicitly a part of the employment relationship. Id.

In many situations, the employer maintains a “Code of Conduct” and it is clear that “it would be objectively reasonable for employees to regard the manual as a legally enforceable commitment concerning the terms and conditions of employment.” Ortega v. Wakefield Thermal Solutions, 20 Mass. L. Rep. 337, *7-*8 (Mass. Super. 2006) (Connelly, J.) (citations omitted). For example, the Code explains that it is designed to create an “environment where people feel comfortable” and describes the “Company’s commitment to employees under the code” (emphasis added). It is plainly evident that the Company intended to bind itself and its employees to the terms set forth in the Code. If the exact environment complained of by an employee is one prohibited by the employee handbook and if the employee followed the exact steps handbook outlines then an employer may be found to have breached an employment contract. Cf. Buttrick v. Intercity Alarms, LLC, 77 Mass. App. Ct. 1107, n.3 (2010) (unpublished) (explaining evidence that employee followed policies indicates reasonable reliance).

As such, if you have found yourself in the situation where you have been wrongfully terminated and the employee handbook provided some right or obligation that the employer did not follow, you should immediately consult with an employment discrimination attorney in your area to find out what if any rights you may have.

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What Will Happen At Your Unemployment Hearing

Saturday, February 1st, 2014

iStock_000000562013SmallOften times when you leave a job you are seeking to offset your lost income with unemployment assistance. However, in some situation, your employer may challenge whether you are actually entitled to receive money from the state of Massachusetts due to the fact they fired you in response to some bad act you performed, or because you simply quit the job. When this happens, the Department of Unemployment Assistance (“DUA”) denies your claim, you have an automatic right to appeal that decision and request a hearing on the matter.

An unemployment hearing is very much like a small short trial with rules of evidence and procedure. What happens at this type of hearing is that the decision maker, for now we will call them a judge, even though they are not actual judges, will start by questioning you on what happened at your job. After they complete their questions, if you have an attorney, your attorney will then be able to ask you questions to fill in the gaps as to what the Judge did not ask. After that, the lawyer for your employer will have the opportunity to cross examine you and ask you questions with exhibits and evidence. Once that is done, the whole process starts again, but on the employer’s side.

The key in these types of hearings is the burden of proof, that is who needs to prove what. If you were fired, then the employer must prove they terminated you for good cause. If instead you quit, you have the burden to prove that no reasonable person could withstand the hostile nature of the job.

It would be in your interest if the employer is going to appear with counsel to have your own, but I do understand that sometimes you just can’t afford one. However, the question you really need to ask is can you afford to loose the hearing.

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Who Can Claim to Be Sexually Harassed At Work?

Sunday, January 19th, 2014

A discussion about employee rights with respect to sexual harassment in the workplace by Attorney Deirdre Clegg of the Law Office of Goldstein and Clegg

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You can’t be fired because of a wage garnishment

Saturday, January 4th, 2014

Employees often fear that their personal lives, especially their financial affairs and any public records can come back to haunt them at work. As an example, many people in society today have lived or continue to live on the use of credit and loans. As a result, if something happens financially to the family, such as an illness or FMLA leave, the loss of a job, divorce, etc, they may fall behind on payments. When this happens, a creditor does have the right to sue that person and even ask the Court to force the person’s employer to hand over a portion of their wages to pay back the creditor. In Massachusetts, a Plaintiff can ask the court to force the employer to hand over up to 15% of wages.

When a wage garnishment happens, or creditors start contacting an employee’s job, many employees have an unreasonable fear that the employer will be upset with the employee for letting this happen and cause the employer to incur additional administrative expenses. As a result, the employee is afraid that the employer will fire them or take some other form of adverse employment action. However, this fear is unjustified and frankly would be considered a wrongful termination and a violation of the Federal law.

More specifically, it is unlawful for an employer to fire or take any adverse or negative action against any employee due simply to the fact that the employee’s wages or salary has been garnished by a creditor, pursuant to the Consumer Protection Credit Act, 15 U.S.C., 1674. Now this is not to say that if your salary is going to be divided and paid to someone other then you, it is a good thing, and if it does happen, you would be well advised to seek the advise of a lawyer who may be able to stop this garnishment, but at the end of the day, your job should not be at stake just because of a financial hiccup that has nothing to do with your work.

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