WSJ Reports- Bankruptcy Judge Sends a Message to Bank of America

Bank of America has been ordered to pay $10,000 per month for every month it continues to badger a couple to pay off a loan that was discharged in bankruptcy, in a ruling from a prominent judge who says he means to “send a message.” “This is not just a stupid mistake. This is a policy,” wrote Judge Robert Drain of the U.S. Bankruptcy Court in New York. “And frankly, $10,000.00 a month plus attorney’s fees may not mean much to Bank of America, but at least it will send a message that other attorneys may pick up on.” Judge Drain’s decision, memorialized in a written ruling issued Tuesday, documents a barrage of letters and phone calls attempting to collect the debt from Edwin and Michelle Ramos. Chapter 7 bankruptcy relieved them of the obligation to pay off their home loan while preserving the bank’s right to foreclose on its collateral. The calls and letters kept coming to the Ramoses, even after their attorney pointed out that their personal liability had been discharged in bankruptcy. The bank ignored him, he said, and, according to court records, failed to respond to Judge Drain until 10 days after he signed an order imposing sanctions on the lender. In a statement, Bank of America said it’s “resolving the issues with the court” and working with the homeowners “while we continue researching and investigating what transpired.” Judge Drain is not alone in his criticism of Bank of America. In March, U.S. Bankruptcy Court Judge Karen Jennemann in Orlando, Fla., fined the bank $220,000 for repeated violations of court orders involving a loan-modification arrangement. “The Debtors, even to this date, continue to receive statements from BOA claiming substantial additional payments due, erroneous payment amounts, inflated interest rates and incorrect loan type, and purporting to hold over $12,000 of the Debtors’ payments in ‘unapplied funds,’” Judge Jennemann wrote. When it came to the $227,000 home loan of Warren and Mary Houghland, the judge said it should be considered paid. The bank disputed the order, saying it was unfair, and earlier this year settled with the homeowners. Consumer bankruptcy attorneys say not much has improved in lender behavior in spite of promises that the alleged sins of the past won’t be repeated. Long after Bank of America signed on to a widely trumpeted $25 billion home lending industry consent decree requiring it to improve its treatment of borrowers, consumer attorney Thomas Cox of Maine says violations of specific requirements are “routine. I see them all the time.” Consumers with enough spare cash or savvy to hire a lawyer can prevail on lenders to make good on agreements to modify loans, Mr. Cox said. But they’re in the minority, he said. Most distressed consumers hoping for a loan modification are at the bank’s mercy. The consent decree advertised as the answer to industry practices that wrongly forced people out of their homes lacks an enforcement mechanism, Mr. Cox said. In the case of the discharged debt collection, the Ramoses had to not only hire a lawyer but also had to reopen their bankruptcy case. Last week, Bank of America agreed to stop the calls and letters except for informational notices that inform the Ramoses of what they have to do to hold onto their home. Chapter 7 bankruptcy absolved them of the obligation to pay the debt but preserved the bank’s lien on their property. “This is a national problem. It’s happening all over the place,” said New York attorney Michael Schwartz, who represented the Ramoses. “Why is BofA doing it? Because they can.” Article by Peg Brickley

This is only one of numerous violations and corrupt business seen lately by Bank of America… it’s time the bankruptcy attorneys start paying close attention to the FDPCA violations… it could be well worth the effort and beneficial to both counsel and client!

Do Attorneys Still Practice Law? Are Paralegals Now Practicing Law Instead?

Back in 1977 when I began working for law firms, there was no such thing as a paralegal.  Instead, we were called: legal secretaries.  This is because the attorney studied the law, looked up the law in their office law books and became their own law clerk.  In fact, the attorney learned every aspect of the field of law they chose to operate in and most of them enjoyed it.   By knowing the law they were able to advise their clients properly and write their own pleadings and briefs.  After writing or dictating their pleading or brief, this was given to a legal secretary and we typed out the legal document.  We did not practice law in any manner and we respected the attorney for his or her knowledge.

But in the mid-1980s some attorneys began assigning jobs to their legal secretaries that were similar to what a law clerk performs today.  The problem was that they did not raise their salary and continued to pay them a legal secretarial wage.  The legal secretaries revolted and developed the paralegal role; which was a higher paying position than a legal secretary.

I was one of the few who revolted against this concept.  I believed that attorneys should continue practicing law and legal secretaries should continue in their role and not practice law, but as you know, this is not what happened.  Instead the paralegal role was developed and today we have non-attorneys who are committing unauthorized practice of law, but it is disguised due to the fact the paralegal is employed by an attorney.

Over the years, a large segment of attorneys continued to get lazy.  Many of them depended on their non-attorney staff to know the law and keep them informed of any changes.  These types of attorneys lost the desire and the passion to know the law and practice it with a diligent effort to protect their clients and win their cases.  How do I know this?  I have worked for many of them and I see the increase of this behavior, especially in the bankruptcy field.

Prior to 2005, the bankruptcy field was filled with excellent attorneys who knew the bankruptcy law inside and out.  (I was trained by many of these attorneys.) If an attorney wanted to practice in the bankruptcy arena, he or she would work as a type of apprentice for one of these experienced bankruptcy attorneys and learn the bankruptcy law inside and out also.

But when rumors of the changes in the bankruptcy law began to surface, a large number of these experienced bankruptcy attorneys transitioned into another area of law.  You can look up arguments that attorneys published on the internet from that time period and you will see all the various reasons they opposed the new 2005 bankruptcy law.  Their arguments are too numerous to cover in this short article so I will leave the research to those who are interested in this particular topic.

However, the fact remains that when a large number of experienced bankruptcy attorneys left the field, this opened the field for many new attorneys who did not have this experience.  The number of bankruptcy cases did not stop; in fact, they increased.  And this increase caused many attorneys to open up practices and have little time to learn their bankruptcy laws.  Instead, a large number of them relied on their non-attorney staff to know this information which was the biggest mistake an attorney can make.

How do I know all this?  Not only have I worked in the legal field since 1977, but during the past 90 days I have came into contact with two bankruptcy attorneys who demanded that I know their specific state exemption codes in order to prepare their petitions.  When I argued that the attorney should practice law and know their own exemptions they became angry and fired me.  Both of these attorneys were young (under 40) and both of these attorneys were hard driven to make money, not practice law.

Personally, I find this situation very sad.  I hope that an experienced bankruptcy attorney will read this article and write other articles for legal magazines that stress the importance of why attorneys should practice law and not depend on their non-attorney staff to do the job for them.  Here are just a few of the problems that could develop for a law firm that bases their practice on these principles:

**  The attorney cannot possibly represent and advise their client properly.  Sure, they can make it appear to the client that they are knowledgeable in the law, but they will overlook loopholes that could benefit the client and loopholes the attorney does not take advantage of for their clients protection.

**  The attorney will show his or her ignorance of the law when they go to the 341 Meeting or interact with other attorneys who do know the law.  For example, bankruptcy trustees are very smart.  They process hundreds (perhaps thousands) of bankruptcy cases per year and they know the bankruptcy law inside and out.  A trustee can look at a bankruptcy petition and pick out the flaws.  When they question the attorney, they know from their response if they know the law or not.

Note:  I worked for one attorney who actually had a system of filing his petitions on certain days of the week so he could be assured of getting Trustees assigned to the case who did not give him a hard time.  In my opinion, if the attorney knew the bankruptcy law, he would not need to hand pick Trustees; he would be able to argue his clients case with any Trustee and gain a solid reputation in the court.

**  The attorney will lose the passion and feeling of accomplishment that occurs when they know the law.  There is no better feeling when you are trying to protect a client from wrongdoing by the opposing party and you find the loophole you need to win your case.   I have worked for attorneys like this, and they are so overjoyed and happy, we have had office parties to celebrate these victories.


If you are an attorney who depends on your non-attorney staff to know the law, stop this behavior now.  Join groups at your local bar association and mentor with experienced attorneys in your field who know the type of law you practice.  Seek them out, hang out with them, and study the law over and over again until you know it well.

If you are not an attorney, make sure you know the type of attorney you hire or work for.  One way to know this is to ask the attorney a series of questions.  If they cannot rapidly answer you (and need to make a call or consult with someone else to find the answer) be very leery of this attorney.

Perhaps in recognizing this problem and not tolerating this behavior from attorneys who choose not to practice law, the problem will not become so rampant in our society.  Thank you for doing your part.

Methods for Establishing Ongoing Marketing Structures within Your Business or Law Firm

Marketing needs to be integrated into your day-to-day business functions; not done as something you dread, like accounting and taking out the trash.  The following are a few tips to help you establish ongoing marketing structures for the growth of your business or law firm.  Once they become a part of your structure, it will become easier for you to implement.

** Check business-related emails daily (preferably several times a day) and respond to inquiries immediately.

** Be sure to answer all emails with a professional tone or potential clients will not place any faith in your experience and knowledge.

** Never post PERSONAL information on Facebook and Twitter if you do not want your clients to see what you post.  Instead, post comments or announcements pertaining to your business at least 2 or 3 times per week on Facebook and Twitter for additional exposure.

** Always have links to your Facebook, Twitter and LinkedIn accounts on every page of your website so that people can quickly follow you. Subscribing to ezines is quickly become obsolete because they were mostly filled with high pressure sales.  Instead, they are being replaced by social networking which is virtually the free way to market in 2010.

** Continually build your LinkedIn business group list.  Set a goal of 500 or more followers who are specifically within your specific target market.

** When you receive emails from people within your target market, add them as a connection to your LinkedIn list by copying and pasting their email address into the INVITE screen of LinkedIn.

** Set up Google alerts to be notified if anyone mentions your company (or you) on the internet.  Take time to research information about other virtual assistants with the ideas of either networking together or learning from them so you can improve upon your own services as well as your website. To set up a free Google alert, visit

** Enroll in online internet marketing classes as often as you can.  This helps you to keep up to date with new trends and the internet marketing world; while improving your marketing skills.  One of the best is at:

** Join MeetUp groups in your area for small business and entrepreneurs and attend them.  Also, if there are any paralegal MeetUp groups or organizations you can join within your field, do that also.  But do not just join and read a newsletter or two.  Take an active role by attending meetings and networking with group members.  Check out ** Write about your experiences that are related to your specific business or law firm on a weekly basis.  Post this information to your blog, which should have a separate website of its own.  We recommend you install WordPress software with the domain so it will be easy for you to update frequently or set up one online free at These are just a few tips to get you started.  However, implementing ongoing marketing techniques into your day to day business or law firm will certainly make a large difference in your profits and the growth of your enterprise.

For marketing assistance and other ideas, you may want to schedule a telephone conference with the author of this article: Victoria Ring.  Rates are currently $125 per hour and you can reach her by email at or by calling 719-659-0743

Schedule B Bankruptcy Petition Tips

Security deposits with landlords

If the debtors are renting, make sure you include the deposit paid to the landlord on Schedule B. Listing this asset does not take money from the debtor; but not listing it could throw up a red flag to the court that you may have left out additional information.

Of course, if there is no security deposit with the landlord you need to make a note for the attorney file in case this question is asked by the Trustee.

Household goods and furnishings (no lien)

Every debtor filing bankruptcy has some type of household goods and furnishings, even if it is an empty guitar case where they keep their clothes.  In addition, even if the debtor is renting a furnished apartment, he or she will have some type of household goods and furnishings such as a trash can, knives, forks, spoons and bowls, etc.  Therefore, this property type needs to always be included on every bankruptcy petition you prepare.

Household goods and furnishings (with a lien)

Any household goods and furnishings with a lien attached to them should be listed separately on Schedule B.  Then, if the debtor’s intend to keep the asset and has the income to continue making the payments, the monthly payment needs to be listed on Line 13(b) of Schedule J.

Wearing apparel

Every person filing bankruptcy will have wearing apparel.  However, debtors often do not think their clothing is worth much money and will normally write $0 as to the value of their clothing when filling out the client intake forms.  However, even if the debtor only owns a pair of sneakers, a t-shirt and a pair of shorts, there is at least a value of $1.00 that is listed under this property type on Schedule B.

One good rule of thumb is to include the number of people in the household when you write the description for this property type.  For example:

Wearing apparel and personal effects for 2 adults, 1 infant and 1 teenager

Next, make sure these family members are all accounted for on Schedule I of the petition.  This also provides backup for the additional expenses you list on Schedule J for such items as baby diapers and formula, school sports expenses, etc.

Furs and Jewelry

If the debtor is married they will normally always own a wedding ring.  Therefore, the court will look for this asset to be listed on Schedule B for any married debtor.  Of course, you may encounter the rare incident where a married person has no wedding ring, but you need to make sure this information is recorded in the file before you decide not to list it on Schedule B.

Interests in Insurance Policies

Often, you do not know about the term life insurance policy until you get to the paycheck stubs and find the deduction from the debtor’s paycheck.  Distinguish between “term” and “whole life” policies for this property type on Schedule B.  And because “term” life insurance policies have no cash value you will leave the amount of “$0” as the market value.  However, “whole” life insurance policies will have a market value.


Victoria Ring provides petition reviews to help you catch errors before the petition is filed. The cost is only $150 for a Chapter 7 and $250 for a Chapter 13. To schedule your petition review, email or call Victoria Ring at: Email: Phone: 719-659-0743

Bankruptcy School Update

My Bankruptcy School was developed from the materials I created after traveling the country from 2004 to 2008.  Back in those days, I kept a suitcase packed at the front door and was leaving to do a seminar or set up a new law firm practice 2 or 3 times per month.  After training hundreds of attorneys, paralegals and virtual assistants, I took these same materials, updated them and developed the first online bankruptcy training school.

My Bankruptcy School is NOT a school that trains the law, but rather a school that trains attorneys, paralegals and virtual assistants how to prepare well-detailed Chapter 7 and 13 bankruptcy petitions.  For training in actual bankruptcy law, I highly recommend you check out the courses developed by Max Gardner at

My Bankruptcy School has now been updated to provide those on a tight budget with the ability to pay their school tuition in 3 installment payments. This helps you to get enrolled faster so you can learn the skills you need to:

** Reduce the need to amend pages of the petition after filing ** Reduce issues caused from inaccurate data ** Reduce issues with the Trustee at the 341 meeting due to poorly prepared petitions ** Create a better working environment for your law firm ** Provide paralegals and legal assistants with consistent training

To view the new 3 installment payment options, please visit:

Victoria Ring Certified Paralegal and Bankruptcy Petition Instructor

How to Save Your Bankruptcy Client $100s on Their Motor Vehicle

Did you know that as a bankruptcy attorney you have several options available to save your clients hundreds, if not thousands of dollars on their motor vehicles?  In fact, by understanding and utilizing these options to help your clients, they will be better able to understand the benefits of paying your fee and utilizing the services of your law firm compared to other law firms in the area who do not offer them the same options.

A free audio is available that you can listen to online right now concerning this topic. Listen to it and help your bankruptcy clients now.  Visit:

I addition, the changing credit landscape makes the decisions made in bankruptcy increasingly important. In the past few years, the credit landscape has changed dramatically, and auto lending is no exception. The current climate makes it much more difficult to get credit approval for an auto loan post-bankruptcy. LEAP is an auto finance company that specializes in Redemption and Replacement programs for your Chapter 7 clients and you can find out more about them at:

How to Increase Profits for Your Law Firm

The first question Victoria Ring receives from many attorneys is: “How can you increase profits for my law firm?” She answers this question by introducing them to the concept of utilizing virtual paralegals.  However, when attorneys learn that virtual paralegals charge a flat fee versus a “per hour” rate, the next question is: “Why can’t I hire someone to work in my office at a lower cost than hiring a virtual paralegal.” The answer follows:

What is the difference between a virtual bankruptcy assistant and a virtual paralegal?

A virtual bankruptcy assistant is an individual who has been trained to prepare bankruptcy petitions for attorneys. The majority has never worked inside a law firm and their experience and knowledge varies from person to person.

A virtual paralegal is a paralegal that has:

** Worked five (5) years or longer inside a law firm ** Obtained a Paralegal Certificate ** Is a member of good standing in their local chapter of the National Association of Paralegals chapter

Hiring an Employee Versus Hiring a Virtual Paralegal

An employee working in your law firm preparing bankruptcy petitions may do part of the work but you (or someone else) will always invest time in verifying and correcting their work; or work on the case in one form or another.  A virtual paralegal is a trained specialist.  You simply have the clients fill out the intake forms and 99% of the remaining work is done for you.  You receive a complete Chapter 7 or 13 petition ready to file along with an Attorney Case Summary that details any potential problems before you approve the case to be filed.  Your time per case is reduced to approximately 4 hours and this includes the 341 Meeting.  Unless the employee you hire is a specialist with many years of experience in bankruptcy, you will not receive the same efficiency from an employee working in your law firm compared to a virtual paralegal.

Example: Your attorney fee is $2,500.  Let’s suppose the virtual paralegal charges $500.  The time you invest in the average case is approximately 4 hours or less, including court appearances.  You profit $500 per hour. virtual paralegal charges are not sharing fees. Instead, virtual paralegals are considered to be outsourcers and are the same as paying a TRAINED PROFESSIONAL to work in your office.  No employee can net you this high of an hourly rate.

What do employees do in the law firm if they are not preparing petitions?

As you know, there are many more duties associated with debtor bankruptcy than the pre-petition workload.  If you have an established law firm, the addition of a qualified virtual paralegal will ease the tremendous workload on your present employees, prevent you from hiring additional employees and allow you time to concentrate on growing your law firm and increasing your profits.

Isn’t bankruptcy petition work simply filling out forms?

A common misconception that some attorneys have is that preparing a bankruptcy petition is simply filling out a set of government forms.  This may have been true in 1942 but this line of thinking is now so far from reality that I invite you to prove it to yourself.

Call up any debtor bankruptcy attorney and ask them how many deficiency notices they receive from the bankruptcy court when a petition is filed.  Also ask them how many Amendments they normally file to correct problems with forms and schedules after they are filed.  Finally, ask them how many Chapter 13 Plans are confirmed without several recommendations by the Trustee.

If you perform this exercise, you will hear many stories of frustration and despair.  However, most of these problems could have been avoided if the petition had been well-detailed, prepared and all the research performed before the petition was filed.

Back in 1999, a very intelligent attorney in Columbus, Ohio encountered this same frustration. He looked for a way to improve the consistency and quality of his bankruptcy petitions; so he tried an experiment.  By taking the bankruptcy petition work out of the law firm, the virtual paralegal was able to work without interruptions, conduct client intake interviews with clients when they were more relaxed at home and the preparation remained consistent throughout the process.

The attorney soon discovered that when he implemented this method, his profits increased, the paperwork was reduced in the office, clients were happier and more cooperative and the amount of phone calls diminished; plus the attorney had time to grow his business.

You should now begin to visualize the difference between utilizing the services of a virtual paralegal versus an employee preparing petitions.  On the surface, it may appear that you are paying more in the beginning but the huge benefits a virtual paralegal will make to your law firm bottom line cannot even be compared to an employee who is simply filling out forms in your office.

What are some additional benefits to hiring a virtual paralegal?

** Attorneys do not pay the standard overhead costs associated with hiring a full time or part-time employee. The virtual paralegal charges one flat fee just like the bankruptcy attorney does for petition work.

** Attorneys do not pay for services until they are satisfied with the quality of work produced by the virtual paralegal. There are no financial risks for the law firm.

** Other law firm personnel are freed up to work on more complex cases. It is a known fact that the typical employee preparing petitions in a law firm is interrupted several times. This makes the information on the bankruptcy petition to not be consistent and precise, resulting in errors, lost time and money.

** Attorneys eliminate their need to train new employees. Most virtual paralegals stay with the same attorney for many years. Not only does this increase efficiency with bankruptcy petitions, but the virtual paralegal gets to know the clients on a more personal level, are able to build a better relationship with the local bankruptcy court and the attorney which helps the attorney to build a more solid and reliable reputation.

** There are no standard overhead expenditures for the attorney (i.e., desk, chair, office supplies, software and employee downtime costs). Virtual paralegals already have established their own home office and use their own software programs because they are independent business owners.

** If the virtual paralegal is within driving distance of the attorney’s office, he or she may provide client intake interview services. By going to the office, meeting the client in person and reviewing the client intake forms they filled out, the virtual paralegal gains more knowledge of the case and can normally reduce the amount of time they spend on each petition. That is why no additional charge is made for an onsite client intake interview since it makes the job easier for the law firm, client and virtual paralegal.

** No office politics. Normally, the majority of time the only contact the attorney will have with the virtual paralegal is by email and telephone. This eliminates staff and employee conflicts which wastes time and costs the average law firm a great deal of money every year.

How to Get Started

Click here to download your free set of Client Intake Forms. Complete, step-by-step instructions are provided in the document you download. This document is in PDF format. If you do not have Adobe Acrobat,  click here and get your free reader

A Quick Tip for Qualifying a Chapter 13

I just got off the phone with an attorney in Florida regarding a case he was working on.  Believe it or not, these debtors actually had equity in their home (which is rare to find in this day and age.)  Their home was appraised at $400,000 and they owed $387,000.

Originally the attorney filed a Chapter 13 and tried to strip the second mortgage but the mortgage company filed a Motion for Relief from Stay based on the fact there was equity in the home.  The attorney then converted the case to a Chapter 7 and wanted my help to convert it back to a Chapter 13.

Since this can be a common problem, here is a quick tip I learned from one of the attorneys I worked for handling this issue:

1.  Take the total amount of arrearages owed on the home.  In the case discussed above, this amount was $115,000 (which included attorney fees, foreclosure proceeding fees and non-payment dues covering 24 months.)

2.  Divide the arrearage amount by 60; which is the maximum time a debtor can be in a Chapter 13.  In the case discussed above, this amount was $1,916 per month.

This simple calculation told the attorney that the debtors did NOT have enough disposable income to pay the arrearages; let alone the second mortgage payment itself.  And this saved the attorney in Florida a great deal of time.  Instead of filing a motion to convert the Chapter 7 back to a Chapter 13, the attorney was able to determine immediately that a Chapter 13 would not be possible.

This left the debtors with only two choices: (1) Surrender the home, or (2) Increase their income.

I hope this quick tip helps save you time and money when you encounter the same problem.  If you have any cases you would like for me to help you with, please contact me directly at:

Victoria Ring Cell: 719-659-0743 Email:


Mortgage Cram Down Report

Last week there was a great deal of controversy surrounding the topic of first mortgage cram downs based upon articles I had written about the subject.  Some attorneys became angry and upset while others researched the topic and sent me their comments which appear below.

I hope this article helps to resolve the issue and to calm down the attorneys who were angry and condescending in their analysis.  Let us always remember that we are all in the same boat and we should have a heart to help each other rather than post cruel slurs in an attempt to hurt others who try to do the best they can, based upon the information they know and experiences they have endured.

I wish all of you a happy Fourth of July.

Victoria Ring



I went to a meeting at the Chapter 13 Trustee’s office for the Central District of California in August 2009 and was told by the Trustee that California would allow cram downs on first mortgages IF a hardship situation existed.  This is why many California attorneys proposed them and this is why you undoubtedly worked on them during the past 2-3 years.  However, almost 30 days later, the Chapter 13 Trustee posted a retraction stating that he made a mistake and he was actually referring to second mortgages.  I am sure the attorneys you were working with forgot to tell you this.

Although I did not examine the specific cases you worked on for these attorneys, I believe the reason some of the cases in California were confirmed for first mortgage cram downs was because the home was not placed inside the Plan. Therefore, the amount never really mattered to the Trustee since their office was not paying the claim.  I am sure that the first mortgage company filed a Proof of Claim on the full amount; therefore, the Proof of Claim amount was honored and no Objection was filed.

Finally, even though first mortgage cram downs are not legally recognized, your thoughts in educating others about first mortgage cram downs is exemplary. This legislation has already passed in the House and many Senators also voted for the Bill. I believe first mortgage cram downs will be realized in the near future and I thank you for all you continue to do to support this industry and help debtors.

Lydia Zlobnicki, JD


Here in the Western District of Washington State, an Adversary Matter has to be filed in order to strip or cram down a mortgage.

Amy Wishart Do It Yourself Documents


The Southern District of Florida will not allow modification of the first mortgage upon the primary residence.

Here is an interesting twist, though:  one of the 2 judges in the West Palm Beach division of the Southern District, Erik Kimball, takes the position that if a stripped off 2nd mortgage, or a stripped down 1st mortgage on a property other than the primary residence, causes enough stripped off secured debt becomes enough unsecured as to disqualify the debtor for a Chapter 13 under Sec. 109(e)

Jeffrey Lampert


Under Chapter 13 you have Section 1322(b)(2) and we can avoid junior liens via this section and ‘cram down’ non-owner occupied properties.  We have similar Sections under Chapter 11.

Congress has not granted bankruptcy courts to ‘cram down’ or otherwise reduce the first mortgage on a debtor’s primary residence.  I am reporting in from the Central District of California


Christine Wilton Greifendorff Law Offices, PC


I have been out of bankruptcy for a while, however as of last year, our three districts in Oklahoma were uniform in their treatment of home loans – IF a home was worth less money than the sum of the first and 2nd loan, the 2nd was treated as an unsecured debt, and paid that way, with its lien being stripped away. First loan cram downs were not allowed at all. I do not believe that has changed, however as I said, I have not been practicing this year, so am not completely positive.

Michael McCoy Oklahoma City, OK


In 2007, our office was successful in cramming down a first mortgage because Washington Mutual was going out of business and did not file a Proof of Claim or Objection to Plan.  Since we listed the claim amount the same as the appraised value, the Plan was confirmed.

However, I recently learned that only second mortgages are permitted for cram downs in Ohio, but I do know that first mortgage cram downs are sometimes confirmed also.

Charlie Hafer Southern District of Ohio


If you have any comments to add, please send them directly to Victoria Ring at:

How are cram downs handled in your jurisdiction?

There have been a lot of conflicting stories regarding the treatment of mortgage cram downs and strip downs in the various bankruptcy courts.

Some attorneys have proposed cram downs on first mortgages and those Chapter 13 Plans have been confirmed.  Other attorneys have only been successful in proposing second mortgage cram downs but unable to do first mortgages.

Still, some attorneys are only able to propose cram downs for rental property while others only propose cram downs on primary residences.

In order to substantiate their success, attorneys I have spoken to refer to either Section 502 of the bankruptcy code or 11 USC 1322(b).

And because of all these variances, much confusion has developed.

I understand that the ability to cram down the first mortgage to the market value on the primary residence has passed the House of Representatives, it failed in the Senate.  However, I have spoken to attorneys who were able to get first mortgage cram downs approved in hardship situations.  (Note: The key word here is: hardship.)

Therefore, to help me with my research, I would sincerely appreciate you taking a moment and let me know how mortgage cram downs are handled in your jurisdiction.  I will accumulate the information and write a future article that contains a summary of my research.  Hopefully, together, we can determine the cause of this confusion and work in the best interest of protecting the debtor.

You can submit your response either by replying to this post or email your response privately to me at

Victoria Ring Chapter713Training.Com and