Chapter 7 and 13 Bankruptcy Blog

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 http://www.chapter713training.com Email: victoriaring1958@gmail.com

 

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 http://www.chapter713training.com http://www.mybankruptcyschool.com

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Victoria:

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

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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

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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 lampertletters@gmail.com

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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

Links: http://www.losangelesbankruptcylawmonitor.com

Christine Wilton Greifendorff Law Offices, PC

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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

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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

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If you have any comments to add, please send them directly to Victoria Ring at: http://www.chapter713training.com/contact.html

After sending out my last article, I received an email from Michael Warren, an experienced bankruptcy attorney in Chillicothe, Ohio.  He informed me that cram downs are now permitted in Ohio. This is a major breakthrough.  Below is the email I received from Attorney Warren:

“Cram down and strip off are slightly different things.  Cram down (for chapter 13) is accomplished by section 502, claims allowance.

For lien strip off, some courts require a motion (Preston and Hoffman in Columbus), some require an adversary proceeding (Caldwell in Columbus), some say it is done by the confirmation order (Hopkins in Cincinnati).

Cram down means something completely different in the chapter 11 world.”

Then, R. Todd Frahm, a California attorney submitted this from11 USC 1322(b) which says:

(b) Subject to subsections (a) and (c) of this section, the plan may–

(2) modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor’s principal residence, or of holders of unsecured claims, or leave unaffected the rights of holders of any class of claims.

To contact Attorney Warren directly, his contact information appears below:

Michael Wm Warren 6 Consumer Center Dr. Chillicothe, OH 45601 Phone: (740) 774-4357 mwarren@buckeyelegal.com http://www.buckeyelegal.com

Personal Note: I have personally visited this law firm and worked with Attorney Warren. He has one of the most efficiently run and customer-oriented law firms I have ever found. Also, Attorney Warren produces near perfect petitions and rarely has a Deficiency Notice from the Trustee. I consider it an honor to have been able to work with Attorney Warren back in 2006 and thank him for providing this important information to our group.

Please pass this information on to any Ohio bankruptcy attorneys you know. By working together we can do our part to keep Americans in their homes and help them rebuild their lives.

Victoria Ring http://www.chapter713training.com

 

I worked on a case this past week with a California attorney, practicing in the Riverside Division of the Central District.  The client had a home that carried a mortgage of $402,500; however, the home was appraised at only $178,000.  This is a common occurrence in California.  Although the real estate market crash has affected every state in a large way, the state of California seems to have the largest gap.  And every time I prepare petitions in California, it amazes me at the staggering numbers I encounter.

Perhaps it is because I am originally from the Midwest.  I too lost a home to foreclosure.  My house was appraised in 2005 at $210,000; but by 2008, it was worth about $82,000.  So, I am accustomed to witnessing a 40-50 percent gap between the mortgage balance and the appraisal; but California has the highest that I have ever seen.  For example, when I was in Ventura, California; I worked on a case where $920,000 (almost $1 million dollars) was owed to three separate mortgage companies.  The home was appraised at only $250,000.  So in this case, by proposing a cram down, this attorney was able to save his debtor $670,000.  It is shocking to say the least!

Why was a cram down proposed?

For the case I worked on this past week, when the debtors income and expense information was entered into Schedule I and J of the bankruptcy petition, the Chapter 13 Plan calculator in the software told us the debtor did not have enough disposable income to pay the current mortgage payment of $2,500.  However, by reducing the mortgage payment to only $1,500; the debtor would be able to afford to stay in his home.  (The mortgage payment was reduced because the home was crammed down from $402,000 to $178,000.)

If this option would have been permitted in Ohio (where I lived back in 2008 after my hospitalization) I could have filed a Chapter 13 and possibly reduced the amount owed to my mortgage company from $210,000 to $82,000; thereby reducing my monthly payment.  Instead, I lost my home.  But in the state of California, cram downs are permitted and encouraged by the Chapter 13 Trustees office; especially in the Central District of California.  The California attorneys should be overjoyed about this because they have an advantage over most of all the other states, including Ohio.

In order to propose a cram down in the state of California, a separate Motion and Order must be prepared and submitted by the debtor(s) bankruptcy attorney.  More information on these Cram Down documents are available at:

http://www.chapter713training.com/bankruptcy_pleading_packages.html

What is the success rate with the proposal of cram downs?

I am a certified paralegal so I am unable to comment on the law.  However, I can tell you that the cases I have worked on in the state of California have all been successful when proposing a cram down.  This is not to say there have not been objections and amendments to the Chapter 13 Plan along the way; but in all cases I worked on, the attorneys were able to save their clients hundreds, if not thousands of dollars.

I suppose if an attorney lacked a strategy in order to argue in the best interest of his or her debtor, that attorney could be unsuccessful in getting a cram down approved, so let us review one typical example that could happen.

In the case I worked on this past week, the debtor had three motor vehicles, all of which had high monthly payments.  In fact the total motor vehicle payments were $1,100 per month.  Cases that I have worked on in the past have shown me that creditors often object to the fact that a single debtor does not need three motor vehicles.  So, for example, instead of allowing the debtor to keep his Harley Davidson and continue making payments of $675 per month, the mortgage company would prefer this money is paid to them since the debtor already owns a truck he is paying $450 per month for.  When the attorney is already asking the mortgage company to excuse $270,000 in a proposed cram down, it is often unfair to ask them to reduce the mortgage payment to allow $675 to be paid for a third vehicle that is not necessary for the debtors reorganization.

Situations like this happen in almost every bankruptcy case and bankruptcy court across America.  The outcome is not always the same in every state because creditors may or may not file a Proof of Claim or hire a law firm to represent them (among other numerous reasons.)  Besides, many mortgage companies are so overloaded with foreclosures and sale dates that cram downs are approved more often than not.  This is where the bankruptcy attorney needs to take the plunge and at least attempt to save their debtors some money.  The worst that can happen is that the Chapter 13 Plan is amended to comply with the Trustees final decision and request.

Summary

Although I am well known as a training instructor for bankruptcy law firms, I still enjoy preparing new bankruptcy petitions and interviewing clients.  Working inside law firms for the first 26 years of my career taught me a lot and provided me with a great deal of experience. I have to give credit to the excellent bankruptcy attorneys that trained me, as well as the attorneys I work with currently.

At the moment, I am looking to add three attorneys to my workload and I can assure you extremely professional, dependable and high quality paralegal services from someone who has been around the block several times.  My prices are only $350 to prepare a basic Chapter 7 and $450 for a Chapter 13.  If the case is more complicated or is a business bankruptcy filing, the price will be slightly higher.  My turnaround time is 72 hours unless rush service is requested. No payment is required until the bankruptcy petition is prepared to your satisfaction.  Electronic filing services are also included.

I hope you will consider my services the next time you need a Chapter 7 or 13 bankruptcy petition prepared.  In the meantime, be sure to download your free Client Intake Forms at: http://www.chapter713training.com/client_intake_forms.pdf

Have a wonderful week.  (Victoria Ring, Office: 719-375-1504)

 

– by Victoria Ring, Certified Paralegal and Bankruptcy Specialist

I consider it a pleasure and an honor to work with many new bankruptcy attorneys. On Friday I received an email from a new attorney in New York who was in a desperate bind.  In the initial interview, he had told the clients that their Chapter 13 Plan payment would be about $400 per month.  Unfortunately, when all the math was done and the petition completed, the debtors had $1,500 of disposable income left on Schedule J.

The attorney was correct in questioning how he could propose a Chapter 13 Plan payment of only $400 to the court when the debtor’s had $1,500 in disposable income.  He called me and then sent the petition for a review.

This is not the first attorney to face this same problem.  I encounter new attorneys who make this mistake all the time.  But an attorney taught me this one time:  She said that the one word attorneys should also use in communication with clients is the word POSSIBLY.  In other words, never make statements that are written in stone; leave yourself an out in case the scenario changes (which is often the case.)

After reviewing Schedule J of this particular petition, I immediately noticed large monthly payments being allocated to private school fees, charitable contributions and college tuition for a daughter that was over 18.  I am not an attorney, but I have worked on thousands of bankruptcy petitions over the course of my 3o+ year career.  I have found that creditors often object to these types of allowances on Schedule J and redistribute the money to paying them instead of the private school, or whatever.

I worked on one case in Atlanta, Georgia where the house the children lived in was in a bad, drug-infested neighborhood.  The parents had sent their children to private school their entire lives. The kids were sheltered from the world they actually lived in.  A creditor won his argument and those children were forced to attend the bad school. The money allocated to the private school tuition was denied and that money was paid to the creditor instead.  It is sad to me when the innocent suffer and I often wonder that happened to those little children. I am sure they had to learn how to grow up quick.  What a shame.

Anyway, I related this information to the new attorney and we talked about it.  The attorney pointed out that in the case of his debtors, they were proposing to pay everything.  The only items placed inside the Chapter 13 Plan to be paid by the Trustee were: (1) Arrearages on home; (2) Unsecured debts; and (3) Attorney and Trustee fees.  This means that there will be no objections from the secure creditors since they are being paid in full.  The only creditors to object to the private school expenses, etc. would be the unsecured creditors.

Using this logic, the attorney made the decision to file the proposed Chapter 13 Plan with a payment of $1,500 (matching the disposable income on Schedule J).  Arrearages would be paid the standard interest rate and unsecured debts were paid at 50%.  This is what made this Chapter 13 Plan so easy and extremely easy to comprehend or argue at the 341 Meeting.

I hope this information helps you in your bankruptcy law practice.

Do you need help with your Chapter 7 or 13 practice?

I am available 6 days a week and I work after hours. Since I work from home, my prices are low because my overhead is virtually eliminated.  Prices start at $350 for simple Chapter 7s. For details and other prices, visit my website at: http://www.chapter713training.com/bankruptcy_petition_preparation.html and http://www.chapter713training.com/petition_review.html

A total of 78 new pages of Chapter 13 documentation was added to My Bankruptcy School today at: http://www.mybankruptcyschool.com

This new documentation includes two exercises, complete with computer screen shots to assist you in advancing your knowledge of Chapter 13s. In addition, an entire section provided by the Chapter 13 Trustee’s office is provided to help students understand the process before and after Plan confirmation.

Be sure to login to your Chapter 13 Course and download the following new documents:

Chapter 13 Class – Lesson 1 Chapter 13 Class – Lesson 2 Chapter 13 Class – Lesson 3 Chapter 13 Class – Lesson 4

or, if you are not currently enrolled as a student, you can enroll at: http://mybankruptcyschool.com/enroll

Note: My Bankruptcy School is rapidly growing. We are adding new materials as well as training videos on a frequent basis ensuring that you get MORE than your moneys worth. Plus, all students received 1 hour of free, one-on-one training and support every month.

TESTIMONIALS FROM TWO BANKRUPTCY ATTORNEYS:

I liked your class 1 training videos. Good stuff here. I would endorse them for new attorneys, or attorneys who are new to bk, as a tool to get some practical advice on nuts and bolts of the practice.

Rick West, Esq., West, Hurley, Malkiewicz Board Certified Bankruptcy Attorney http://www.debtfreeohio.com/ I just returned from attending Victoria Ring’s one-on-one bankruptcy training for attorneys. I am setting up my own office after several years doing 7s and 13s with law firms in Sacramento.

I was stunned by the fact that in this world you can get more than your money’s worth. There is no other Victoria Ring. Her personality exudes confidence. She has so much experience that it spills out. Yet, she tailors everything to you! Bring your questions, ask her what you want. You’ll get it. She does not direct you. She can more than fill two days with practical steps for setting up the office, turning out petitions, and letting potential clients find you. She is 100% committed to you.

I was not the same person on the plane home and the individual work has stayed with me. Do not pass up having Victoria Ring train you and your staff!

Karen Fairchild, Esq. http://www.karenfairchild.com

 

My staff and I just opened a new training office in Pueblo, Colorado.  Please update your records to the following:

Pueblo, Colorado 81001 Office: 719-696-8014

This office provides advanced training for attorneys (and those working for attorneys) in the bankruptcy field to advance their skills and knowledge in all areas to best benefit the law firm.

For example: Our next training session is scheduled for March 2-3 with an attorney who is flying in from Sacramento. I will spend 2 days setting up her law firm and training her in a wide variety of different techniques to streamline her operations.

When the attorney returns to her office she will be ready to accept clients because all her office procedures and marketing will be in place. Then, I can assist her remotely for any length of time, assisting her with actual cases and walking her through the entire process with her first client.

The cost for personalized, advanced training is a very affordable $850 per day. Most attorneys only need 2 days of training but 3 days is available if needed. Although most attorneys fly into Denver where we pick them up and take them to the training location, there are other law firms who will fly us to their location so that the attorney, as well as the entire staff can be trained at one time.

If you would like to discuss these options for your law firm please visit: http://www.victoria-ring.com or call me personally at 719-696-8014.

Remember: There are no stupid questions, only stupid answers.

Victoria Ring Certified Paralegal and Business Coach

Issue 06 – December 11, 2010

RE: THE TRIED AND TRUE METHOD OF BUILDING YOUR LAW PRACTICE

We had a couple who originally wanted to file a Chapter 13 so they could keep their home. However, they were unable to pass the Means Test.

Is this a problem? You bet it is.  Many attorneys who are practicing consumer bankruptcy today did not obtain proper training before starting their practice. Many of them opened up a Chapter 7 and 13 practice because they wanted to make extra money without realizing the consequences of that decision.

Besides, the majority of attorneys believed that preparing the bankruptcy petition was nothing more than filling out a set of forms.  I know this because there are many virtual bankruptcy assistants today who are working for attorneys and charging them $300 for preparing the petition based upon the assumption the forms are easy to prepare. They do this because the majority of them provide poor quality work and have little or no law firm experience.  Any experienced, reliable virtual bankruptcy assistant who provides paralegal level quality is going to charge double or triple that rate.

Unfortunately, if you combine an attorney with no prior bankruptcy training with a virtual bankruptcy assistant who provides poor quality work, you end up with a big mess.  So, I decided to write this article, based around a very important topic and help you to avoid this situation.

Using the Means Test as the Qualifier

The Means Test was developed to provide a way for the legal system to determine if a client is eligible to file a Chapter 7 or 13.  However, when the debtors qualify for a Chapter 7 on the Means Test but want to keep their home, attorneys will do a wide variety of manipulation to either lower expenses or raise the income, just to satisfy the debtor.

This  is FRAUD and the attorney and possible the virtual bankruptcy assistant can get in a lot of trouble. Here are some things that could happen if the debtors qualify for a Chapter 7 and the attorney places them in a Chapter 13 just to save their home:

1.  The Trustee and/or the creditors may object to the Chapter 13 Plan simply because the debtors are below the median on the Means Test. If this happens and the trustee demands the case be converted, the attorney and staff have wasted a lot of time and money. It would have been less costly to do the Chapter 7 in the first place that the debtors qualified for.

2.  The debtors will be unable to make the Plan payment and everyone loses; the court, the attorney and the debtor.

3.  Once Schedule I and J of the bankruptcy petition is filed, if adjustments are later made to the Chapter 13 in order to qualify the debtors for a Chapter 7, the attorney will need to provide the court with detailed reasons as to why and precisely how the income and expenses changed from the original that was filed.  If not, the attorney could be sanctioned for filing a fraudulent bankruptcy petition.

4.  The debtors will be locked into the Chapter 13 Plan for a period of 3 to 5 years.  This could mean that they will be unable to earn more money without paying it to the court. This also means that if their income should drop, they may be forced by the court to convert to a Chapter 7.  And upon conversion, the assets and liabilities the debtor was paying back in the Chapter 13 could cause devastating financial results. Back to our debtors

An attorney I worked for encountered the problem that many attorneys across America encounter. He had debtors who qualified as a Chapter 7 but they wanted to file a Chapter 13. I was hired to act as the paralegal and convince them why it was to their advantage to file a Chapter 7 and let their house go.  Unfortunately, these are skills that need to be trained and attorneys with no bankruptcy experience and $300 per petition virtual bankruptcy assistants will often never question or catch this error; which is causing catastrophes in the lives of debtors nationwide. In fact, it is becoming an epidemic that my heart is hurting to solve.

It took two meetings before the couple were finally convinced to surrender their home, walk away and start over fresh again.  But once they made the decision, they knew it was right for them.  In fact, they were so overjoyed and happy it made all our efforts worthwhile.  In fact, here is an email the debtors recently sent me:

Dear Victoria:

My husband and I cannot thank you enough for taking time to work with us. We have heard many horror stories of attorneys who never care about their clients. It is rare to find someone like you and the attorney to actually take time to sit down and talk with us.  You both answered all our questions and made it so easy to get in touch with you by email or phone. We cannot thank you enough.  Without you taking the time to care about us, we would have mistakingly filed a Chapter 13 and be in the same situation we are in today in 5 years. By filing a Chapter 7, which we really qualified for and could afford, we are able to walk away from the past and begin all over again. We should be back on our feet this time next year and we owe it all to the honesty and concern you and your attorney showed to me and my husband.  We have already recommended two new clients to the law firm. These are friends who were scammed by bankruptcy attorneys and left in bad shape. We know you can help them because you helped us.  May God bless you. Summary of This Article

The email above was published to help you understand that the old tried and true method of providing high quality customer service to your clients is still the method that will work to build your law firm. Besides, good customer service will never cost you anything. It will do nothing except help you and your law firm grow by leaps and bounds.

REFERENCE LINKS

Free Attorney Training Videos http://www.youtube.com/user/msvictoriaring Free Tools for Attorneys http://www.bankruptcylinks.info/about/free-stuff and http://www.bankruptcylinks.info/about/free-supplies Enroll in the Chapter 7 or Chapter 13 Online School http://mybankruptcyschool.com/ Bankruptcy Research Links http://www.bankruptcylinks.info/about/research

Help When Preparing Petitions http://www.bankruptcylinks.info/about/prepare-petitions

Complete Bankruptcy Motion Package (over 300+ templates) http://www.bankruptcytrainingproducts.com/home/complete-bankruptcy-motion-package Initial Intake Form Package http://www.bankruptcytrainingproducts.com/home/initial-intake

Bankruptcy Attorney Help Line Main Office: 719-659-0743

 

When Donny Debtor came into the office to review his bankruptcy petition before filing, we asked him if he had any other credit cards that were not listed on Schedule F. He said he had a JC Penny and Macy card but wanted to keep them in case of an emergency. This is a typical situation that is played out in law firms thousands of times per day. In fact, it happens so frequently that debts are often left out of petitions; thus creating major problems. Therefore, if you learn anything from this article, learn to always ask debtors these questions before filing the bankruptcy petition: Read the rest of this entry »

Many of the attorneys that we prepare petitions for are shocked when they go to their 341 Meeting and receive a list of Trustee Recommendations.  Because we provide paralegal services to our attorneys through confirmation of the plan or discharge of the Chapter 7 they will call us back to review the issues addressed by the Trustee, sometimes thinking that the petition could have been prepared wrong.

While we are quick to fix any problems that may have been caused through our error, some attorneys who are new to the industry become nervous because they do not understand how to solve the issue and dispute the Trustee. In fact, many automatically assume that just because the Trustee made a recommendation, they must abide by it and make the change.  This is simply NOT true.  First of all, a Trustee is NOT required to be an attorney to be hired for the position, so there is a possibility that the Trustee (whether he or she is an attorney or not) can make a mistake.

Here is one example of an error a Trustee recently made that we disputed:

We prepared a Chapter 7 for an Ohio attorney.  When the attorney went to court the Trustee objected to the use of the exemption allowance of $800 for the security deposit.  We used Ohio Revised Code Annotated Section 2329.66(A)(18) on Schedule C but the Trustee said we needed to use Section 2329.66 (A)(3) instead, which provided for no exemption allowance.

Now, if this would have been handled by a non-seasoned attorney, the attorney may have made the change which would have resulted in the debtor paying $800 out of their pocket.

But we were determined to protect the debtor as much as possible.  I personally looked up Section 2329.66 (A)(3) and read it.  This code ONLY referred to a security deposit that would have been received within 90 days of the filing of the petition.  A quick cross-reference showed me that the debtor’s lease on their apartment would not expire within the 90 day guidelines set forth by this code. Therefore the debtor’s were eligible to use Section 2329.66(A)(18) as we had originally filed with the petition.  This saved the debtor $800 and the attorney learned a very valuable skill in protecting his debtors.

Another Example

We had a case where the Trustee demanded an additional $1,500 be paid per year from the proceeds of the tax refund check and he wanted this money placed inside the Chapter 13 Plan.  Unfortunately, the debtor had lost his income and would not qualify for a tax refund this year and therefore could not pay the $1,500.

Rather than change the Plan and comply with the Trustee’s unreasonable request, we contacted the tax preparer and asked them to fax us a letter stating the debtor would  not be receiving a refund check.  We then faxed this to the Trustee and the Trustee withdrew his recommendation.  This saved the debtor $1,500 and the attorney learned a very valuable lesson in protecting his debtors also.

Summary

Attorneys always have the ability to dispute and question any Trustee Recommendations that are made.  However, attorneys must also have enough knowledge of the bankruptcy law to protect their debtors and not allow the Trustee to take more than is permitted.

However, because many attorneys have jumped into the field of bankruptcy with no prior knowledge, and with the pre-conceived notion that bankruptcy is a quick and easy way to make money; problems like these are happening at alarming rates.  I strongly urge any attorney who fits this scenario to obtain training to protect your debtor or you are doing them a great injustice.   Two resources I suggest you consider are:

Excellent Books for Attorneys: http://shop.consumerlaw.org/forlawyers.aspx

Online Petition Training http://mybankruptcyschool.com or, for specialized training, contact:

Colorado Bankruptcy Training Office: 719-659-0743