Chapter 7 and 13 Bankruptcy Blog

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 »

Issue 04 – November 15, 2010

RE: UNEXEMPT EQUITY IN A CHAPTER 7

When Mary Doe (fictitious name) filed her Chapter 7 bankruptcy petition, the attorney used the Kelly Blue Book TRADE IN value for her car on Schedule B; which was $5,200.  The attorney was not aware that the local Trustee used the PRIVATE PARTY value from the Edmunds website.  The Trustee claimed that by using Edmunds and the Private Party value, he determined the market value of the car to be $7,800 instead of $5,200 and objected to the granting of a discharge until the unexempt equity ($4,500) was paid or the items would be seized and sold by the court.

From the courts point of view, this scenario makes perfect sense. Mary is asking the court and her creditors to forgive her of over $200,000 in debt resulting from a foreclosure and medical bills.  In exchange, she only needs to pay the court $4,500 in unexempt equity.  But from a human point of view this news is devastating because Mary is penniless. After paying her basic living expenses, she has less than $5 in cash to live on.  How can she pay the court $4,500?

Some people may say that Mary should find a job and increase her income; but Mary lost the muscle control in her hips and legs from 18 years of uncontrollable diabetes. She now must use a cane to walk short distances and a wheelchair for longer distances. Therefore, Mary is severely limited in her ability to earn an income outside the home.

In addition, Mary’s car is her only mode of transportation and she has no living relatives or friends that live close enough to provide daily transportation to meet her basic needs. If Mary loses her car, she will be unable to get to the doctor and the grocery store, thereby causing her to eventually become an award of the state as she would be forced on welfare simply to survive.

POSSIBLE SOLUTION NO. 1

The Chapter 7 may be able to be dismissed due to the fact that Mary would be placed in a hardship (much worse than she would have been prior to filing bankruptcy) if the present bankruptcy were to continue.  However, in order to dismiss the case, it would require the filing of a pleading and a court hearing would need to be scheduled in order to render a Judge’s decision on the matter.  Mary may also need to hire an attorney to represent her at the hearing, which she clearly cannot afford.

Note: Debtors are normally prevented from dismissing a Chapter 7 case when unexempt equity is involved, which is different from how unexempt equity is treated in a Chapter 13 filing.

But there is a problem; once the Chapter 7 case would be dismissed, Mary would be back to Square One and still owe her creditors $200,000; therefore, they would begin collection procedures again.  Since Mary has already revealed her car as an asset in the bankruptcy filing, the creditors will know this asset exists and would naturally file a lien against it and take the car anyway.

POSSIBLE SOLUTION NO. 2

Working with the attorney we naturally came to the conclusion that Possible Solution No. 1 was not in the debtor’s best interest.  Eliminating this solution left us with the only possible choice and that was to come to an agreement with the Trustee on the amount of unexempt equity Mary needs to pay back.

To do this, the debtor had to agree as to the true market value of her car.  She visited three different automobile dealers: (1) dealers who sold new and used cars; (2) dealers who only sold used cars; and (3) Buy Here Pay Here car lots.  She obtained a written proposal from each which amounted to $6,400, $6,700 and $6,900 respectively.

The attorney called the Trustee and convinced him to allow the lower $6,400 estimate simply because Mary was penniless and unable to afford to replace her current vehicle.  In doing so, this left Mary with unexempt equity of $3,100.  Due to Mary’s financial condition, the Trustee also agreed to accept monthly payments in the amount of $258.34 so she could keep her car.

Problem:  Although this appears to be a better solution for Mary compared to Possible Solution No. 1, where is Mary going to get the extra $258.34 per month to pay the Trustee?  Besides, if Mary agrees to make these payments, the Trustee will want to know where this extra money was obtained and why it was not included as income on Schedule I when the petition was filed.

Important Lesson:  Many Trustee’s use this approach when a Chapter 7 is filed because they are able to determine if the debtor has lied about their true income. By placing a debtors assets on the line and threatening to take them away, debtors often come up with extra money and then the Trustee can dismiss the case because the debtors committed perjury by misrepresenting their income on Schedule I.

At this point is when a discussion with Mary was necessary in order to resolve the issue.  When I contacted Mary (on behalf of the attorney) she said that her ex-husband offered to make the necessary monthly payment so that she would not lose her only mode of transportation.  Once the Trustee accepted the newly proposed amount of unexempt equity. Mary’s cousin mailed a check for $258.34 to the Trustee every month and satisfied the court’s requirement.

What if …?

What would have happened if Mary told us she would pay the $258.34 to the Trustee each month to keep her car?  Before making a proposal to the Trustee we would need to know where she obtained this additional money and why it was not reported on Schedule I.

If Mary had recently received a raise in salary, we would need to amend Schedule I to report the new income and obtain pay check stubs (which would be used as Exhibits) to verify the increase in salary. If Mary said she rented a room in her home to get the extra money we would need a copy of the rental agreement.

But in Mary’s case, her ex-husband agreed to make the payments because he knew that Mary was penniless and would be on welfare if she lost her car.  In addition, the ex-husband knew he could not buy a reliable replacement vehicle for $3,100.  In this case, the ex-husband wrote a letter to the Trustee stating that he agreed to make the payments and the ex-husband made these payments directly from his personal checking account throughout the payment duration.

Are You An Overworked Bankruptcy Attorney?

We are accepting new attorney clients. Please give me a call at 719-465-2442 to discuss your bankruptcy case needs. I am normally in the office from 10:00 am to 8:00 pm Mountain Standard Time.

Talk to you next week ….

Victoria Ring Colorado Bankruptcy Training http://www.coloradobankruptcytraining.com

Issue 03 – November 3, 2010

COMPLIANCE WITH SCHEDULE C EXEMPTIONS

One very confusing fact for attorneys new to bankruptcy is that the debtor(s) need to reside in the state they are filing bankruptcy in for a period of 730 days (2.3 years) in order to be entitled to use that particular state’s exemption allowances on Schedule C.  (Ref: 11 USC Section 522(b))

THE CASE OF JANE DOE

Debtor (who moved from Oregon) had been a resident of Montana for a period of 710 days prior to filing her Chapter 7 bankruptcy petition.  The attorney was under the assumption that as long as Jane resided in Montana for longer than 180 days (as indicated on the Voluntary Petition) that she was eligible to file in that state.

However, this assumption was only partially correct.  Even though the debtor was eligible to file in Montana due to the 180 day venue requirement; the debtor still had to reside in Montana a full 730 days in order to be eligible to be covered under Montana’s exemption allowance on Schedule C.  The debtor was short by only 20 days.

After the 341 Meeting, the Trustee objected to the use of the exemption allowances.  An answer was filed amending Schedule C so that the exemption allowances reflected the exemption allowances for Oregon instead of Montana.

WHAT WOULD HAVE HAPPENED IF?

As you know, exemption allowances are the protection of a debtor(s) assets listed on Schedule A and B.  In the case of Jane Doe, she surrendered her home and car and had nothing but $5,000 in personal property that no one would have wanted anyway.  However, since Jane Doe was desolate, if these assets were not protected by exemption allowances, the court may require her to pay $5,000 out of pocket to the state of Montana.  Unfortunately, this debtor would have been unable to do this financially, which means that her clothing and other assets could have been seized by the court, sold for any dollar amount and the money turned over to the creditors.

DOES YOUR LAW FIRM NEED PARALEGAL ASSISTANCE WITH CASES?

Call Victoria Ring at 719-465-2442 or Sonya Banks at 770-601-4730, or for more information, visit: http://www.virtualpetitions.com

Talk to you next week ….

Victoria Ring Colorado Bankruptcy Training http://www.coloradobankruptcytraining.com

The case review this week is a clear indication of why attorneys need to pre-qualify their debtors before accepting them as clients. Not only do you need to protect yourself from accepting fraudulent cases but also from cases that cost you a great deal of time and money. This is necessary to build a strong law firm that is not only profitable but beneficial to the community it serves. Read the rest of this entry »

Disclaimer: The information in this article is for training purposes only.  This article is written by Victoria Ring, a certified paralegal and bankruptcy specialist, who is not an attorney.

Normally when I work with attorneys on Chapter 7 and Chapter 13 bankruptcy petitions, debtors want to keep everything they own even if they are unable to afford the payment.  However, today, I encountered just the opposite.

A little over two months ago I prepared a Chapter 13 bankruptcy petition for an attorney I work with in the District of Colorado.  The debtor had three older motor vehicles and was 11 months behind on their mortgage.  We were able to propose a cram down to save the debtor about $85,000 on their mortgage as well as cram down on the motor vehicles, thus saving the debtor another $28,000.

The petition was finalized and everything was ready to be filed when the debtor called the attorney to say he was going to surrender two of the motor vehicles.  Because this was only the second petition my attorney had worked on, he naturally thought this would be a good thing for the debtor to do and did not see how it would affect the debtor in a bad way.  Therefore, he approved the transaction and emailed me to so I could update the bankruptcy petition.

WHY WOULD A DEBTOR GIVE UP ASSETS?

It is always helpful to understand why debtors do certain things because it will equip you to handle similar situations in the future.  Therefore, you may be wondering why a debtor would want to give up assets (such as the motor vehicles) when they are filing Chapter 13.  Through my many years of experience, I have often found that the core of the problem is normally derived from bad bankruptcy advice from non-attorneys.

When a person files bankruptcy, they will discuss their personal business with family, friends and neighbors BEFORE they will pick up the phone and ask their attorney for legal advice that they paid for.  And as you know, people who are not attorneys love to give legal advice.  It makes them feel important and knowledgeable.  However, you will find that family, friends and neighbors almost always tell horror stories about assets being taken in the middle of the night and people having to live on the street because they lost their home.  These stories often scare debtors and they will lose sight of what is logical and what is not.

Therefore, attorneys and their law staff need to be aware that this is a common problem when dealing with debtors and make it a point to educate their debtors and answer questions for them as it relates to their case.  A more informed debtor will make life much easier on the attorney and their law firm.

TIP: As a new bankruptcy attorney, you may not have all the answers.  That is why you may want to have your debtors watch some of the videos produced by the Federal Bankruptcy Court, which are excellent in answering many of the questions debtors have about bankruptcy.  The link to these videos is at: http://www.uscourts.gov/video/bankruptcybasics/bankruptcyBasics.html

Another good piece of advice to always keep in mind is that people only make changes when they believe the change is going to benefit them.  Therefore, someone has told this particular debtor that it would save them money if they gave up their motor vehicles.  But like all bad advice, this is not always the case.

IF A DEBTOR GIVES UP AN ASSET, DOES THIS SAVE THEM MONEY?

In the bankruptcy case concerning the Chapter 13 debtor I worked with, the debtor actually caused harm to himself by giving up the motor vehicles.  Here is the breakdown to understand why:

Car No. 1 – Market Value = $6,125.00 Lien Amount: $10,640.00 Cram Down saved debtor: $4,515 Benefit in Chapter 13: Monthly payment would have only been $102.00 because the debt would have been paid prorata over the life of the Plan.

Car No. 2 – Market Value = $5,065.00 Lien Amount: $11,687.00 Cram Down saved debtor: $6,622.00 Benefit in Chapter 13: Monthly payment would have only been $85.00 because the debt would have been paid prorata over the life of the Plan.

THE PROBLEMS THAT DEVELOPED FOR THE DEBTOR As you can see from the data above, filing a Chapter 13 would have benefitted the debtor in several ways in regard to his motor vehicles.  However, by surrendering them, the debtor loses all benefit from the use of the vehicles as well as the financial savings from the cram down.

Secondly, the debtor also could have qualified under 722Redemption.Com to upgrade the vehicles and improve his situation.

Thirdly, the debtor lost the monthly IRS expense allowance which was $950.00 for three motor vehicles but only $260 for one.  This alone increased the Chapter 13 Plan payment by an additional $690 per month.

WHAT HAPPENED TO THE EXTRA MONEY?

When the debtor gave up the two motor vehicles, naturally he no longer made a payment to the lienholder.  This gave the debtor an extra $550.00 per month which was applied to the UNSECURE creditors.  Instead of the debtor being in a 15 percent Chapter 13 Plan, they were now in a 30 percent Chapter 13 Plan; which means that the debtor is paying MORE money to the unsecured creditors but gave up a secure asset in the process.

Also, notice that if the debtor would have kept the vehicles, the debts could have been paid PRORATA over the 60 month life of the Chapter 13 Plan.  This reduced the payments from $550 per month to only $187.00.  Again, the debtor lost again by surrendering the motor vehicles.

TIP TO HELP PREVENT SITUATIONS LIKE THIS FROM HAPPENING TO YOUR CLIENTS

Regardless if you are a new attorney or a seasoned attorney, you should never provide a client with a definite yes or no answer until you have had the opportunity to examine the issue from all angles.  I was at a legal seminar one time and an attorney said: Attorneys never answer questions with yes or no; they always answer with – IT DEPENDS.  The other attorneys in the room laughed, but all of us is aware this is an excellent response if you need more time to research the issue.

Therefore, instead of feeling like you are trapped into providing bankruptcy advice when you are unsure what that advice entails; listen to the client and make sure you get all the facts.  Tell your client that you will need to review their case before you can provide them with an answer.  Assure them that every bankruptcy case is different and what may work for one person may not work for them.  This will provide you with some extra time to either research and get the answer online, contact an attorney mentor, or contact our office at 719-659-0743 and we will try to help you.

NETWORKING WITH BANKRUPTCY ATTORNEYS

As a new bankruptcy attorney or an experienced attorney new to bankruptcy, you may want to join the National Association of Consumer Bankruptcy Attorneys and the American Bar Association.  Both of these organizations provide you with access to a wide range of tools including the ability to join private forums and ask questions to experienced attorneys.

Another way to network is to find out if your local Bar Association offers classes and meetings for bankruptcy attorneys.  If so, make sure you attend and pass out your business card.  Not only is this a terrific way to find attorneys who are mentors but also you build your practice by accepting referrals from other attorneys who are often overloaded with Chapter 7 and 13 work.

A final suggestion is to join a social networking group such as LinkedIn and join all the bankruptcy attorney groups.  From your LinkedIn profile, click on GROUPS and do searches on the key words: bankruptcy attorney, bankruptcy court, chapter 7 attorney and chapter 13 attorney.  LinkedIn provides you with the ability to join up to 50 groups, so join as many as you possibly can.  Once you are a member, you can post questions to other attorneys and get help.

REFERENCE LINKS

http://www.linkedin.com http://www.nacba.org http://www.abiworld.org http://www.hg.org/northam-bar.html

TRAINING REFERENCE

http://www.bankruptcytrainingproducts.com/home/web-and-teleconference-training Have a wonderful week and keep working on ways to improve your skills in Chapter 7 and 13.

a lesson in client intake interviews and conflicting information

For the three weeks I have been working on one particular bankruptcy case.  Why is it taking so long?  The clients have been very difficult to interview and the husband and wife keep providing conflicting information.  Therefore, I decided to write this article to help you when you face the same problems, if you have not encountered them already.

The petition began like any other normal petition.  I entered the initial data into the bankruptcy software and compiled a list of questions to ask the clients.  When I called the client back I discovered the phone number the attorney provided was her work phone, so I apologized for the interruption and set up an appointment to talk with her after hours when she was at home.

The first problem I encountered was the inability to understand the clients due to their heavy Filipino accent.  However, I did my best to get the answers to some of the questions.  For other questions, the wife handed the phone to her husband and I tried to communicate with him the best I could.  However, the husband could not understand who I was and was very reluctant to talk with me.  I had no choice at this time but to end the interview, let the attorney know my dilemma and ask him how he wanted me to proceed.

It took approximately 2 weeks before the attorney had the opportunity to talk with the clients and inform them of my role.  I was instructed by the attorney to call the clients and finish the interview.  Hint:  If you are an attorney, you should always let your clients know the names of people who may call them to obtain information.  This way you save a lot of time for your office and staff as well as confusion for your client.

Finally, after leaving voice mails for the clients and eventually getting in touch with them for a second interview, I was able to conduct 80% of the interview in about 2 hours time.  The reason I was unable to complete the interview is detailed in my notes to the attorney which are provided below.  However, the debtor(s) did nothing but hurt themselves by refusing to provide me with the crucial information I needed.  Now the attorney has to spend time getting it before we file the petition.  So eventually, they will have to answer the questions whether they want to or not.

When you encounter situations like this, it does not always mean that the debtor(s) are committing fraud or trying to be fraudulent in their answers.  Instead, some clients are reluctant to answer questions because they are afraid it could get them in trouble, so they ask you or me to answer the questions for them.

For example: in one part of my conversation with the debtor, I asked him how much his family spent per month in food.  He said they spent $6,000.  You and I both know that this amount is too extreme and overinflated.  The IRS allowance for this family of 4 is only $1,370, so I immediately knew that this would not pass through the bankruptcy court without problems.  I told the debtor that $6,000 was much higher than the IRS allowance and that I needed a more realistic figure.  The debtor told me to make up any number that I needed to.  I told him that if I did, I would be committing unauthorized practice of law.  The debtor needed to provide me with a figure and that figure could not be $6,000.

But instead of trying to be sensible, the debtor became upset and started playing mind games.  He told me to try $5,000; but I told him this was too high.  Next he told me to try $4,500.  This immediately told me he was playing games and had no intention of providing me with an accurate figure to reflect his own household budget.  It was at this point that I stopped playing the game and told the debtor that he could discuss the matter with his attorney.

Remember: As a non-attorney, you should do everything you can (within your scope of power) to obtain the information you need to compile a well-detailed bankruptcy petition.  If the client refuses to provide that information or cooperate with you, do the best you can to get as much information as you can, then document details of the interview (as I have done below) and turn the matter over to your attorney. Ask your attorney how they want you to move forward and wait on their instruction.

MY NOTES TO THE ATTORNEY REGARDING THIS CASE provided for training purposes only

STUDENT LOAN ISSUES

From what I can understand, the clients have 2 sons with 2 separate student loans.  The first son (who is 21) has a student loan with Great Lakes for which the debtor co-signed.  This means that the debtor may need to start paying $300 per month for this student loan debt beginning in June 2010.

However, debtor claims that these are his student loans; however, he acknowledges that he did NOT attend school.  Because debtor did not attend school, the student loans must be in the name of the son who did attend.  I am sure that Great Lakes had to place the student loan in the name of the student, not the parent.  Yet, debtor says that I am totally wrong and became very upset.

Bottom line: We do not care if debtor wants to pay the student loan for his son who is able to work and pay his own debt; my ONLY concern is if the Chapter 7 bankruptcy will be over in order time to allow for this $300 monthly payment.  By allowing for this $300 monthly payment, Debtor’s income could be reduced on Schedule I; but the expense may not even be allowed by the court since the debt does not belong to debtor.  This is the part the debtor is not able to understand.  I do not believe the loan is solely in his name and that his son is the only one responsible for it; but if I am wrong, please let me know.

Since debtor is unable to clarify this information and provide me with a suitable explanation, I have NOT listed these loans since they are currently NOT due and at this point, are not in default and not the responsibility of the debtor(s).

DEPENDENT ALLOWANCE

The debtor(s) currently have both sons living with them.  One son is 21 and the wife said he has a job; however, the husband said he is still looking for a job.  The problem is, the 21 year old is NOT in school and therefore may not qualify as a dependent on the bankruptcy petition regardless of whether he is working or not.

However, the second son, who is 20 years old, is still in college and will not be graduating until 2012. Again, the student loan would not even be due until this date, yet debtor said he wants to plan ahead and include the amount in his bankruptcy.  In fact, he got angry because I told him the court may not allow for this student loan repayment and therefore I was not placing it on Schedule J unless the attorney advised me otherwise.  I tried over and over again to explain to the client that we were only concerned with TODAY not tomorrow; yet, he became more agitated and upset with me.

Therefore, I listed both sons on Schedule I but the attorney may receive objection from the trustee.  Hopefully the trustee will allow the son who is still going to college as a dependent but it cannot be guaranteed.  The clients both need to get their stories straight before they go to court.  You may want to counsel them only to say YES and NO and not to start telling stories since their stories are always conflicting.

GE MONEY BANK DEBT

The debtor(s) listed on their client intake forms that they had a debt owed to GE Money Bank in the amount of $6,194.47 but it was a credit card.  Since the account number they provided was not a credit card number, I talked with them about it.

I discovered that the debt was SECURE because they purchased 4 television sets.  However, the debtor was unable to describe the TVs to me.  I cannot believe that 4 televisions are worth over $6,000 unless they are of a better quality than the $800 the debtor claims.  First he told me the televisions were very OLD (but would not tell me how old).  Next he told me he owed GE Money Bank $3,000 but added some more stuff in January (less than 90 days ago) that brought the total to $6,000.  When I asked him what items he had previously purchased for the original $3,000 debt, he said it was for the television sets.  When I asked him what he purchased in January, he again said it was the television sets.

This conversation continued like this for almost 15 minutes and I tried every way to try and help the debtor understand that I needed a complete inventory of the GE Money Bank debt but he kept giving me conflicting information.

My thoughts: Since this debt is such a touchy subject, debtor may have purchased these items less than 90 days ago because he knew he was filing bankruptcy.  As you know, any debt made within the past 90 days could be subject to non-discharge and the clients may have to pay this debt or give up the televisions.

Please find out:

1.   A complete inventory of everything included in the $6,194.47 debt 2.   A complete inventory of any purchases made to GE Money Bank within the past 90 days, which includes January. 3.   A complete description (brand name and size of screen) for each television set 4.   The monthly payment made to GE Money Bank 5.   Are they behind in payments?  If so, which months? 6.   Do they plan to catch up the back payments or surrender the televisions?

THE RECENT FINE FOR SPEEDING TICKET

In general conversation debtor mentioned that he has a court appearance set for March 23 to appear for a speeding ticket.  When I tried to find out about the ticket the debtor refused to go into detail. The only information I could pull from him was the court date and the amount of the fine, which is $332.  I did a search online through PACER as well as the Los Angeles Traffic Court but I could not locate any records on this traffic violation.

Debtor stated that he already paid the fine but still he needed to appear in court.  I suggest you check this out.  If the $332 was the entire fine paid in full, it needs noted on the bankruptcy petition. If the $332 is only a partial payment, I need to know that also.  Additionally, I need to know the:

1.   Case number 2.   Case caption 3.   Parties in the case 4.   Date of ticket 5.   Name and address of the court handling this matter

ADDITIONAL QUESTIONS

Debtor could not tell me if he was behind in payments on the 2002 BMW.  If he is behind, he will need to catch up those payments before the 341 Meeting or a potential objection could be challenged by the creditor since this case will more than likely be a Chapter 7.  In the petition we have asked the creditor to accept a LOWER monthly payment as well as a CRAM DOWN.  The original amount owed was $14,474 on the 2002 BMW but the Nada Guides has a market value of $6,025.  We are saving the debtor(s) $8,449.00 but if they do not show a good faith effort to catch up any past due balances, the deal could be lost and receive an objection from the creditor.

If they are only 1 month behind in payments, this may not be an issue; however, debtor was unable to provide me with this information and became upset when I asked him the question several times so I gave up.

SUMMARY

I hope my notes help you when you work on future petitions.