Chapter 7 and 13 Bankruptcy Blog

– 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

Kelly Thrasher, CEO of More Clients NOW, and her assistant, Joan Miller, flew to Denver from Indianapolis, Indiana on Monday, May 16, 2011.

Kelly is probably the best paralegal I know. She came out for a three day business meeting to discuss how we could work together for the expansion of My Bankruptcy School.

Kelly was first attracted to My Bankruptcy School when she did some research for training in the debtor bankruptcy field.  During her research she came across:

1.  Colorado Bankruptcy Training 2.  713Training.Com 3.  Morgan King Bankruptcy

Naturally, Kelly wanted to know the difference between the three, which is:

713Training.Com

This company was founded in 2001 and developed by me (Victoria Ring) but I am NO LONGER associated with the company. The reason behind this separation was that I was forced to separate the attorneys/law firms from the VBAs (virtual bankruptcy assistants in 2009.)

VBAs are typically people who enter the industry with little or no legal training. Many have never worked in a law office. Back ion 2009, I found that when I held seminars, more attorneys were attending compared to VBAs. This forced me to revamp all my training materials to be geared more toward attorneys, paralegals and law firms, and sell the VBA-portion to a VBA who could more identify with their needs. That VBA was Clay Holland.

Since January 2010, 713Training.Com has been owned and managed by Clay Holland in Salt Lake City, Utah. The products that are sold by Clay have NOTHING to do with the current operations of my company, Colorado Bankruptcy Training; which was developed to provide training and support to attorneys, paralegals and law firms nationwide; not VBAs.

An agreement has been signed between our two companies so that Clay only sells his products and services to VBAs. My company only sells its products and services to attorneys, paralegals and law firms.  At the present time, my products and services are updated on a weekly basis and comply with all new, updated bankruptcy court procedures. Clay has assured me that he would be updating the materials for 713Training.Com in the near future.

Morgan King Bankruptcy

Many people confuse the two names: Victoria Ring and Morgan King; but I have never met Mr King and he lives over 1,200 miles away from me.  I understand that Mr King provides training for attorneys and law firms also. However, I have never reviewed his products or conducted any business with him; so I do not know the man well enough to provide any comment regarding his training materials.

Colorado Bankruptcy Training

In order to prevent further confusion by people who think my company: Colorado Bankruptcy Training only provides services to Colorado attorneys, I have secured the following three new domains:

http://www.chapter7and13training.com http://www.chapter713training.com http://www.debtorbankruptcytraining.com

I take all the blame for making this mistake in naming my company Colorado Bankruptcy Training when I separated the two fields: attorneys from VBAs. Hopefully you can learn from my mistake if you are ever faced with this type of business decision. If your product and service are not state specific, do not place a state name in the name of your company.

SUMMARY OF MEETING

* Kelly physically saw my operations, worked with me and discussed many business ideas. We have taken positive steps to improving My Bankruptcy School and the results of our efforts will be demonstrated in the coming months.

* Further information regarding the differences between Chapter 7 and 13 Training and the other companies publishing bankruptcy training information will continue to be published. This article being the first for public education so they can make a better informed purchasing decision.

* Kelly will be providing Credit Report Repair services for law firms.  More details about this unique and excellent service will be provided in a separate article. Or contact Kelly through her website at: http://moreclients.net/

* Several new packages will be developed for students of My Bankruptcy School. These packages will enable attorneys and law firms to personalize training options to suit their specific needs. More details about this will be announced within the next few days.

* Better public information regarding the cost of enrollment in My Bankruptcy School. The Chapter 7 course is $425; the Chapter 13 course $350; and the Chapter 7 and 13 course is only $725. The full cost of the course will more than pay for itself with the FIRST petition. This makes My Bankruptcy School one of the best investments for attorneys, paralegals and law firms nationwide. For more information, visit: http://mybankruptcyschool.com/enroll

 

Have you noticed the ads in newspapers from law firms claiming to file a bankruptcy for only $300 or $200 or even as low as $150? Did you ever wonder how they can charge this low of an amount and still stay in business?  Here are two scams that use these techniques:

Scam 1: Pretending to do a loan modification

A law firm will advertise to do loan modifications for clients. They rent mailing lists of people facing foreclosure and target them with promises of helping to save their home.

Once the client has paid $4,000 or $5,000, the law firm will claim the mortgage company would not accept their offer. The only choice left for the client is to file bankruptcy. Of course the law firm will pretend to give the clients a deal and charge them $300 or less for filing the petition.  But remember, they just received $4,000 or $5,000 for doing nothing.

How do I know this happens? Because I have personally been involved with four law firms who used these tactics. I refused to work for them, but other virtual assistants worked for law firms like this and reported their horror stories to me.

Scam 2: The low price is only for a skeleton filing

Some law firms will advertise low prices for filing bankruptcy because this price is only for filing the Voluntary Petition and Creditor’s Matrix.  This type of filing will stop any legal action against the debtor but they will only have 14 days before they must file the remaining schedules of the petition.

Of course the law firm will charge extra for Schedule A, Schedule B and so forth.  By the time the clients pay for each remaining schedule, they have more money invested compared to paying an honest bankruptcy attorney the full fee in the beginning.

Summary

There are bad attorneys and good attorneys. There are bad doctors and good doctors. There are bad waiters and good waiters. There are bad people and good people.  No one is immune from scams because they exist everywhere.

But the next time you see one of those low-cost ads for filing bankruptcy, perhaps this article will help you shed some light on the possible truth behind the low price.  Also, you can use the information to educate your staff and your clients who may ask you about these ads.

Be sure to pick up your free tools from Chapter 7 and 13 Training.Com at:

http://chapter7and13training.com/ Click on FREE TOOLS along left side of page

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

Colorado Bankruptcy Training is pleased to announce the release of the first bankruptcy training videos ever produced to train the skills needed to prepare a well-detailed Schedule B within the bankruptcy petition. As you may know, we just released the Voluntary Petition and Schedule A training videos last week. Read the rest of this entry »

Enroll at http://www.mybankruptcyschool.com

September 7 – Getting Started and Pre-Qualifying Debtors September 11 – Voluntary Petition, Schedules A and B September 15 – Schedules C, D, E and F September 20 – Schedules G, H, I and J September 24 – Statement of Affairs and Means Test September 28 – Miscellaneous Forms and Finalization Techniques September 30 – Marketing on the Internet

START CLASSES ANYTIME

The schedule above is for LIVE classes.  But when you enroll you gain immediate access to the online school.  Each class module is filled with training materials, videos and audios so you can get started learning right away.

However, during the LIVE classes you will be able to interact with the instructor, Victoria Ring.  You are also encouraged to bring problem petitions to the class so that everyone can learn through real world practice.

STUDENTS ALSO RECEIVE

** 90 days of free access to the online school after the graduation month ** 90 days of free access to future Chapter 7 classes so you can repeat classes if you miss one or need to review the information a second time ** 50 percent discount on private training services during the time you are enrolled as a student

VIDEOS FOR REVIEW

http://www.youtube.com/watch?v=39Knm0X6TTs http://www.youtube.com/watch?v=oInwBLMGvKA http://www.youtube.com/watch?v=Ojn-TWS6aAA http://www.youtube.com/watch?v=1bF3G8zCWmY

ENROLL AT http://www.mybankruptcyschool.com

My Bankruptcy School is for both attorneys, paralegals and legal professionals working for attorneys. We have attorneys sign up as individuals because they prepare their own petitions; or we have attorneys sign up with their paralegals.  We also have entire law firms of 5 or more sign up and take the classes together.  Regardless of whether you are a beginning or have experience with petitions, I hope you decide to join us and increase your current petition skills.

INSTRUCTORS

Victoria Ring – http://www.victoria-ring.com Sonya Banks – http://www.virtualpetitions.com

If the video does not automatically appear in the area above, click here: http://www.youtube.com/watch?v=39Knm0X6TTs

MyBankruptcySchool.Com is the first online school developed for bankruptcy attorneys, paralegals and legal professionals to teach Chapter 7 and 13 bankruptcy petition preparation skills. This video walks you through the benefits provided to students who enroll in the online courses.

DO YOU ENJOY MY VIDEOS?

If you enjoy my short videos specifically designed for Chapter 7 and Chapter 13 bankruptcy attorneys, you can subscribe to my YouTube channel at: http://www.youtube.com/user/MsVictoriaRing Click on SUBSCRIBE at the top of page

– Victoria Ring, Colorado Bankruptcy Training

For those of you just entering the field of debtor bankruptcy, this article will be very helpful to you because it addresses a very common problem that occurs when working with debtors.  The common problem is that debtors want their cake and eat it too. This statement may sound a little harsh but allow me to explain:

I am finding that many new attorneys entering the bankruptcy field do not have the training to screen their clients before sending us the petitions for input.  One of the easiest methods for an attorney to screen their clients is to find out how much equity is in their home before taking the case. During the intake it only takes a minute or two to find out approximately how much the debtors owe on their mortgage.  Then, while the client is still in the office, go to a computer and do a search on www.zillow.com.  Although Zillow is certainly not a court authority by any stretch of the imagination, it will tell you immediately the approximate amount of unexempt equity the debtor may have.

For example: I had a case today for a California debtor who had just divorced. There was $200,000 of equity in the home.  Since the debtor was divorced, he only had to claim $100,000 of this equity.  Under the 704 California exemptions, the debtor was provided with a healthy $75,000, leaving him with $25,000 that was UNEXEMPT.  Was the debtor happy about the $75,000 exemption?  Of course not.  The debtor was angry because he wanted to keep the $25,000 plus have all his debts excused.  Although most debtors may not realize it at the time, in reality they are being unfair and asking the attorney to commit fraud by making this selfish demand.

Unfortunately, most of the new bankruptcy attorneys that I work with do not understand the bankruptcy law well enough to properly advise their client.  Instead, they accept the case, have the client fill out the intake forms, pay the fees and send the paperwork to my team.  We input the petition and discover the problem with the equity in the home.  By this time, the attorney has invested his or her time, the debtor has spent several hours gathering information and we have worked inputting the case.  When we discover this problem we alert the attorney, the attorney talks to the client and the debtor decides not file bankruptcy.  The attorney is forced to refund some of the money because the attorney did not know how to properly explain the advantages to the debtor of filing a Chapter 13 instead.  In fact, if the attorney had called to discuss this case with me, I could have taught him how to turn this unhappy client from a Chapter 7 to a positive Chapter 13 because I deal with these issues all the time.

For example, this particular debtor had $38,000 in Schedule F debts and $25,000 of unexempt equity in his home.  The debtor did not want to surrender his interest in the property because he wanted to make sure his ex-wife and children had a home to live in.  This is admirable, but the court and creditors look at numbers because they are not emotionally tied to debtors. New attorneys must learn these types of skills so they can help the debtor understand why it may or may not be to their advantage to file bankruptcy at this time.

But for the particular debtor in our scenario, it would have been to his advantage to file a Chapter 13.  First of all, we could have proposed a 100% Plan which would have more than likely protected the $25,000 of unexempt equity.  Secondly, the Chapter 13 would have eliminated $73,000 in interest charges over the 5 year Plan period, the debtor would have paid off his student loan in full as well as the unpaid personal income taxes from 2002.  By presenting these positive factors to the debtor, the attorney may have saved this case and never had to refund money.  Plus the debtor would be happier once he understood the advantages.

(Note:  A key to good marketing is to point out advantages for the client.  If you can show a client how much money you can save them and how, they often will do whatever is necessary to comply with your requests and invest their time and money making it happen.  This is what makes a happy client and this is what generates referrals.)

But in this case, the attorney did not call to discuss the matter with me.  He simply told the client that he would have to pay $25,000 or lose his home.  This naturally scared the debtor to death and he decided not to file. Who can blame him?

It amazes me when things like this happen; and they happen quite frequently.  In fact, it may be shocking to you also.  I hope so, because I want this article to be shocking enough to help to prevent this from happening to you.  Also, please understand that this article is not intended in any manner to provide legal advice.  I am not an attorney and I am not trying to predict what a bankruptcy court to do by writing this article.  I am simply trying to help you understand the concept of fairness so you will know how to better deal with situations exactly like this in the future.

I wish you the best of success and encourage you to continue learning and working hard to protect the debtor; but in a fair and balanced way.

Click here to find out more about our online training classes

The first Chapter 7 Bankruptcy Petition Training Class began on July 5, 2010. The first class consisted of eight students; four attorneys and four non-attorneys.  I asked the students if the online class was different compared to purchasing the training videos.  Three comments I received were:

The online class is much different from the videos.  You provide different information in the online class so I would recommend someone purchase both for well-rounded training.

I really prefer the online class because I can ask questions directly to the instructor and get an immediate answer.  I also like the personal touch because a video is a recording and the online classes are LIVE.

I like the videos because I can watch the lessons over and over again; however, the online class does provide an advantage in the fact that different information is covered compared to the training videos.

The Cost Saving Advantage to Online Classes

The biggest advantage to attending online classes is the cost savings.  For example, to attend a one day seminar you could invest as much as $2,000 for airfare, hotel and meals; let alone the time spent away from work.  But by attending online classes you CAN SAVE 90%. The Chapter 7 class is only $275 and the Chapter 13 is $150.  Plus, you attend online and have absolutely no overhead costs.

I noticed this benefit immediately during the development of the Chapter 7 Bankruptcy Petition Training Class.  From 2004 until this year I traveled throughout the United States speaking at seminars.  The average overhead cost for me to book a hotel meeting room, rent the audio visual equipment, make copies of manuals and buy food for attendees was about $3,000.  That meant that I needed 10 people to sign up for a $300 seminar just to break even.  Rarely did I ever produce a profit, but I knew the training was necessary for attorneys and virtual bankruptcy assistants, so I continued doing the seminars as long as I broke even; but my business suffered because I was out of town; just like your law firm would suffer if you had to miss work to attend a seminar.

However, now, with the development of the online class, I can conduct a class if only one person signs up.  That’s because instead of paying $3,000 in overhead expenses for a one day seminar, I only pay $7 a month for hosting the website.  My costs are reduced – the costs for the student are reduced; and it is a win/win situation that I am sure more people are going to enjoy.

Why are some people apprehensive about online classes?

One reason people have trouble accepting online courses are that the quality of many of them is extremely poor.  I signed up for a class that had absolutely no live interaction from the instructor.  In fact, she would not even reply to my emails.  I had to actually call the school and complain just to get the instructor to respond.  Also, the materials were only available online, not in a classroom setting; and the materials were very scanty and contained poor content.  The information was only theory and contained nothing that I could actually put to use in my real work life.

These are just a couple of reasons why online schools and classes have a bad reputation and are destroying the reputation for professional schools like MyBankruptcySchool.com.  I hope you give us a chance because the materials we provide are the best in the field and are taught by the developer of the virtual bankruptcy assistant industry.  This is top level training at low prices designed for bankruptcy attorneys just starting a law firm and operating on a tight budget.

Questions from Attorneys Regarding the Online Classes

Q: Why is the Chapter 7 class so long?  Can I jump ahead and take the class in a few days?

A: The online courses that I developed are not intended to dictate to you like grade school.  If you want to download all the handouts and quizzes, never attend a class and complete your training in a few days; that decision is entirely up to you.  I will tell you that you get so much more from attending the live meetings because you learn a great deal from the instructor.  But whether you attend or not is your decision.

Q: What materials do I receive once I enroll in the course?

A: Prior to the first day of the course you will be emailed a username and password so you can have access to My Bankruptcy School online.  A video showing you a visual tour around the interface is provided at:  http://www.youtube.com/watch?v=Uc-598gBlxQ

Once logged into MyBankruptcySchool.com you will have access to:  (1) extensive handout materials; (2) quizzes to check your progress; (3) audios of previously recorded classes; plus (4) all the other features of the interface.

Q: What other topics do you cover in the course that are not listed on the website?

A: Every class is very intense and contains a great deal of information.  However, every class is different because the topics are structured around the needs of the particular students in that class.  However, some popular topics I cover to help attorneys are: (1) how to set up electronic files; (2) how to incorporate marketing techniques into your operational procedures to produce long term results; (3) client intake interview tips; and (4) social media for marketing.

Do you have any other questions?

Fill out the contact form at: http://www.coloradobankruptcytraining.com/contact-us

What classes are available?

Chapter 7 and Chapter 13 Classes are available at: http://www.bankruptcytrainingproducts.com/home/web-and-teleconference-training

How do I find the My Bankruptcy School website? http://www.mybankruptcyschool.com

Sample Bankruptcy Games

Bankruptcy Terminology Game http://www.quia.com/cc/1983817.html

Bankruptcy Hangman Game http://www.quia.com/hm/665546.html