Chapter 7 and 13 Bankruptcy Blog

– by Victoria Ring, www.victoria-ring.com

From June 13-16, 2010, I had the pleasure of training the First Master Certified Virtual Bankruptcy Assistant (MVBA), Sonya Banks of VirtualPetitions.Com, LLC in Loganville, Georgia. Sonya arrived in Colorado Springs on Sunday, June 13 to begin training for the Master Certification.  Before her arrival, Sonya already had five years of experience working virtually for an attorney but she wanted to expand her services so that she could work for a variety of attorneys and advance her knowledge in bankruptcy and Chapter 13s.

Our training began with an intense review of Chapter 13s and a variety of different Chapter 13 Plans.  I trained Sonya using methods of deep case study in a variety of different consumer-based Chapter 13 filings found online through PACER.  In addition, I downloaded a case study review that is used by the American Bar Institute for the certification of attorneys.  Although many areas of the exam were completely over our heads (since the exam pertained to the logic of the law itself) it was still an excellent way to study cases and understand how they progress and are handled through the bankruptcy court process.

Next, Sonya and I again utilized PACER in the study of different pleadings used in the Complaint process as well as the various Adversarial Proceedings connected with bankruptcy filings.  This skill enables Sonya to be able to study cases and work with attorneys in updating the petition based upon the Trustee Recommendations as well as other problems that can occur after the 341 Meeting.  This level of skill is only achieved by Master Certified Virtual Bankruptcy Assistants.

To finish the training and for a better well-rounded education, I taught Sonya how to design her own website and maintain it.  This will save Sonya literally thousands of dollars and reduce her overhead expenses to zero.  I also taught her many different marketing methods and we customized a marketing plan so that she could return home and put a plan into action immediately.

After the training was complete I asked Sonya to comment about her experience, and her reply was:

This experience has been a life-changing event.  I learned more in 30 hours than most people learn in one year.  One important thing I learned was that I am marketing all wrong and now that I know how marketing works; I have learned how to incorporate it into my daily business routine.  Like Victoria, I have learned how to make marketing fun and exciting and I cannot wait to return home and try some of the ideas I learned.  Also, I feel very confident that I have the skills needed to do a very good job for attorneys and I did not have this confidence before coming to Colorado Springs for training. (Sonya Banks)

SUMMARY

If you are an attorney seeking to outsource your Chapter 7 or Chapter 13 petition work, I highly recommend the services of Sonya Banks and her company.  Not only is she our first Master Certified VBA, but she is a kind, patient and wonderful lady with high moral character.  Your clients, as well as you and your staff will love working with her.  To contact Sonya:

Email: sonya@virtualpetitions.com Phone: 770-601-4730

DOES YOUR LAW FIRM NEED TRAINING?

Review the various training options available to you and your law firm staff at: http://www.coloradobankruptcytraining.com http://www.victoria-ring.com

The first Chapter 7 Petition Training Course will begin its first class in July.  This is your unique opportunity to work one-on-one with Victoria Ring in learning how to prepare a detailed Chapter 7 petition.  Along the way you will learn 100s of time and money-saving techniques that will improve your skills.

This course is designed to teach attorneys, paralegals and other law office personnel how to prepare a well-detailed Chapter 7 bankruptcy petition. In the process the student will learn a high level of skills that enables them to curtail most (if not all) Deficiency Notices issued by the Trustee after the 341 Meeting is complete.

This course is for both beginners as well as advanced students.  The reason we can provide one class that meets the needs of a wide range of knowledge levels is because the course is structured to teach a higher level of detail than is normally never taught in typical bankruptcy law firms.  This allows those who have been trained in the haphazard, traditional training methods to apply their present knowledge and advance their skills tremendously through the lessons they learn in the Chapter 7 Petition Training Course.

Beginning students who have never been trained in the haphazard, traditional method of preparing a bankruptcy petition will have the advantage of being trained correctly from the beginning.  This will protect students at this knowledge level from many of the common problems that exist in the majority of bankruptcy law firms today; which originated from poor petition training methods.

For more information and to sign up, visit: http://www.bankruptcytrainingproducts.com/home/web-and-teleconference-training

The following questions were submitted by bankruptcy attorneys during the past week. The answers are provided by Victoria Ring who is not an attorney.  Therefore, the information provided in this material is for training purposes only and no whole or part should be conceived as legal advice.

DEAR VICTORIA

I am a new attorney doing my first bankruptcy petition where I am proposing a cram down.  The appraised value of my clients home is $185,000.  They owe $170,000 on the first mortgage and $45,000 on the second.  How can I do a cram down?

ANSWER

You cannot do a cram down.  A cram down is when the house is worth LESS than the amount that is owed.  The amount that is owed is crammed down to the appraised value.  In your clients case, the opposite is true.

Perhaps it will help you to understand the concept better if you think of it this way:

If the house had to be sold and it sold for $185,000; there would be plenty enough money to pay off the first mortgage of $170,000. In fact, you would have $15,000 left over after the sale and the pay off.  Therefore, a cram down is impossible to do since there is nothing to cram down.

However, on the second mortgage, you may be able to propose a reduction since there is only $15,000 left.  Instead of the client paying $45,000, they may only need to pay $15,000 on the second mortgage.  The remaining $30,000 from the second mortgage is actually unsecured equity.

But let us not forget the exemption allowance provided for by your state.  If the exemption allowance is $50,000 the figures change for both mortgage companies.  Therefore, I would need to review Schedule A of your clients petition in order to determine the different strategies available in this particular case.

DEAR VICTORIA

How can I find the IRS Guidelines so I can accurately calculate Schedule J of the bankruptcy petition?

ANSWER

The main page of links I put together to help you when preparing bankruptcy petitions is at: http://www.bankruptcylinks.info/about/prepare-petitions

The links to the IRS guidelines are at: http://www.justice.gov/ust/eo/bapcpa/meanstesting.htm http://www.irs.gov/businesses/small/article/0,,id=104627,00.html http://www.irs.gov/businesses/small/article/0,,id=104696,00.html http://www.justice.gov/ust/eo/bapcpa/20061001/bci_data/median_income_table.htm http://www.irs.gov/businesses/small/article/0,,id=104623,00.html

Keep in mind that the government wants you to think outside the box.  Many of the guidelines are lumped into categories that are not consistent with Schedule J.

The only purpose in reviewing the IRS guidelines and comparing them to the Schedule J figures the clients provide is to make sure the figures are accurate.  For example, gasoline prices fluctuate from week to week.  If the clients tell you they spend $200 a month on gas this month and the IRS guidelines allow them $800; it is an indication that the client may have provided you with a wrong figure and you should ask them to provide a more accurate one.

Why is this important? Because if you give your clients a Chapter 13 Plan payment they cannot afford, they will be unable to stay in the Chapter 13.  This escalates costs as well as other problems for attorneys, clients and the bankruptcy court.

However, this is not a skill that you learn preparing one bankruptcy petition.  This is why I incorporate the training of this skill when I train attorneys.  Believe me, I did not learn the skill overnight myself.

DEAR VICTORIA

The liquidation analysis says that the unsecured debts get nothing but I am not sure how to adjust for that since the plan wants to automatically pay them. Do I use: not in plan, for each to stop the computation?

ANSWER

Unsecured debts should NEVER be removed from a Chapter 13 Plan.  That is one of the main purposes of filing a Chapter 13 in the first place.  The solution is not to trick the software into not calculating unsecured debts.  The solution is to fix what you did wrong and make sure that the unsecured creditors are paid a minimum percentage.  The minimum percentage varies from state to state.  In California, attorneys can have as low as a 2% Plan but in Ohio they never allowed any Plan less than 10%.  As an attorney, you need to call the Chapter 13 Trustee’s office or consult with an experienced attorney in your area to find out the minimum Plan percentage accepted in your state.

DEAR VICTORIA

When you switch from a Chapter 7 to a 13, why does the dialog box come up in the software asking if you want to change your answer on funds available to the unsecured creditors? Are you supposed to have funds in a 13 and not for a 7?

ANSWER

I assume you are referring to the Voluntary Petition.  There are two checkboxes on this form with the following two choices:

Box 1: YES.  Debtor estimates that funds will be available for distribution to unsecured creditors. Box 2: NO. Debtor estimates that, after any exempt property is executed and administrative expenses paid, there will be no funds available to unsecured creditors.

Yes, your assumption is correct.  If there are no funds available to pay unsecured creditors, the debtor is filing a Chapter 7.  One of the requirements to file a Chapter 13 is that there is money left over to pay unsecured creditors.  Besides, if there is no money left over, how could the debtor be filing a Chapter 13 anyway?  They would have no Plan payment to make if they have no money left.  This is a Chapter 7.

DEAR VICTORIA

Where, if anywhere, are there widely accepted interest rates for the secured debt published?  Is this an area where there are lots of disputes?

ANSWER

I called an attorney in California to get a good answer for this question.  The attorney told me this: The interest rate currently paid by the debtor should be used on secure debts unless it is excessive.  To have figures to compare she suggested you find out the average percentage people with good credit pay to purchase a new home (or other asset) in your area.  Suppose you find out this percentage is 2% but the clients are paying 27%.  This is excessive; and in bankruptcy, you may consider proposing the 2% instead of 27% and hopefully there will be no objection from the mortgage company.

DEAR VICTORIA

With all the information you know about bankruptcy and law firm operations, do you plan to publish a book?

ANSWER Yes.  Two attorneys in Georgia (J. Jeffrey Williams and Patricia Lyda Williams) and myself are putting together the materials now.  The name of the book will be: What They Did Not Teach You in Law School About Chapter 7 and Chapter 13 Bankruptcy.  We hope the book will be ready for sale within 90 days.

DEAR VICTORIA

I am a California attorney. If I attend your web training seminar how many MCLE credits do I receive?

ANSWER

The MCLE credits permitted by the State of California are only for seminars that you physically attend. MCLE credits are not provided for the web training seminars I develop and offer to help your law firm.  Besides, the purpose of the web training seminars Michael and I provide is to teach you skills that will improve your bottom line and help you to have a well run and organized law firm.  If we have to force attorneys to attend our seminars through the lure of giving them credits, I really do not think those attorneys would appreciate the training they receive.

IN THE MEANTIME

If you are a new bankruptcy attorney, spend 1 hour with me online and I guarantee I can help solve many problems with your petitions that you are encountering. The cost is only $100 for a full hour and we meet via a web meeting. This means that you will login to the internet and be able to view my computer screen.  This way, I can provide you with visual training, which has more impact than talking solely on the telephone.

Call 719-465-2442 or email victoriaring@coloradobankruptcytraining.com to schedule your training.

ATTEND THE CRAM DOWN WEB SEMINAR

Check us out for only a $25.00 investment. Attend the June 5, 2010 Bankruptcy Cram Down Web Training Seminar.  Sign up at: http://www.coloradobankruptcytraining.com/newsite/contact-us/bankruptcy-web-training

If you have any questions you would like answered in this forum, send them by email to victoriaring@coloradobankruptcytraining.com Your name or contact information will never be used unless you specifically request it.  And if I do not know the answer, I will ask an attorney and get an answer for you.

Have a wonderful week.

If you have worked in bankruptcy longer than 1 minute, I am sure you know that one of the most time-consuming tasks in preparing a bankruptcy petition is waiting for the client to provide you with the information you need.

ATTORNEYS DEAL WITH THIS PROBLEM IN A NUMBER OF WAYS:

1.  Some attorneys designate one specific person in the office to follow-up with clients and make sure the client intake forms are filled out properly as well as gathering all the documentation BEFORE the petition even begins the input cycle.

2.  Some attorneys will enter in the data they have.  Then, as new information comes in from the debtor, they add to the information in the bankruptcy software until the petition is completed and ready to file.

3.  Some attorneys bring the clients into the office and does a live client intake interview to speed up the process.  In the interview the debtor is made to answer all the questions on the forms and sent home with a list of documents they need to bring back to the office before their petition is filed.

4.  Some attorneys just put everything in a file and do not do anything until the debtor pays their entire attorney fee in full.

MY SOLUTION:

After preparing and working with literally thousands of bankruptcy petitions, the method that works for me is NOT to enter the data into a Schedule until you have all the information you need for that particular Schedule.

For example, the average debtor does not enjoy filling out debt sheets.  They want the law firm to pull a credit report and gather their own information, rather than caring enough to take responsibility and do the job right. (Note:  A credit report is a tool. It should never be used solely to prepare Schedule F.) Therefore, before I prepare Schedule F of the bankruptcy petition, I look through the debt sheets the debtors provided.  If the debt sheets are not at least 80% complete, I do not enter anything on Schedule F.  The same holds true for Schedule A.  If the debtors do not have a recent appraisal, know who they pay their mortgage to, provide account numbers, the date the debt was incurred and a balance owed on the mortgage, I do not begin Schedule A.

I have found that by following this procedure, I rarely miss important pieces of data within the bankruptcy petition.  If I enter one piece of info, close the software, find another piece of data, open up the software and enter it, then repeat this process over and over again until one Schedule is complete; errors are much more prominent.  Additionally, the process is much more time-consuming.  If you continually open and close your software program, entering data as it is fed to you, you not only increase your time spent working on the petition but you will greatly decrease efficiency.

DO YOU ENJOY THESE TIPS?

Visit http://www.coloradobankruptcytraining.com and take advantage of some of the unique, low-cost training options for attorneys and their staff.

Also, subscribe to my articles at: http://chapter7and13bankruptcyblog.com/feed

If you have been following previous emails, Michael Misenheimer and I had to cancel the June seminars in California because no one registered for them.  We both were shocked and wanted to find out why no one was interested in attending.  The training we offered was beyond any other training offered within the industry and the popularity of previous seminars told us that we were doing everything right.  So, what was the problem?

After emailing and talking with about 15 different California bankruptcy attorneys, we were told that the Central District is so busy that attorneys do not have time to attend a seminar right now.

Our first reaction was: What can we do to help?

IDEA FOR TELEPHONE TRAINING

The first idea came from Art Hausmann, a seasoned bankruptcy attorney that attended the Los Angeles Chapter 13 seminar back in August 2009.  Art hired me to provide training to his paralegal, as the paralegal needed it.  In other words, when his paralegal is working on a bankruptcy case, if she has a question she calls or sends me an email.  I either reply to her email or call her in order to help solve the problem.  In addition to solving the issue, I also take the time to train her skills in the process.  Art’s paralegal and I will begin our training starting tomorrow (Monday.)

In the meantime, I talked with Michael about this problem.  He agreed that we should offer other attorneys the same service.  For a fee of $100 per hour, Michael or I will be available by telephone and email to answer your questions.  In fact, we will not even charge a retainer fee to get started. If you try out our service and you do not immediately see results, you owe nothing.  The training can be provided for you or any member of your legal staff.  How much better could this offer be? You have nothing to lose.

Obviously, Michael and I are only two people.  We can only provide our training services to a limited number of attorneys and we are doing this in order to assist the law firms who are in crisis mode at this time.  Please contact us (see contact information at end of this email) to discuss this training option if you are interested.

LAW OFFICE MANAGEMENT ASSISTANCE

Working in law firms, Michael and I are also aware that some law firms do not necessarily need help with petitions, but are severely disorganized due to the huge increase in the workload.

These are precisely the types of problems that Michael and I are experienced in handling because we have worked in a variety of law firms throughout our career.  Please contact us (see contact information at end of this email) so we can analyze your situation, offer a few suggestions and see what we can do to help you improve your law firm efficiency.

CHAPTER 13 PETITION ASSISTANCE

As you may already know, Chapter 13 filings are increasing because the creditors are fighting harder against Chapter 7 filings.  This has created a nitch for paralegals like Michael and me to work with attorneys in improving their Chapter 13 petitions and Plans.  We provide a wide range of services up through the confirmation stage.   And, if you are located in Colorado Springs, Colorado or Atlanta, Georgia, we can even accompany you to court if you need us.  To discuss your Chapter 13 needs, please contact us (see contact information at end of this email.)

We are here to help in any way we can, especially during this time of mortgage crisis and upside down loans.  Remember, we are both skilled in cram downs and strip downs of mortgage loans which can save your client thousands of dollars.

We hope to hear from you soon.  See contact information below.

CONTACT INFORMATION

Victoria Ring Phone: 719-465-2442 Email:  victoriaring@coloradobankruptcytraining.com

Michael Misenheimer Phone: 404-795-9013 Email: mmisenheimer@gmail.com

A quick lesson in the Means Test, Schedule J and the Chapter 13 Plan.

http://www.youtube.com/watch?v=FoldzGDhV3I

I just placed a free 1 hour training audio containing various tips and techniques for preparing Chapter 13 petitions and plans. It should be a great benefit to you and your clients. There is no hidden costs and you can download it free at: http://www.coloradobankruptcytraining.com/audio01.html

Most attorneys are already aware that there are very few training options available for bankruptcy attorneys pertaining to Chapter 7 and 13 bankruptcy petitions. In law school, the focus is mainly on Chapter 11s and business-related filings.  Not only is consumer law often overlooked in law school, but until recently, bankruptcy was not an area of law that carried much weight or prestige.

In the past, attorneys and their staff had no option except to be trained either on the job (through the trial and error method of making mistakes) or from experienced people who had the time to train them.  However, because of the record number of Chapter 7 and Chapter 13 bankruptcy petitions being filed today, bankruptcy is booming.  Therefore, the option of learning by trial and error or being taught by experienced people is an option not readily available to most law firms today. In addition, bankruptcy courts in every state spend a great deal of time finding and fixing errors caused by new and inexperienced attorneys and their personnel.  All of this combined will waste time and money which is why many courts are becoming more strict with their procedures.

But there is a very bad side to this issue also.  Some attorneys have actually been sanctioned and either paid high restitution fees or lost their license to practice law simply because the attorney and the staff were not properly trained and repeatedly filed inaccurate or fraudulent petitions.  Some of these attorneys became paralegals and continued to work inside law firms and others will get out of the profession altogether.

This problem needed fixed and it needed to be fixed fast!!

In a sincere effort to help address these problems, Victoria Ring (the developer of the virtual bankruptcy assistant industry) and Michael Misenheimer (a certified paralegal who is entering law school this Fall) have joined forces.  They have developed a dynamic training curriculum that has literally transformed business for bankruptcy attorneys nationwide.  Together, Victoria and Michael are able to provide bankruptcy attorneys with the skills they need to streamline their practice and increase profits for their law firms.

Keeping costs to a reasonable $275 per person, an attorney can easily afford to attend with their staff and everyone will gain from the knowledge that both Michael and Victoria teach.  Unlike typical seminars and workshops, Michael and Victoria take a different approach to training by making their seminars unique and unlike others you may have attended in the past.

For example:

1.  The information taught in the Bankruptcy Attorney Seminars is NOT taught in any other seminar, workshop or training program. This is because the materials have been personally compiled from many years of working in the field as well as advanced training from attorneys, judges and trustees.

2.  The Bankruptcy Attorney Seminars are causal, relaxed and interactive. In fact, attendees are encouraged to ask questions and participate in the ongoing discussion.  This type of atmosphere promotes a higher level of learning.

3.  Networking is one of the prime goals of the Bankruptcy Attorney Seminars.  In fact, in previous seminars, long-lasting business relationships have developed just from attending.  This is because the Bankruptcy Attorney Seminars place great emphasis on working together and feeding off the knowledge of everyone present. This results in an atmosphere that helps to promote maximum retention levels.

4.  All attendees receive a wealth of information in the form of handouts that they can use to take back to the law firm and immediately put to use.

Bankruptcy Attorney Seminar Overview

The Bankruptcy Attorney Seminars are structured to cover TWO days (Friday and Saturday.)  Attorneys and their staff may attend either day or both days and save $100.  A single day registration is only $275 per person with discounts when two or more are attending from the same law firm.

Day 1 of the Seminar (Friday)

* Bankruptcy petition preparation skills and tips to make your job faster * Demonstrations of how to propose mortgage cram downs and strip downs * Tips for improving your Chapter 13 Plan preparation skills * Techniques to help you reduce deficiency notices after the bankruptcy petition is filed * How to work better with creditors as well as how to better protect the debtor

Day 2 of the Seminar (Saturday)

* Client intake interview tips to help reveal information that could make or break a case * Procedural and operational techniques to maximize office efficiency * Methods for turning free consultations into paying clients * Easy to understand web page development suggestions * Marketing your law firm via the internet and social networking

To find out more about these seminars, visit http://www.bankruptcyattorneyseminars.com

The first TWO bankruptcy attorney seminars has been scheduled. I just launched a new website which you can review and register for these seminars at:

http://www.bankruptcyattorneyseminars.com/ Thank you for your continued support and faith in my training services. I strive to continue working to provide the much needed education to debtor bankruptcy attorneys nationwide.  I hope to see you at an upcoming seminar.

As you may be aware, cosigners and codebtors are people (or companies) who are obligated to pay a debt if the client does not pay it.  Therefore, when a client decides to file bankruptcy and that client owes a debt where a cosigner or codebtor is involved, it could potentially cause a major problem to develop.

This is why it is extremely important to obtain precise information about any cosigners or codebtors the client(s) have that are associated with their debts.  And to be certain you (or your attorneys) protects the client(s) in the best way possible, the attorney may need to review the contract that was signed regarding this debt.  You will need to find out:

1.   Was the debt secure or unsecure? 2.   Were the client(s) the primary or secondary client(s) on the contract? 3.   Were any items used for collateral no longer in the possession of the client(s), or that the client(s) are surrendering in the bankruptcy?

After obtaining the answers to each one of these questions the attorney will need to find out if this client qualifies for a Chapter 7 or Chapter 13.  Both Chapters treat debts somewhat differently but you need to verify the facts before the attorney can advise the client(s) properly.

Let me give you an example:  An attorney discussed a case with me that he was working on.  A lady had stopped by the office to ask about a debt she cosigned on a $27,000 credit card with her nephew.  The nephew was filing bankruptcy and he wanted to know how this would affect his aunt who was not filing.

If the nephew files a Chapter 13 and has enough income to pay back his unsecure creditors 100%, this issue could possibly be uneventful.  The debt could be paid in full through the Chapter 13 Plan which is filed with the bankruptcy petition.

However, a problem could occur if the nephew does not have enough money left over to pay the unsecured creditors 100%.  He may only have enough income to propose a 50% Chapter 13 Plan. What will happen to the remaining 50% that will not be paid through the bankruptcy?

One of the more interesting features of Chapter 13 law is something called the COCLIENT(S) STAY.  Set out in Section 1301(a) of the Bankruptcy Code, the CoClient(s) Stay disallows collection action on consumer debt against co-client(s) or the person filing for bankruptcy.

A TYPICAL SCENARIO

A client files a Chapter 13 bankruptcy and includes a debt owed to TV Centers of America for a new television.  The clients mother cosigned the loan for her son.  The clients Chapter 13 protects the mother from collection efforts for as long as the client remains in the Chapter 13 and continues making the payment to the trustee.

However, the obligation of the coclient(s) do not disappear.  If the client repays a consumer debt at 30 cents on the dollar in the Chapter 13, the clients cosigner will be liable for the remaining 70% after the bankruptcy case is discharged.   But, during the time the client(s) are in a Chapter 13, the coclient is protected.   Often in these cases, client(s) will establish special payment CLASSES in their Chapter 13 Plan to pay co-signed debts in full to protect the co-client(s).   In other situations; such as when the cosigner is an exspouse, the co-client(s) may be left exposed.

WOULD YOU LIKE MORE INFORMATION LIKE THIS?

Information like the article above are extremely valuable for attorneys and non-attorneys working in Chapter 7 and Chapter 13 debtor bankruptcy law.  To obtain your 75 page Operations Manual and Initial Intake Forms, visit:

http://www.coloradobankruptcytraining.com/products_intakeform.html