Chapter 7 and 13 Bankruptcy Blog

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

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

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

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

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

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

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

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

Victoria Ring Cell: 719-659-0743 http://www.chapter713training.com Email: victoriaring1958@gmail.com

 

– 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

Michael Burstein and Debora Golshani (two attorneys who currently operate an Estate Planning practice) decided to open up a new Chapter 7 and 13 practice in the Central District of California. It was an honor that they chose Colorado Bankruptcy Training (CBT) to help them establish their new practice and you can find out more about them at:

http://www.bursteinlaw.net/attorneys/ Phone: 310-391-1311

Michael and Debora flew from Los Angeles to Denver, rented a car and drove to Colorado Springs on April 21. They obtained a suite at the Hyatt so that I could train them at their hotel on April 22 and 23.

All law firms who decide to train through CBT, receive 30 days of free access to My Bankruptcy School. I do this so that the attorney can benefit from the best of both worlds. Instead of spending our training time concentrating solely on how to prepare a petition (which can be obtained online) I am able to cover much more during the training period.

We began the first day of training by establishing a clear set of operational procedures. We covered a wide range of ideas, as well as tips and techniques used by other attorneys I have trained over the years. In addition we covered the court process for both Chapter 7s and 13s, as well as how to utilize Motions, Answers and Amendments as well as how to avoid many problems which are normally caused by the inaccuracy of the petition itself.

One thing I always include in my training is to show attorneys how to cross-reference information provided by the clients with the petition in order to maintain accuracy and reduce issues. This way, an attorney should know of any possible Objections that could occur BEFORE the petition is filed. The goal is for the petition to be as near perfect as possible and to eliminate any issues with the Trustee, which delay the petition process.

On Saturday, April 23 Michael, Debora and I spent the majority of time performing extensive case analysis.  We trained on PACER and I walked them through several Chapter 7s and 13s.  We also analyzed the various pleadings in open and closed cases and determined how these problems could be eliminated.

Although Michael Burstein does not have his bankruptcy law firm website online at the time of the writing of this article, I wanted to announce the news to the subscribers and LinkedIn members as soon as possible. Join me in congratulating Michael Burstein in the opening of his new bankruptcy practice.

Training References to Help Your Law Firm:

Colorado Bankruptcy Training offers a free, unique ebook titled: The Bankruptcy Attorney Start-Up Kit at: http://www.coloradobankruptcytraining.com/bankruptcy_attorney_startup_kit.pdf

For additional training and support options, visit:

Online Training http://www.coloradobankruptcytraining.com/online_bankruptcy_training.html

Training in Colorado http://www.coloradobankruptcytraining.com/bankruptcy_training_colorado.html

Training at Your Law Firm http://www.coloradobankruptcytraining.com/law_firm_training.html

Legal Web Design http://www.coloradobankruptcytraining.com/legal_webdesign.html

 

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

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

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

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

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

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

TESTIMONIALS FROM TWO BANKRUPTCY ATTORNEYS:

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

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

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

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

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

 

— by Victoria Ring

Problem: An attorney graduates from law school with knowledge of the law and how to interpret it; but they never learn the day to day operations of the law firm or how to market their practice.  That task used to be performed by law students, paralegals and legal secretaries. However, in the field of debtor bankruptcy, many attorneys are preparing their own petitions and marketing their own law firms.  In doing so, attorneys eliminate 90% of their overhead expenses and dramatically increase their profits.

But where does an attorney go to learn how to properly prepare a bankruptcy petition? There are many CLE courses for bankruptcy but none of them specifically address the Chapter 7 or 13 petition.  In the past, attorneys and paralegals had to learn either through trial and error (with the court) or by training through someone who had the experience.  But this type of training is not only inconsistent but it does not guarantee professional quality.  And without these two ingredients, the law firm for a bankruptcy attorney will lose profits and eventually collapse.

It is a known fact that if the bankruptcy petition is prepared correctly in the beginning, the entire case will process through the system with less complications. Additionally, potential problems can be addressed before filing; thus saving even more time and money.

REAL LIFE EXAMPLE

A law firm in Maryland was told by several of their attorney friends that preparing the bankruptcy petition paperwork was a piece of cake.  So, when a client came into the office with $4,000 in their hand wanting to file a Chapter 13 because of a foreclosure sale in 2 weeks, they promptly filed an emergency petition to save the home.

Typical example right?

Yes, but this is normally a bad decision.  It is a proven fact that if clients wait until the last minute to save their home, it is going to be extremely difficult and time-consuming to gather all the information needed to properly prepare the petition.  And when an Emergency (or Skeleton) petition is filed, the attorney only has 15 days to get the remaining schedules and Chapter 13 Plan filed.

When they run out of time, many attorneys are then forced to file an extension, which automatically causes the attorney to appear disorganized and unreliable. These negative feelings (that the court may form from this behavior) can have an effect on future cases the attorney may file.  Therefore, it is vitally important for the attorney to learn how to earn brownie-points with the court rather than create negativity from the beginning.

A SUGGESTED METHOD

When I set up new law firms and train new attorneys in paralegal-type operations, I always stress never to file an Emergency petition unless it is absolutely necessary and there are no other alternatives. Besides, when the debtor is aware they are on a deadline to save their home, they are more inclined to get the information the attorney needs to prepare the petition.  However, when an Emergency petition is filed, the client thinks everything is covered and they are not motivated to get the information needed as quickly.

Secondly, new attorneys need to realize that properly preparing a Chapter 7 or Chapter 13 is VERY DETAILED and a great deal of information is required (much like IRS tax returns.)  Without this information, the attorney will normally be filing several amendments to the schedules and a great deal of time will be lost; and time is money.

REFERENCES

If you would like to learn methods to save your bankruptcy law firm a great deal of time and money; and how to increase your profits, contact the author, Victoria Ring at:

http://www.victoria-ring.com Email: victoriaring1958@gmail.com Cell: 719-659-0743

Also, contact Karen Fairchild; a California bankruptcy who recently trained with Victoria. Her contact information is:

http://www.karenfairchild.com Email: karen@karenfairchild.com

Or, enroll in My Bankruptcy School; the first online school specifically designed to train attorneys and their staff in the Chapter 7 and Chapter 13 bankruptcy petition. Visit:

http://www.mybankruptcyschool.com We wish you the best of success.

 

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

Pueblo, Colorado 81001 Office: 719-696-8014

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

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

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

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

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

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

Victoria Ring Certified Paralegal and Business Coach

Issue 06 – December 11, 2010

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

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

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

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

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

Using the Means Test as the Qualifier

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

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

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

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

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

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

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

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

Dear Victoria:

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

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

REFERENCE LINKS

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

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

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

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

 

Many bankruptcy attorneys that we prepare petitions for are normally apprehensive regarding cram downs and strips downs of mortgages. Although I have written many articles about these topics, one angle I have not covered before is the angle of NOT proposing cram downs or strip downs at all. This is great news for those bankruptcy attorney practicing in states where they encounter problems with the courts when they try to propose cram downs and strip downs to help their debtors. Read the rest of this entry »

An independent review of the My Case Info tool developed for bankruptcy attorneys in an effort to save them time and eliminate paperwork. This video shows you a behind the scenes look at how the information is imported and the havoc caused within the petition. Read the rest of this entry »

Issue 01 – October 20, 2010

This is the first issue of a new publication I plan to publish each week.  The information in this publication is made possible by the Chapter 7 and 13 bankruptcy petition reviews we do for attorneys nationwide.  We felt by sharing this information with other attorneys and law firms, it will help them to pick up specific tips and techniques to help them in their practice.  I hope you enjoy the case review this week that follows.

CRAM AND STRIP DOWNS

Some attorneys make the mistake of assuming that all mortgages are eligible for cram and strip downs.  First, we need to establish the fact that cram and strip downs have not been written into law and it is up to each bankruptcy court as to whether they accept them or not.

But let us suppose that cram and strip downs are permissible in your bankruptcy court.  The next step is to qualify the debtors.  Qualifying the debtors for a cram and strip down on their mortgage could take in a wide range of possible scenarios depending on the situation the debtors are in.  This week we encountered a situation where the debtors were unable to qualify for a cram and strip down so I wanted to share it with you.

THE CASE OF BOB AND SUE

The debtors (let us call them Bob and Sue) had their home appraised for $275,000.  They owed $200,000 on the first mortgage and $150,000 on the second.  The attorney asked us to prepare a Chapter 13 and propose a cram and strip down for the primary residence.

Now although we are paralegals and the final decision is always given to the attorney, we do warn attorneys when possible objections could occur based upon our many years of experience.  The main reason the cram and strip may not work for Bob and Sue is because they have $275,000 of SECURE property.  If the bankruptcy court seized the home and sold it for $275,000, they could completely pay off the first mortgage company and still have $75,000 left over.  This also means that since $75,000 is left over, the second mortgage company would be able to claim that as SECURE also.  The only amount of the mortgage debt that is underwater and UNSECURED is $75,000 of the second mortgage.

We suggested to the attorney to propose paying $275,000 as secure and $75,000 as unsecured, non-priority inside the Chapter 13 Plan.  This still saved Bob and Sue a great deal of money but it was not the $200,000 they had originally anticipated.  (Note: I am still amazed at how people work to push the bankruptcy system in their favor. Many people today appear to not understand what is meant to act in a fair and moral manner; but this is just my personal opinion.)

OTHER REFERENCES

Pre-Qualifying Debtors for a Mortgage Cram Down http://chapter7and13bankruptcyblog.com/archives/710

How Banks are Viewing Cram Downs Proposed in Bankruptcy http://chapter7and13bankruptcyblog.com/archives/18

Mortgage Cram and Strip Down Questions and Answers http://chapter7and13bankruptcyblog.com/archives/24

Recommended Book on Foreclosures from The National Consumer Law Center http://shop.consumerlaw.org/foreclosures.aspx

DO YOU NEED A BANKRUPTCY PETITION REVIEW?

You can save a great deal of money and ensure you have a well-detailed Chapter 7 or 13 bankruptcy petition before filing.  Here is how it works:  You prepare the petition with as much detail as possible. But before filing the petition, email it to us (PDF or Best Case format) and we provide you with a complete petition review.  This review is provided on the telephone and if a visual is needed for training purposes we will provide that at no additional charge. The costs are only $200 for a Chapter 7 and $275 for a Chapter 13.  To schedule your bankruptcy petition review call Victoria Ring at 719-659-0743.

Talk to you next week ….

Victoria Ring My Bankruptcy School http://www.mybankruptcyschool.com