Chapter 7 and 13 Bankruptcy Blog

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

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

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

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

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

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

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

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

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

 

Last week there was a great deal of controversy surrounding the topic of first mortgage cram downs based upon articles I had written about the subject.  Some attorneys became angry and upset while others researched the topic and sent me their comments which appear below.

I hope this article helps to resolve the issue and to calm down the attorneys who were angry and condescending in their analysis.  Let us always remember that we are all in the same boat and we should have a heart to help each other rather than post cruel slurs in an attempt to hurt others who try to do the best they can, based upon the information they know and experiences they have endured.

I wish all of you a happy Fourth of July.

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

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Victoria:

I went to a meeting at the Chapter 13 Trustee’s office for the Central District of California in August 2009 and was told by the Trustee that California would allow cram downs on first mortgages IF a hardship situation existed.  This is why many California attorneys proposed them and this is why you undoubtedly worked on them during the past 2-3 years.  However, almost 30 days later, the Chapter 13 Trustee posted a retraction stating that he made a mistake and he was actually referring to second mortgages.  I am sure the attorneys you were working with forgot to tell you this.

Although I did not examine the specific cases you worked on for these attorneys, I believe the reason some of the cases in California were confirmed for first mortgage cram downs was because the home was not placed inside the Plan. Therefore, the amount never really mattered to the Trustee since their office was not paying the claim.  I am sure that the first mortgage company filed a Proof of Claim on the full amount; therefore, the Proof of Claim amount was honored and no Objection was filed.

Finally, even though first mortgage cram downs are not legally recognized, your thoughts in educating others about first mortgage cram downs is exemplary. This legislation has already passed in the House and many Senators also voted for the Bill. I believe first mortgage cram downs will be realized in the near future and I thank you for all you continue to do to support this industry and help debtors.

Lydia Zlobnicki, JD

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Here in the Western District of Washington State, an Adversary Matter has to be filed in order to strip or cram down a mortgage.

Amy Wishart Do It Yourself Documents

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The Southern District of Florida will not allow modification of the first mortgage upon the primary residence.

Here is an interesting twist, though:  one of the 2 judges in the West Palm Beach division of the Southern District, Erik Kimball, takes the position that if a stripped off 2nd mortgage, or a stripped down 1st mortgage on a property other than the primary residence, causes enough stripped off secured debt becomes enough unsecured as to disqualify the debtor for a Chapter 13 under Sec. 109(e)

Jeffrey Lampert lampertletters@gmail.com

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Under Chapter 13 you have Section 1322(b)(2) and we can avoid junior liens via this section and ‘cram down’ non-owner occupied properties.  We have similar Sections under Chapter 11.

Congress has not granted bankruptcy courts to ‘cram down’ or otherwise reduce the first mortgage on a debtor’s primary residence.  I am reporting in from the Central District of California

Links: http://www.losangelesbankruptcylawmonitor.com

Christine Wilton Greifendorff Law Offices, PC

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I have been out of bankruptcy for a while, however as of last year, our three districts in Oklahoma were uniform in their treatment of home loans – IF a home was worth less money than the sum of the first and 2nd loan, the 2nd was treated as an unsecured debt, and paid that way, with its lien being stripped away. First loan cram downs were not allowed at all. I do not believe that has changed, however as I said, I have not been practicing this year, so am not completely positive.

Michael McCoy Oklahoma City, OK

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In 2007, our office was successful in cramming down a first mortgage because Washington Mutual was going out of business and did not file a Proof of Claim or Objection to Plan.  Since we listed the claim amount the same as the appraised value, the Plan was confirmed.

However, I recently learned that only second mortgages are permitted for cram downs in Ohio, but I do know that first mortgage cram downs are sometimes confirmed also.

Charlie Hafer Southern District of Ohio

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

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

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

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

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

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

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

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

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

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

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

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

Victoria Ring http://www.chapter713training.com

 

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

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

Why was a cram down proposed?

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

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

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

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

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

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

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

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

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

Summary

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

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

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

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

 

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

 

Colorado Bankruptcy Training and Virtual Petitions have teamed up to offer bankruptcy attorneys the convenience of a HELPLINE.

THE HELPLINE WORKS LIKE THIS:

At any point during the intake process and even pre or post petition, you or a member of your staff can contact us with any questions regarding Chapter 7s and 13s. This contact can be made by email or telephone; whichever is convenient for you.  We will then do our best to answer the question or assist you in any way to solve the issue.

BONUS:  And during the process, we will train you in a variety of skills so that you eventually never need us.

Sonya and I decided to initiate this service because we are finding that most attorneys open up new bankruptcy practices without any prior knowledge of the intake process. In law school, attorneys are trained in the law, not the process that most paralegals perform.

Within the past month we have had four attorneys ask if they could call us to discuss their cases to gain insight from our combined 37 years of paralegal experience.  And this is why we decided to announce the service to our LinkedIn members to see how popular the service is received.

TO GET STARTED

1.  Email your name, law firm name, address, city, state and zip, telephone and email address to victoriaring1958@gmail.com  PAY NO MONEY UPFRONT.  (We provide the service and bill you after 30 days. There is NO RISK on the attorney’s part whatsoever.)

2.  Next, call or email the HelpLine when you have a case or issue regarding a Chapter 7 or 13 case.  Remember, we are not attorneys and we cannot provide legal advice. But we do have a wealth of knowledge in Chapter 7s and 13s that we enjoy sharing with attorneys so that the law firm prospers and the client receives the best benefits that bankruptcy can offer them. Monday through Friday HelpLine: Morning Shift: Sonya Banks 6:00 am to 12:00 noon PACIFIC time: 770-601-4730 Evening Shift: Victoria Ring, 12:00 noon to 7:00 pm PACIFIC time: 719-465-2442

3.  At the end of the month, we will provide you with a detailed invoice containing the clients’ name with a summary of our discussion.  You are billed at the rate of $125.00 per hour which is about half of what other on-demand support services charge.

If this is a service you do not need, please forward it to a new attorney who may benefit from the HelpLine.  Sonya and I have a passion for the debtor and we enjoy working with attorneys who feel the same way.  We hope to work with you and your staff soon.

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

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 »

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

View changes at:  http://www.mybankruptcyschool.com/

We are now into our third online bankruptcy school class.  Two problems I have found is that (1) some people are unable to attend all the classes for the course they registered for; and (2) with every class, I am developing new training materials and adding it to the course materials.  Since I want to make sure everyone has access to the same tools as future students, I decided to add a method of solving these two problems.

YOU CAN NOW ENROLL AT ANY TIME

Here’s how it works:

There are two components to every Chapter 7 and Chapter 13 bankruptcy course:

Component 1

Once you pay your registration fee you are granted immediate access to the online school where you can watch videos, listen to audios from previous classes, download all the training materials, take the class exercises and online quizzes.  This way, you can learn at your own pace regardless of when the live, instructor-led classes begin.

Component 2

The second component is the LIVE, instructor-led online classes.  We have ongoing Chapter 7 and Chapter 13 classes that are offered every month.  That way, if you miss a class, you can attend any that you missed in future months when the same class is given.

IN FACT . . .

As a registered student you receive THREE MONTHS OF FREE ACCESS after you enroll in our courses.  This means that you can attend all the live classes a total of 4 times if you wish.  Plus, you have access to all new training materials that are developed for future classes since you are able to login and use the system up to ninety (90) days after your enrollment month.

GET STARTED TODAY and learn the skills you need to improve the services you provide to clients and protect the debtor in the best manner possible.  These are important skills that are rarely taught in any other legal course.  Take advantage of the opportunity to get started now.  Visit:

http://www.mybankruptcyschool.com

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

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