I have been actively involved the past two weeks training new VBAs. One problem that all of them had was when I gave them a petition they immediately started entering the information into their bankruptcy software. Let me ask you a question: If you were going to paint a room, would you walk in with a paint can and start painting? Of course not. You would prepare the room first. This is a common behavior you should adapt for anything you do. Whether you are cooking, running errands, paying bills or working on a new bankruptcy petition; you need to do prep work before you begin the actual work.
Hopefully the information below will help save you a great deal of time and teach you some of the skills of preparing a bankruptcy petition before you begin the initial input.
Does the debtor reside in a community property state?
Item 16 on the Statement of Affairs provides you with a list of all the community property states. If a debtor is married and is filing a petition without their spouse, there could be a problem. In a community property state, everything the spouse owns belongs to the other spouse. Also, all the debts the spouse owes is also owed by the other spouse. Therefore, if a debtor is filing a bankruptcy petition without their spouse, they need to be made aware that collectors will most likely attempt to collect from the non-filing spouse when the bankruptcy petition is filed.
Therefore, before you start working on a bankruptcy petition where the debtor resides in a community property state, make sure that both the husband and wife are filing together. If not, the attorney needs to prepare an Affidavit that is signed by both the husband and wife stating they understand creditors may collect from the non-filing spouse. This way, the attorney can be protected by providing verification they warned the debtor of this problem occurring and fulfill their due diligence.
Has the debtor filed bankruptcy before?
This past week one of my students entered an entire bankruptcy petition and later found that the debtor had filed a previous bankruptcy less than 2 years ago. All the work she did was lost and the attorney could not be billed for this time since it was the VBAs fault for not checking facts before starting the input of the case. So to prevent this from happening; before you start working on a bankruptcy petition, do a check in PACER. Also, check the Client Intake Forms and tax returns to see if the debtor has lived at any previous addresses. This will tell you whether you need to check in different jurisdictions other than where the debtor currently resides for previous bankruptcy filings. Also, to triple check your facts do a background check for previous addresses. One service I use is http://www.ussearch.com/
Are the debtors behind in their mortgage payment?
If the debtors are seriously behind in their mortgage payment (6 months or more) you may have a problem if the debtors cannot qualify for a Chapter 13. If debtors are behind in their mortgage payment and file a Chapter 7, they are normally required to catch up all the back payments before the 341 Meeting. However, in some cases, the attorney will provide foreclosure mediation services to the debtor and either reduce, strip or negotiate the mortgage to the benefit of the debtor. If these negotiations occur, the attorney will provide you with the figures you need to enter on the bankruptcy petition before it is filed.
Or, if you have received advanced training in foreclosure mediation, the attorney may hire you to negotiate with the mortgage company on behalf of the debtor. (See the references below for training materials in foreclosure mediation.)
Is the real property due for a Sheriff’s sale?
If the client or attorney does not tell you about a Sheriff’s sale that is scheduled to occur, you can normally find the information when you do an online lawsuit check. You can also check the Real Estate page of the Client Intake Forms to see how many months the debtors are behind in mortgage payments. If there is a pending Sheriff’s sale and the debtors want to keep the house, you should not decide to go on vacation, attend family outings or lay the matter aside. Instead, you need to jump into high gear and make sure a bankruptcy petition is filed in order to protect the debtor’s home.
I cannot begin to tell you how many times I have had to work all night to save a person’s home. But two people I trained during the past month encountered this situation and instead of rolling up their sleeves and working, they left me with the responsibility. It was more important for them to attend an AVON meeting and go on a weekend picnic than to save a person’s home. People who put their personal life above their business responsibilities will never grow their companies into professional operations. Owning your own business is nothing like working 9 to 5. Therefore, if you don’t want the responsibility, go work for an employer.
Summary
These are just a few of the problems I encountered during the last two weeks of training. As I encounter more, I will write more articles to help you so that you do not make the same mistakes.
References
The Complete Foreclosure Mediation Kit
http://www.713training.com/shop/cart.php?m=product_detail&p=93
Chapter 13 Training Seminar, Los Angeles CA
http://www.713training.com/shop/cart.php?m=product_detail&p=100
Introduction to Chapter 13 Concepts
http://www.713training.com/shop/cart.php?m=product_detail&p=101
Join the NAVBA and Save 10 Percent on All Products
http://www.navba.org/administrator/signup.php
