The Truth Behind the Bogus Credit and Rapid Import Features Provided by Bankruptcy Software Companies

At this point in time, all bankruptcy software programs were written by programmers who have never had any experience preparing bankruptcy petitions. Therefore, I think it would be good business practices that the software companies listen to the bankruptcy professionals who purchase and use their software in order to obtain ideas for software improvement; but they do not do this.

Instead, the bankruptcy software companies all decided to develop some form of credit or rapid import feature for their software. Their goal was to increase their profits. They never once considered the chaos they would cause by developing this type of added feature. This is because the majority of all bankruptcy software company programmers have never worked for a bankruptcy law firm, never interviewed a client, never input information from a credit report and never prepared a bankruptcy petition in their life. How could they know what havoc their features would cause within the legal field?

All of the credit and rapid import features in the bankruptcy software programs work basically the same way. The client logs onto the internet and fills out a type of intake form. This information then imports into the bankruptcy software program. Or, the attorney signs up to be able to pull credit reports. The credit report information is then imported into the bankruptcy software. Either way, data is supposed to be imported, thus saving people time from entering names, addresses and account number data.

On this surface this feature appears to save time, especially if you have never prepared a bankruptcy petition before. However, this feature adds on an additional 3 to 4 hours of time for the person preparing the bankruptcy petitions. One of the major problems is that when the information imports into the software, the debt does not know if it belongs on Schedule A, B, E, F or G. This requires the bankruptcy assistant to separate the debts and place them in the specific areas of the bankruptcy petition where they belong. But this is impossible to do with scanty information to go on that is provided by a credit report; many reports of which do not even contain addresses. As you can see, the credit or rapid import feature can be more time-consuming than simply typing the information into the software program.

Secondly, the credit and rapid import feature does a good job of importing everything from a credit report, but the bankruptcy petition does not need to include everything listed on a credit report. For example: If a debt has been paid in full and appears on the credit report with a $0.00 balance, the debt may no longer exist. Or, perhaps it still exists but the company wrote the debt off and turned it over to a collection agency. How could any software program know how to distinguish between the two without human intervention?

How Can This Dilemma Hurt Debtors?

I recently did a bankruptcy petition review for a law firm in Georgia. They were not aware of the Chapter 13 unsecure debt limits which are currently $336,900. Instead, they had used a credit report rapid import feature purchased from their bankruptcy software company.

When I opened up Schedule F, debts had been repeated in triplicate because they had been turned over to many different credit collection agencies. This caused the total amount of unsecure debts listed on Schedule F to total $997,647. This is almost three times the allowable limit in a Chapter 13. After working with the debtor in order to find out which debts were duplicates, the debts were reduced to $57,800; which is clearly under the Chapter 13 qualification limit.

If the bankruptcy petition had been filed without Schedule F being corrected, the bankruptcy court would have dismissed it because the total amount of unsecure debt did not qualify for a Chapter 13. It would then be left up to the attorney to discover the error, research the facts of the case, prepare an Answer to the Dismissal and possibly attend a court hearing on the matter. Would not it be simpler to not use the credit or rapid import system or spend the money purchasing it?

Suggestion for Proper Use of Credit Reports

My suggestion is to require clients to obtain a copy of all three of their credit reports during the intake process. If they have not requested a report within the past year, the credit reporting agencies will provide the reports without cost.

Since the client(s) are the people who made the debts, they will be able to recognize the debts and match them up properly. They are also the people who know the detailed information about the debt, such as if the credit card was used within the past 30 days. This information cannot be provided by a credit report when the credit report is always at least 90 days old at the time it is pulled; however, this information is mandatory to know for the bankruptcy petition or it can result in the filing of an Adversary Proceeding.

Therefore, we suggest that you have the client(s) use the credit report to fill out the Debt Sheets which are included inside the Client Intake Form package. All information required on the Debt Sheet Forms is needed for every debt and only the client(s) know the answers to these types of debt related questions.

Download your free set of Client Intake Forms:

English Version
http://www.713attorney.com/intakeforms/bankruptcy_intake_forms_english.pdf

Spanish Version
http://www.713attorney.com/intakeforms/bankruptcy_intake_forms_spanish.pdf