On Day 1, we covered marketing and how to get business, and on Day 2, we held bankruptcy petition training, with a focus on Chapter 13’s.

For those that weren’t able to attend, you can checkout the marketing and petition training materials on our website:

Marketing Training:

www.713training.com/categories/Marketing-Your-Business/?sort=priceasc

Chapter 7 Training:

www.713training.com/categories/Chapter-7-Training/?sort=priceasc

Chapter 13 Training:

www.713training.com/categories/Chapter-13-Training/?sort=priceasc

I have been able to correspond with many of the attendees of the seminar and get updates on how they are making deploying what they learned to start or grow their business, and am excited for their success!

So moving along, have the debtors on the cases you have worked on, ever not submitted EVERY pay stub you need for the Means Test?

If you’ve been drafting petitions for more than oh, a week, you’re part of the chorus of laughter I hear ringing in my ears right now.

The answer to the question is…YES!  In fact, this is quite common.

So what’s the big deal?  That all depends on the jurisdiction the petition is going to be filed in.  If you’re filing in a jurisdiction that doesn’t use the Means Test, or doesn’t put much weight on it, it may not be an issue at all.

If however, you’re filing the petition in a state that does use the Means Test in they’re analysis of the case, or if you file most of your cases in a jurisdiciton that lives and breathes by the Means Test, it’s a VERY big deal, especially for cases that are borderline on whether they can file a Chapter 7 or not.

So when you have missing pay stubs, what do you do?

First off, I always ask for them.  I normally send the debtor an email with a list of everything that we need for their case, so that they have a checklist to work off of.

I then try to follow up the email with a phone call, to let the debtor know that there is an email in their inbox, so that they know to look for it, and to respond to it.

Usually the debtors are very helpful, and get any missing pay stubs to us within a few days.  Sometimes however, the debtor tells us they can’t find the missing pay stubs.

Uh-oh!  Now what?

Well, we still have a couple of options:

The next thing I do, is ask the debtors if they would talk to their employer, and ask for either a reprint or a report of the missing pay stubs.  I tell them they can just tell the payroll person that their attorney needs it, which typically gets they payroll person to take care of this quickly.  I also tell them that if they ask what the attorney needs it for, to just say “It’s a private matter”…no big deal.

If for some reason, we still come up short on pay stubs, we have a last resort…a lifeline if you will, that most trustees seem to find acceptable.  It’s called “bookends”

What are book ends?

When we’re collecting pay stubs for filing bankruptcy, we need pay stubs representing the last six full months.  With that in mind, if we have the first pay stub at the beginning of the six months we’re interested in, and the pay stub from the end of the last six months we are interested in, as well as several in between, it is likely that the amount of pay on the missing pay stub(s) could  be surmised, and used for reporting of income.

Fortunately this bookending of pay stubs is not usually necessary, but it’s a good tool to have in your tool belt when needed.

Have a terrific week!

Sincerely,

-The 713 Training Team

DISCLAIMER: We at 713 Training are not attorneys; any information provided by 713 Training should not be considered legal advice.  The information in this article, and any other materials provided by 713 Training, whether delivered verbally, written or via any other means, including electronic/digital delivery and storage, is for training purposes only, and is intended for individuals who work under the direction of a licensed attorney.

This could be something as simple as protecting them from deficiency notices by just doing a good job on the petitions prepared for him or her.

Taking this a step further, what about helping to protect your attorney from potentially fraudulent debtors that may have something to hide?

Recently I was working on a petition for an attorney where only the husband was filing a Chapter 7.

The debtor had a fairly unique name, and so I decided to do a Google search on his name.

As I perused the Google results, I came across something interesting — the debtor was listed as being a member of a yacht club, and was the owner of a 28’ yacht.  It even listed the name of the yacht.

“Hmm”, I thought; “That boat isn’t listed on the client intake form”.

Before you read on, think for a moment about what you would do. Here is what I did…

First, I printed the web page showing the yacht information to a PDF file, and saved it in a folder called “Due Diligence” in the debtors folder on my computer.

Next, I called the debtor’s wife, who was my designated contact for getting information about the case.

I asked the debtor’s wife “Do you have a boat that needs to be listed on the documents for your bankruptcy?“.  She immediately responded and said “The boat is in my name.”

Since the debtor’s wife was not filing bankruptcy with the husband, I said OK, thanked her, and hung up the phone.

I then made a note of this in the attorney cover page that I gave to the attorney along with the petition when it was completed.

The 341 Meeting

The petition was filed with the court, and the day of the 341 meeting came, and I received a phone call from the attorney, who seemed somewhat excited.  He told me that he had just left the 341 meeting for this debtor, and relayed the unexpected outcome.

The attorney had printed out the debtors information to take with him to the 341, and when sitting with his client across from the trustee, he was well prepared as he answered questions, and went through his notes.

At one point the trustee was asking for information about the debtors mortgage, and when the attorney pulled the mortgage papers out of the folder to respond, there was another piece of paper stuck to the bottom of them that fell out onto the table. This piece of paper showed a picture of a beautiful boat.

The trustee having seen this happen said “Let me see that”, and the attorney handed it over.

The trustee looked over the printed information about the boat (which was a printout of the PDF about the boat I had emailed the attorney with the petition) and asked “What is this?” This is when the debtor began to squirm in his seat.

The trustee then asked “Do you have a boat?”, to which the debtor responded by saying “I sold it 3 years ago”.

The trustee then told the debtor to provide evidence of the sale, then moved on, and wrapped up the 341 meeting.

After the 341, the debtor’s wife approached the attorney and was visibly upset.  This is when the attorney described getting different versions of what happened to the boat.

The attorney was a bit distraught by the situation, and wasn’t sure what was going to happen next.

What I told the attorney was that it was a good thing that this happened, because if it turned out that the debtors were trying to hide the boat, that it was obvious that he was not aware of it.  He agreed.

This case is still open, so it is not known what the outcome is going to be, but one thing is certain, the job of a Virtual Bankruptcy Assistant is not simply data entry, but rather, it is our job to accurately represent the client’s information in the petitions we prepare for our attorneys, and to do the necessary due diligence that backs up that data to help protect the attorney’s interests.

Have a terrific week and don’t forget to register for the Atlanta, Georgia seminar at:
http://www.713training.com/shop/cart.php?m=product_detail&p=120

Sincerely,

Clay Holland
http://www.713training.com
http://www.navba.org
http://www.vbacertification.com

DISCLAIMER: We at 713 Training are not attorneys; any information provided by 713 Training should not be considered legal advice.  The information in this article, and any other materials provided by 713 Training, whether delivered verbally, written or via any other means, including electronic/digital delivery and storage, is for training purposes only, and is intended for individuals who work under the direction of a licensed attorney.

This could be something as simple as protecting them from deficiency notices by just doing a good job on the petitions prepared for him/her.

Taking this a step further, what about helping to protect your attorney from potentially fraudulent debtors that may have something to hide?

Recently I was working on a petition for an attorney where only the husband was filing a Chapter 7.

The debtor had a fairly unique name, and so I decided to do a Google search on his name.

As I perused the Google results, I came across something interesting…the debtor was listed as being a member of a yacht club, and was the owner of a 28’ yacht.  It even listed the name of the yacht.

“Hmm”, I thought; “That boat isn’t listed on the client intake form”.

Before you read on, think for a moment about what you would do.  Here is what I did…

First, I printed the web page showing the yacht information to a PDF file, and saved it in a folder called “Due Diligence” in the debtors folder on my computer.

Next, I called the debtor’s wife, who was my designated contact for getting information about the case.

I asked the debtor’s wife “Do you have a boat that needs to be listed on the documents for your bankruptcy?”.  She immediately responded and said “The boat is in my name”.

Since the debtor’s wife was not filing bankruptcy with the husband, I said “OK”, thanked her, and hung up.

I then made a note of this in the attorney cover page that I gave to the attorney along with the petition when it was completed.

The 341

The petition was filed with the court, and the day of the 341 meeting came, and I received a phone call from the attorney, who seemed somewhat excited.  He told me that he had just left the 341 meeting for this debtor, and relayed the unexpected outcome.

The attorney had printed out the debtors information to take with him to the 341, and when sitting with his client across from the trustee, he was well prepared as he answered questions, and went through his notes.

At one point the trustee was asking for information about the debtors mortgage, and when the attorney pulled the mortgage papers out of the folder to respond, there was another piece of paper stuck to the bottom of them that fell out onto the table.  This piece of paper showed a picture of a beautiful boat.

The trustee having seen this happen said “Let me see that”, and the attorney handed it over.

The trustee looked over the printed information about the boat (which was a printout of the PDF about the boat I had emailed the attorney with the petition) and asked “What is this?”  This is when the debtor began to squirm in his seat.

The trustee then asked “Do you have a boat?”, to which the debtor responded by saying “I sold it 3 years ago”.

The trustee then told the debtor to provide evidence of the sale, then moved on, and wrapped up the 341 meeting.

After the 341, the debtor’s wife approached the attorney and was visibly upset.  This is when the attorney described getting different versions of what happened to the boat.

The attorney was a bit distraught by the situation, and wasn’t sure what was going to happen next.

What I then told the attorney was that it was a good thing that this happened, because if it turned out that the debtors were trying to hide the boat, that it was obvious that he wasn’t aware of it.  He agreed.

This case is still open, so it isn’t known what the outcome is going to be, but one thing is certain, the job of a Virtual Bankruptcy Assistant is not simply data entry, but rather, it is our job to accurately represent the client’s information in the petitions we prepare for our attorneys, and to do the necessary due diligence that backs up that data to help protect the attorney’s interests.

Have a terrific week!

Sincerely,

Clay

DISCLAIMER: We at 713 Training are not attorneys; any information provided by 713 Training should not be considered legal advice.  The information in this article, and any other materials provided by 713 Training, whether delivered verbally, written or via any other means, including electronic/digital delivery and storage, is for training purposes only, and is intended for individuals who work under the direction of a licensed attorney.

We had trustee request information from the debtor in regards to a PayPal transfer of $1,000 the day before the debtors bankruptcy petition was filed.

What is PayPal?

PayPal is an e-commerce business allowing payments and money transfers to be made through the Internet. PayPal serves as an electronic alternative to traditional paper methods such as checks and money orders.

A PayPal account can be funded with an electronic debit from a bank account or by a credit card. The recipient of a PayPal transfer can request a check from PayPal, establish their own PayPal deposit account or request a transfer to their bank account. PayPal is an example of a payment intermediary service that facilitates worldwide ecommerce.

PayPal performs payment processing for online vendors, auction sites, and other commercial users, for which it charges a fee.

Needless to say, this money transfer less than 24 hours before filing the bankruptcy petition looked really suspicious.  The interesting thing though, is that it turned out to be completely legitimate.

What had happened is that the debtor had paid his attorney fees to the attorney electronically using his PayPal account.  Why is this problem?  Well…it isn’t.  The problem came in as being that the PayPal account had not been disclosed on the bankruptcy petition, and even though the attorney was able to verify that he had received the payment, the money didn’t clear before the petition was filed, and the trustee did not allow it, and said “That money, and anything else in the PayPal account is mine”. Ouch!

The moral of the story is that we now live in a digital world, and people are now using digital means to make purchases and pay bills.  This being the case, it is very important to help the debtor to disclose ALL bank accounts…even PayPal.

The conclusion?  The attorney is going to continue to take payment via PayPal; he is just going to make certain that it is documented on the petition.

***********************************************

Don’t forget about the upcoming 713Training.com seminar in Atlanta, GA on April 23rd and April 24th.

Day 1 will cover VBA Marketing, and Day two will cover Chapter 13 petitions, including mortgage cram downs and strip downs.

Day 1: VBA Marketing

http://www.713training.com/shop/cart.php?m=product_detail&p=122

Day 2: Chapter 13 Petitions, including Mortgage Cram Downs and Strip Downs

http://www.713training.com/shop/cart.php?m=product_detail&p=120

You may attend either or both days.  Those that attend both days will receive a $100 discount for attending both days.

Don’t forget to check the website for the great free gifts that attendees will receive in addition to the great information that is planned to be presented.

Hope to see you there!

Sincerely,

Clay Holland
Operations Manager
713Training.com
info@713training.com
1-800-535-9984
Join our LinkedIn group:
www.linkedin.com/companies/713training.com-llc

DISCLAIMER: We at 713Training are not attorneys; any information provided by 713 Training should not be considered legal advice.  The information in this article, and any other materials provided by 713 Training, whether delivered verbally, written or via any other means, including electronic/digital delivery and storage, is for training purposes only, and is intended for individuals who work under the direction of a licensed attorney.

For starters, does a bankruptcy petition really expire?  Yes…sort of.

What this is referring to is the fact that a bankruptcy petition is a snapshot in time, of the debtor’s financial situation.

Schedule I reflects the current or most recent income (or lack thereof), and the Means Test (Form 22a in a Chapter 7 or Form 22c in a Chapter 13), reflects the debtors income for the last six FULL months.

Once a bankruptcy petition is prepared to show this financial picture, it must be filed with the court before the end of the month it is prepared in.  Why?  Because if it isn’t filed by the end of the month and the calendar flips over to a new month, the debtor’s financial picture may have changed, and the petition must be updated accordingly so that the Means Test still shows the last six full months of income.

This rolling over to a new month will have caused the sixth month to have rolled off of the six month snapshot, as it becomes the seventh month, and the month that just passed now becomes the most recent month that needs to be reported in the petition.

Furthermore, the income on Schedule I needs to reflect the most recent income, and should be updated with any changes shown on the debtor’s most recent pay stub or business profit and loss statement (P&L).

Once the data in the petition is updated, it is then again ready to file, and you have until the end of the new month to get it filed, before it expires again.  I refer to this process of updating the information listed in the petition in order to be current as “Refreshing” the petition.  I have also heard this referred to as “bringing the petition current”, or the “Means Test expiring”.

The need to refresh petitions is something that would be nice to avoid, but there are a number of situations and unforeseen circumstances that can lead to this, such as the debtor not providing needed information in a timely fashion (this is the most common), the debtor getting cold feet, the attorney having the client wait to file for some reason, or a myriad of other things.

Simply updating Schedule I and the Means test may not be enough though.  There are other things within the petition that could “expire”, or that may need to be updated as a result of rolling over into a new month, including arrearages on liens, and payments to creditors.

Keep in mind too, that with updated information, there may be changes, which could change other things in a petition, such as the amount of disposable monthly income for a Chapter 13 Plan payment.

The list below can serve as a checklist of things you will want to verify, and update if necessary, when refreshing an expired bankruptcy petition:

1. Schedule I

a. Income and deductions must be updated to reflect current pay stubs or business profit and loss statements (P&L’s)

2. Means Test

a. Income must be updated to include any months that have elapsed since previously entered
b. Double-check other items for changes, such as costs of insurance, 401k loan payments or contributions, etc.

3. Arrears on all Secured Property

a. Are the items previously documented as being in arrears, now additional months in arrears?  Update this (Creditor tab)
b. Update the cure amount – # of months in arrears x Mo Pmt (Form 22 Means Test tab)
c. Are any previously current liens now in arrears?  Document this (Creditor tab and Form 22 Means Test tab)

4. Form 7. Statement of Financial Affairs

a. Line 3. Payments to Creditors
b. The dates and payments to creditors will need to be updated, as well as the Amt. Still Owing

5. Re-Balancing Schedule I and &, and updating the Chapter 13 Plan

a. Because you are inserting new income information, it is possible that Schedules I & J need to be rebalanced, or that the Chapter 13 Plan (in a 13) needs to be re-calculated due to the change

Below are some TIPS on avoiding and handling expired bankruptcy petitions:

* Remind attorney a week before the end of the month that the Means Test will be expiring, so that he/she has the opportunity to address the situation

* If you end up needing to refresh an expired bankruptcy petition, you should charge for your time, as you had already done the initial work, and the circumstances surrounding why the petition expired are likely not under your control, so repeating this work is something you should be paid for.

* When entering income into the Means Test, I recommend entering the income for each month separately, if your software program allows for it.  This makes it a lot easier to refresh a petition when all you have to do is add the new month of income as the last month rolls off.  This saves you the time of averaging the income by allowing the software to do this work for you.

I worked on a bankruptcy petition this week that involved a couple who had worked at the same job for 25 years.  They owned no real property and no unexempt personal property.  Their credit card debts totaled only $33,000 and they owned 2 older cars with very low market values.

What would be your first question when faced with a bankruptcy petition like this?

Your first question should be:  Why are these people filing bankruptcy? There has been no change in their income; they own very little and owe very little debt.  Something is missing from the puzzle and before I could go any further I had to find out what it was.

I immediately contacted the attorney by email as well as a voice mail (never totally rely on email) about the problem.  He called the debtors and found out that one of the reasons for the additional expenses was that their son graduated from college and they were paying back his student loans.

This is a typical example of an INSIDER DEBT in bankruptcy!  Learn how to recognize these and you will help to prevent fraud.

Although the debtors I prepared the petition for were probably honest people, many people could say that they are making the student loan debt for their son, when in actuality the son is making the payment and the debtor’s are pocketing the extra cash.  Creditors look for loop holes like this and this is a typical example of why bankruptcy cases are held up in court for many months.

Think about this: Typically, it is the son’s responsibility to pay the student loan debt.  Even if the debtors produce proof of payment that they actually paid the student loan payment, it would be impossible to prove that the son did not give them the cash to reimburse the payment they made.  This would give the debtors extra money each month to spend that the creditors would prefer to have.

Keep learning, take care and have a wonderful week!

Clay Holland is really busy this week putting together the TWO DAY Atlanta Bankruptcy Seminars so I thought I would catch you up on my week.

ATLANTA SEMINAR?

Yes, Clay is finalizing the date and then he will make the announcement.  Stay tuned for more details from Clay a little later.

CHARLOMA BANKS

February 15 and 16 I spent training Charloma Banks.  Charloma lives in Plymouth Virginia and it was her first trip to Colorado.  Charloma had taken the time to do a great deal of studying on her own prior to coming for her training.  The first day was spent addressing the questions she had regarding the materials and reviewing a variety of techniques for developing a website.

After returning to her hotel room, Charloma spent most of the evening redesigning her website to reflect the new marketing information she learned.  When I picked up Charloma the second day for her training, I was impressed with the extra effort she put forth.  We then spent several hours rewriting and revising the wording so that it was more informative.  As Charloma learned, your website should be YOUR BEST.  It can be compared with putting on a tuxedo or a 3-piece business suit and attending a governmental social gathering.  That is how good your website should look in order to attract good business.

SUZIE MCKENZIE

Suzie McKenzie is really a cool chick.  She and a couple of friends jumped in their car, in Dallas Texas, and drove to Colorado Springs.  Although the normal drive time is 15 hours, Suzie and her friends left 4 days ago and stopped and vacationed along the way.  I trained Suzie and her friend on February 18 and 19.

Suzie has owned and operated her own advertising and publishing business for many years; but like the real estate industry, the publishing world is experiencing financial difficulty too.  It appears that right now, bankruptcy is about the ONLY growing field in America.

However, since Suzie has owned her own business for many years, there is no doubt that she will be ready to start working for attorneys within a short period of time.  Plus, Suzie has an outgoing and caring personality which is a perfect fit for working with clients in Chapter 7 and Chapter 13 bankruptcy.

NEW PRODUCT FOR ATTORNEYS

I am presently in the final development stages of a new product for attorneys called:  PRE-QUALIFY INTAKE FORM.  This is a four-page questionnaire, consisting of mostly YES and NO questions.  This makes it easy for the client to fill out in less than 5 minutes while at the attorneys office.

Using the accompanying INTERPRETATION TOOL, the attorney will quickly learn how to glance down the PRE-QUALIFY INTAKE FORM and get a good, general idea as to the complexity of this case.  This information will allow the attorney to make the determination whether to accept the case or how much of a fee to charge.  The more complex the case, the higher the fee.

As soon as the product is available for sale I will announce it to my PERSONAL LinkedIn Group.  If you are not subscribed to my LinkedIn Group, visit:
http://www.linkedin.com/in/coloradovictoria
and click on ADD VICTORIA RING TO YOUR NETWORK (upper right)

WATCH FOR CLAY HOLLANDS EMAIL ABOUT THE SEMINAR TO ARRIVE SOON

Brand New EReport, 49 pages, 12,270 words, titled:

The Guaranteed, No Holds Barred, Easy, Step-by-Step Instruction Guide to Skyrocketing Your Virtual Bankruptcy Assistant Income Without Spending Another Dollar To Find Out

Think about this:

If you were the only store within 500 miles that sold winter coats, and your store was located near the border of Canada and the United States (where they get 300 or more inches of snow per year), how busy do you think your store would be?

You certainly would not need to advertise for customers.  You definitely would need to hire employees to help you though.  You definitely would be sold out of winter coats very quickly and would need a steady and reliable supplier.  But, you would be making a ton of money.

VBAs are in the same position.  The debtor bankruptcy field is booming.  Even attorneys working in other areas of law are flocking to this field because the market is growing by 50%, 60% and I have seen figures as high as 82%.  This has NEVER happened during the course of bankruptcy history!!

Yet, some VBAs are making little or no money and barely have their business off the ground.  Why?  I didn’t know the answer to that question because I had always had success in this field.  So I decided to find out by working directly with other successful VBAs.  One VBA that I recently worked with was Clay Holland of MyBankruptcyAssistant.Com.  Clay came to Colorado Springs for training back in June 2009.  I was impressed with the fact that he had a professional demeanor about him (which is impressive to most attorneys), a deep concern about the quality of his service and his sincere desire to improve his skills to an expert level.  I began working with Clay by referring business to him through articles that I wrote and mentioned his company.  That is all it took.  The attorneys contacted Clay and within a few weeks, he was beginning to make money.

How did this happen?  Why can’t everyone who truly wants to work as a VBA experience the same success?  What makes people like Clay Holland and others like Alexiss Harris, Gary Ostad, Linda Rantz, Evan Fuller, Armida Addessi, Yordanska Fraser and Mary Sosa so successful?  What are they doing that you are not doing?

This report will provide that answer.

Download your copy now for only $25.00.  Visit:
http://www.713training.com/shop/cart.php?m=product_detail&p=119

I talked with an attorney today who said:  For a Chapter 13 Plan, I thought all I needed to do was take the amount left over between Schedules I and J and this was the Plan payment.

Unfortunately, in 90% of the cases, it is not that simple.  For example: Today I had a married couple who owed three mortgages on their home.  Here are the particulars:

$420,000 – Current market value of home

$320,000 – First mortgage
$  20,000 – Second mortgage
$200,000 – Third mortgage
$  20,725 – Exemption allowance

Adding up $320 + $20 + $200 we have a total of $540.  The home is valued at $420, leaving the debtors with $120 in equity.  Minus out the exemption allowance and the debtors are UNDERWATER by  approximately $100.  This means that the attorney could propose a cram down on the THIRD mortgage and save the debtors $100,000.

This is a good thing, right?  Wrong.  Even with the cram down, the debtors only have $2,300 left over every month to make a Chapter 13 Plan payment.  After plugging in the figures into the Chapter 13 Plan, it would take a MINIMUM of $3,000 in a monthly payment just to cover the mortgage obligation, and still then, the unsecure creditors would only be paid 9 percent  (which could be a problem.)

BAD SOLUTION:

Some attorneys, when faced with a problem like this will reduce the expenses on Schedule J just to get the case filed.  But these are the types of things that will drive a Trustee insane.  Also, these are the types of things that can embarrass an attorney in court in front of their clients because they have not done their job properly.  They took the easy way out and left the Trustee to figure it out.

GOOD SOLUTION:

The best approach to solving this dilemma is for the attorney to meet with the debtors and explain the situation.  The attorney should start by giving the debtors a copy of Schedule J and ask them to look over the figures and let them know if everything looks okay.   After the debtors approve the figures (or change them) the attorney can explain the problem to the debtors in terms they will be better able to understand.

The attorney may say something like:  Since the figures are correct on Schedule J, you can see that you have $2,300 left over per month.  However, since your house payment is almost $2,000 that leaves you with only $300 to pay on your cars and the $250,000 in credit card debt.  As you can see, there is not enough money to do that.  Can you look over Schedule I and J and let me know if you can find an extra $700 so that I can make the Chapter 13 Plan work?

This puts control in the debtors hands and allows them to feel they are taking an active role.  If debtors understand issues, they will be more cooperative in staying in the Chapter 13 Plan.  However, if the debtors are unable to come up with a solution, at least they will be able to understand the problem and the attorney can explain different options.

WHAT IS THE BEST SOLUTION TO THIS PROBLEM?

If the debtors are unable to afford their home or do not anticipate increasing their income, the best solution would be to surrender the home.  This would give the debtors a fresh start and since there are only two of them, they could downsize and still leave a comfortable lifestyle.

However, people are attached to their THINGS, like homes and cars.  In fact, they are so emotionally attached that they cannot stand for a day to pass unless they have that particular home or particular car in their possession.  I personally do not understand it.  Everything in life comes and goes.  Everyone has a time when they have money and a time when they do not.  During the times when I have less money, I spend less and adjust my spending habits.  When I have money again, I celebrate and spend more.

Unfortunately, many people today are not willing to make sacrifices, but I hope this article at least puts the problem into a more understandable perspective.

Victoria Ring
http://www.713training.com
http://www.713bankruptcy.com
http://www.navba.org

Thanks for all you do.  And I appreciate the information you provide to us.  I just wanted to add that I currently work for a major bank.  I work with borrowers with defaulted business loans.  And let me tell you that on a lot of the deals we have, I have seen quite a few attorneys propose cram downs.  And a lot of our mortgages have been stripped off because there is no equity in the home.

One of the things we talk about all of the time is why many other attorneys are not doing this.  It is a great tool for the consumer.  No additional litigation is involved.  Once an attorney files the motion during the proceeding, it is up to the trustee.  We do not file responses to these requests.  Especially if there is no equity in the home.  And banks and mortgage lenders know that the bankruptcy court favors the debtor.  We have never been successful in blocking these.  You have to remember the cost that the banks incur in pursuing foreclosure or trying to liquidate the collateral.  We weigh the costs.  Banks make no money on homes they have to take back.  You may find that you will get more with negotiating with the lender too.  The attorney for the debtor is in a greater position than attorneys for the banks.

We knew that most of the mortgages we took at loan inception were abundance of caution.  And unfortunately, many people are filing for bankruptcy and having their debts discharged.  But if they do not do anything to release the liens on their home, then they still end up paying when there is equity in the future or if they want to sell their home.  As long as the lien stays on the home, you are basically giving the banks a long term investment.

I can tell you that many of our borrowers who filed for bankruptcy and were discharged are stunned when they see our lien is still on their home.  And the only way we will release it is if they give us all of the available equity in their house.  I just had a deal where the borrowers had filed for bankruptcy several years ago.  Unfortunately, the attorney did not contest our lien or ask that it be removed.  If the attorney had done this or at least proposed a settlement, we would not be in the great position we are now.  As opposed to getting $25,000 several years ago, we are now looking at almost $80,000.  The owners are senior citizens.  If they ever decide to sell their home, they will have to deal with the fact that we will be getting the bulk of the proceeds.  I believe they assumed when they reaffirmed the first mortgage, that ours was released.  And that was not the case.

From what we have seen, many trustees and bankruptcy judges side with the debtor in these cases.  We do everything we can by filing a proof of claim.  But at the end of the day, if there is no equity available at the time of filing (or equity of sizable value), we anticipate having our mortgage stripped and being put in the category of unsecured creditor.  That is why I am happy to see you offering this training to VBAs and attorneys.  Proposing this makes you a much added value to your clients.    So, for all of the attorneys who fear the drawn out litigation with mortgage lenders and banks, there is no need to worry.  You have to remember that banks have to pay outside attorneys.  And I can tell you that we just as soon not have to pay attorney fees fighting for properties that have little value.  I would tell them to do what is best for the consumer.  They are hiring you for your help.  So I implore them to pursue every avenue possible.

Crystal Brooks
Email:  clbrooks67@comcast.net

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