713Bankruptcy.Com's Blog

I’m often asked when a car can be crammed down in bankruptcy.

First of all, what is a car cram down?

When a debtor owes more on their car than it is worth, a cram down will “cram down” the amount that the debtor owes on the car, to be equivalent with what the car is actually worth.  This simple technique can save the debtor thousands of dollars in what they owe on their car, not to mention the interest on that amount.

There are some rules about how to do this though, as outlined below:

1. The loan on the car (not the car) must 910 days old, or more (roughly 2.5 years old)
2. The debtor must be filing a Chapter 13 bankruptcy
3. The car loan must be place in the Chapter 13 plan to be crammed down

The above will help you determine if your debtor’s car loan qualifies for a cram down.  If their situation meets all of the above criteria, all you have to do in the petition is remove any arrearages that might have been reported for the car loan in the petition, and change the claim amount for the loan from the amount that the debtor currently owes, to the amount that the car is actually worth.

How do you determine how much the car is worth?

There are several excellent online sources for determining the value of a car.  Two of the most widely used are:

Kelley Blue Book – www.KBB.com
N.A.D.A. – www.NADAGuides.com

Simply go to either website, and you’ll find that you can enter any later model (1990 or newer) vehicle, and find the value of it.

Remember though, that a cram down in a Chapter 13 Plan is a proposal, and isn’t a guarantee, so remember to print your findings to a PDF file to give to your attorney with the petition your prepare for him/her, as it may be needed as evidence of value in the 341 meeting, or if there is a proof of claim filed by the creditor.

Also, when cramming down a vehicle, don’t forget to also cram down the interest rate.  I often see debtors with a 12.95% or higher interest rate on their car loan.  You will likely be able to change this in the petition to an interest rate that is the current going rate for a car loan for someone with good credit.  For example, in the jurisdiction that I file a great many of the petitions I prepare in, we always propose cramming down the interest rate of the car loan to 5%, and have not had any objections.

TIP:  Even if the debtor’s car loan doesn’t qualify for a cram down (e.g., the loan on the car is newer than 910 days), we have still been successful in cramming down the interest rate of the car loan, as long as the debtor is filing a Chatper 13, and the car has been placed inside the Chapter 13 Plan.

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Update on Upcoming VBA Marketing and Chapter 13 Seminars in Atlanta, GA
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We still have some seats available at the upcoming 713 Training Seminar on April 23-24, so don’t forget to register.  You can attend either day, or both.

April 23 – Day 1: VBA Marketing
http://www.713training.com/shop/cart.php?m=product_detail&p=122

April 24 – Day 2: Chapter 13 Training (including Mortgage Cram Downs / Strip Downs)
http://www.713training.com/shop/cart.php?m=product_detail&relate=1&p=120

We hope to see you there!

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.

It seems we have seen a run of married couples lately, where only one of the spouses in the marriage is filing bankruptcy.  Why is this an issue?

When only one spouse in a married relationship is filing bankruptcy, and the couple shares a common household, the court still asks to see the complete financial picture of the household.

This creates an interesting situation, as the non-filing spouse can spend his/her money how he/she chooses, yet doing so affects the household financial picture for the filing spouse.

So what do we do?

In petitions I have done for attorneys that are representing a married debtor who is filing bankruptcy, but their spouse is not, the income for both spouses needed to be reported on Schedule I, even though one of the couple is not filing.

When income information about the non-filing spouse is requested, I have found it to be common that the debtor will become defensive, wondering why their spouse’s income is needed, and I have had to explain that it’s not me or the attorney that is asking for this information, but rather that the court has asked for this information with the documents that will be filed for their case.  This usually goes a long way toward removing the defensiveness, they send the non-filing spouse’s pay stubs, and we can get back to working on their case.

What about the non-filing spouse’s expenses?

So we have income being reported for two people, when only one is filing bankruptcy, and the non-filing spouse is free to spend his/her money how he/she chooses, whether or not it affects the household expenses.  How does that work?

Well, in addition to collecting the non-filing spouse’s income, you will want to collect the non-filing spouse’s expenses.  I do this by sending them the “Monthly Budget” page of the client intake forms available for free at www.713training.com/intake_forms.

Doing this allows you to see how and where the non-filing spouse’s income is being spent, which you will use on Schedule J of the petition.

But what about the Means Test?

Because the non-filing spouse has his/her own expenses and places he/she is spending his/her income, the Means Test provides for a way to account for this, via what is called a “marital adjustment”.

The marital adjustment allows for entering various expenses, debts, etc. that belong to the non-filing spouse, to appropriately reduce the current monthly income to what is accurate, and the Means Test is able to determine whether the filing spouse has the means to repay some or all of their debt, keeping in mind that the Means Test isn’t perfect.

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.

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

Day 1: VBA Marketing
www.713training.com/shop/cart.php?m=product_detail&relate=1&p=122

Day 2: Chapter 13 Seminar
http://www.713training.com/shop/cart.php?m=product_detail&p=120

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

Let us begin with the visionary for the paralegal industry …

Jeannie Johnston, CEO of Paralegal Gateway
http://www.linkedin.com/in/jeanniejohnston
Founder and CEO of Paralegal Gateway, Inc. which is the world’s oldest and largest online Paralegal portal and Social Networking vehicle which includes a free career center, free paralegal articles (written by paralegals for paralegals), online seminars, demonstrative evidence, tools for Paralegals and much more.  Jeannie has also been a paralegal for 16 years.  Additionally, she has been a speaker at National Paralegal Conferences, is a Legal Sales Executive as well as a Legal Staffing Consultant.

experts on the CREDITOR side of bankruptcy …

Pamela Starr, CEO of StarrParalegals, LLC
http://www.starrparalegals.com/
Applying 25+ years of paralegal experience, Pamela Starr created STARRParalegals, LLC to provide virtual paralegal services to attorneys and law firms nationwide in Bankruptcy & Creditors’ Rights, Commercial Transactions and UCC. Ms. Starr is an active member (and former Director of Membership) of the Georgia Association of Paralegals (“GAP”), the Association of Bankruptcy Judicial Assistants (“ABJA”), and the Commercial Law League of America (“CLLA”). She is a certified paralegal and a Certified Bankruptcy Assistant (“CBA”). During her career, she has served as an Advisory Board Member for the Institute for Paralegal Education (“IPE”); been published in the National Paralegal Reporter; featured in the 2009 CRAVE Atlanta Guidebook; and has been considered a leader in Atlanta’s paralegal community for over 13 years.

Michael Misenheimer, Paralegal at Sicay-Perrow, Knighten and Bohan
http://sicay-perrow.com/
Michael holds a Masters Degree in Negotiation, Conflict Resolution and Peacebuilding.  He also serves on the Board of Directors for the Georgia Association of Paralegals, the Pro Bono Director and as Community Service Coordinator. Amazingly, Michael has served in this capacity for many years and continues to be re-elected; due to the magnitude of the positive contribution he makes to the organization itself.  Additionally, Michael serves as Pro Bono Co-Coordinator for the National Federation of Paralegal Associations (“NFPA”.)

and for the DEBTOR SIDE of the coin …

Victoria Ring, Developer of the VBA Industry
http://www.victoria-ring.com
Not only is Victoria the developer of the virtual bankruptcy industry that serves DEBTOR bankruptcy attorneys, she is also the developer of the VBA Exam and founder of the National Association of Virtual Bankruptcy Assistants at NAVBA.ORG.  Victoria is currently working with attorneys in helping to establish new Chapter 7 and Chapter 13 bankruptcy law firms nationwide.

Clay Holland, Certified VBA
http://713training.com/clayholland.html
Clay is one of the top success stories in the virtual bankruptcy assistant industry.  He started his VBA business in June 2009 and by November 2009 he was making more money than he was at his fulltime job.  Prior to being a successful VBA, Clay had spent 20 years in the computer software business. He also had worked as a mortgage loan officer and is currently a licensed real estate agent.  Additionally, Clay has owned many home businesses over the years but when he found the VBA field, he knew this was the nugget of gold he was looking for.  At the seminar, Clay will reveal his success story and tell you everything he did to build a successful VBA business.

DO NOT MISS THIS IMPORTANT EVENT

This will be the ONLY seminar held in Atlanta, Georgia this year that brings FIVE industry leaders of the VBA and paralegal world together in one place.  Attend this important seminar and get to know these leaders on a personal level. To find out more information or to register, visit:

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

SPACE IS LIMITED.  REGISTER EARLY TO ENSURE YOUR RESERVATION.

We all hope to see you there.

Virtual Bankruptcy Assistants (VBA’s) do a lot of things for the attorneys that they work for, not the least of which, is helping to protect them.

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.

Virtual Bankruptcy Assistants (VBA’s) do a lot of things for the attorneys that they work for, not the least of which, is helping to protect them.

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 an interesting situation this week that turned out badly for the debtor.

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.

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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.