713Training.com - Bankruptcy Petition Training

How to Boost Your VBA Incom

When contemplating how to boost your VBA income, consider what it is about the traditional VBA service that is valuable to the attorneys you do petition preparation for.

As you know, Virtual Bankruptcy Assistants save their attorneys hours and hours of time per petition, and make them more profitable, by allowing them to hire your when needed, as opposed to hiring full-time staff, or distracting the full-time staff from hiring priority or more higher income producing tasks.

This same principle applies to other tasks related to the life-cycle of a bankruptcy case that extends beyond just the petition itself.

Below is a sample of other services you could offer, and raise your typical VBA fee to include:

Pre-Petition Document Collection – Contacting the attorney’s clients to gather the documents needed to draft the bankruptcy petition (e.g., client intake form, pay stubs, credit counseling certificate)
Electronic Filing (ECF) – File the petition electronically for the attorney
341 Notification – Notify the client of their 341, including a description of what it is, what to expect, what to bring, and where it is being held. Remind them of the meeting a few days before the meeting is scheduled to take place
Post-Petition Document Collection – Follow-up with the client after filing to get their personal financial management (post-filing credit counseling) certificate, and electronically file it
Amendments – Should amendments be needed to the petition, you can do these for the attorney
Manage Creditor Service Notification – Certain changes or additions (amendments) to a petition may require service or notification to the creditors of the case via U.S. Mail. You could offer to handle this for the attorney
Redaction Services – If taxes or pay stubs are filed with the case in your attorney’s jurisdiction, they will need to be redacted, which is “blacking out” personal information such as social security numbers, names of minors, bank account and routing numbers, etc. You could offer to do this for your attorney before these documents are filed with the court

These tasks do not require an attorney to do them, and many attorneys would be more than happy to remove such tasks from their own “to-do” list, and pay their VBA to do them for him/her, which you should charge them for your time to do.

Put yourself in your attorney’s position, and ask yourself “What could I pay my VBA do for me that would save me time or make me more profitable?”, and you will undoubtedly come up with several more ideas on how to boost your VBA income.

Wishing you the best.

Sincerely,

-The 713 Training Team

Join our LinkedIn group:
www.linkedin.com/companies/713training.com-llc

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.

Some Recent Bankruptcy Petition Q&A

We wanted to share some recent questions and answers with you, so that all could benefit.

Thanks!

-The 713 Training Team

Join our LinkedIn group:
www.linkedin.com/companies/713training.com-llc

QUESTION:
I have a debtor that owns property that he is renting out to his son. The mortgage is $2,000.00 per month and the rent he is charging his son is $2,000.00. I'm not sure how to list it in Schedule I, Schedule J and the Means Test. To me it wipes out any income but I'm sure it must be indicated properly in the schedules and the means test.

Can you help?

ANSWER:
Yes, this will all need to be reported.

The mortgage debt would be reported on Schedule D.

The mortgage payment would be reported on Schedule J (line 1).

The $2,000 monthly income from the son would be reported on Schedule I (line 8).

The $2,000 monthly income from the son would also be reported on the Means Test with other income (If you are using Best Case, I recommend using the “Edit CMI Details” button to enter all sources of income separately, and let the software do the rest of the work for you).

If the debtor has made the monthly payments for the last 90 days, this will also need to be reported on the Statement of Financial Affairs (SOFA) (line 3).

QUESTION:
Good morning, please see the 2^nd part of my test for certification previously submitted. I mailed the first part about 3 weeks ago. Please let me know that first and 2nd part have been received.

ANSWER:

Thank you for your email, however, this is the older exam that is now outdated. The updated exam was released last December, and is taken completely online.

To register for the current exam, you can go to www.713training.com/products/VBA-Certification-Exam.html. The exam is now paid for in advance; after doing so, you will be able to download the instructions that you will want to follow very carefully (following detailed instructions is now part of the exam), which will include steps on how to take the exam online.

Your time investment in the older exam will be of a benefit to you, as the updated exam does include things from the original exam.

QUESTION:
I hope you are well. I have attached a 13 for review. I am a little confused about how I listed a couple of property items. My client had a house with her ex-boyfriend that went through a short sale. I listed it on Sch. F (BAC). Also, my client is on the deed to her parent’s house, but only has a life estate interest. I listed it on Sch. B since she is not on the loan. She is also a co-signer on her current boyfriend's equity line - I put it on Sch. F because she has no rights to the house and is only on the equity line.

ANSWER:

Regarding the debtor’s house that she had with her boyfriend, you’ve listed them on the correct Schedule, being Schedule F, as this house can’t go on Schedule A, since she no longer owns it, making the debt unsecured non-priority.

Regarding the debtor’s parent’s home, since her name is on the deed, I would list this house on Schedule A, and select the “Nature of Debtor’s Interest in Property” as being “Life Estate”.

I would also list the line of credit she co-signed for the boyfriend on Schedule F, as you have done.

I noticed that there is a car payment listed on Schedule J, but no car listed on Schedule B, and no lien listed on Schedule D, perhaps something has been overlooked here.

Also, I recognize some of the numbers on Schedule J, because they match the IRS allowance…the trustee may have the same thought. We have seen petitions get objections for this reason, so you may want to consider going close to these allowances, without actually hitting them, and leaving a little bit of a buffer in there, to avoid a possible objection.

I’m also hoping you can find some additional expenses that have been overlooked by the debtor, to list on Schedule J, to lower the Chapter 13 plan payment from $1,200/mo.

QUESTION:

1) How do VBA’s get paid?
2) What is the amount per petition- imagine this depends on attorney working for?
3) Is there enough work to handle all of us being trained - imagine so but would like to discuss

ANSWER:

Virtual Bankruptcy Assistants (VBAs) get paid by the attorneys they work for. How much they get paid, how often they get paid, and any other details surrounding payment, is determined by the VBA and the attorneys he/she works for.

There is no set amount of pay per petition. You may set your prices at whatever you feel your services are worth, and what attorneys are willing to pay. To give you some guidelines though, we suggest that you not charge anything less than $300 for a Chapter 7, and not less than $400 for a 13, although we are aware of several VBA’s that are being paid much more, because their work is worth much more.

There is so much bankruptcy petition work out there compared to the number of people trained to work virtually drafting petitions, it will be years before we ever know whether saturation is even possible. Because of the volume of work available, more and more attorneys are getting into bankruptcy everyday, and they all need petitions drafted.

Disclaimer: We at 713Training.com 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.

Why Reaffirmation Agreements are Important

When a debtor files bankruptcy, what happens to their creditors? There is an automatic stay put in place pending the outcome of the debtors’ case, right? Not necessarily.

Most debtors in bankruptcy have at least one car that they use to get to and from work, to transport their family, etc., and this family car usually has a loan on it.

Because this family car is important for the family, the debtor often wishes to keep it after the bankruptcy, in order to keep getting to and from work, get their kids to and from school, activities, go grocery shopping, go to church, etc.

This is easy to handle in the bankruptcy petition, by simply stating that the debtor wishes to reaffirm the debt, and continue paying for it after the bankruptcy.

But what if the debtor never signs a reaffirmation agreement to reaffirm the debt? Maybe nothing, but they could also lose their car to repossession, and still end up being liable for the debt, even if they were current on payments, and even though they thought there was an automatic stay in place.

This is because in some jurisdictions, the debtor may only have so many days from the time the statement of intention for the car was filed, to sign a reaffirmation agreement with the creditor to prevent the automatic stay on the creditor for the car, from being lifted.

We saw this happen just this week, when a debtor had not signed a reaffirmation agreement in a timely fashion, and the creditor immediately had the car towed. The attorney worked with the creditor to manage getting the reaffirmation agreement signed, and the debtor is getting their car back, so luckily, there is a positive outcome for the debtor, but not without some stress first.

To prevent this from happening:

1. Make certain that the attorneys you work with are familiar with 11 U.S.C. § 521(a)(6) of the revised bankruptcy code, which provides that an individual chapter 7 debtor cannot retain possession of personal property in which a creditor has a purchase money security interest, unless the debtor, not later than 45 days after the first meeting of creditors, either enters into a reaffirmation agreement under § 524(c) or redeems the property under § 722. In addition, pursuant to sections 521(a)(2) and 326(h) the automatic stay will terminate within thirty days of the petition date as to any encumbered collateral if the debtor fails to timely file that statement; and within thirty days after the first date set for the meeting of creditors if the debtor fails to take timely action as specified in the statement of intention.

2. Consider offering reaffirmation agreement management as part of your VBA services, and set yourself apart from the competition

Have a terrific week!

Sincerely,

-The 713 Training Team
www.713Training.com

Join our LinkedIn group:
www.linkedin.com/companies/713training.com-llc

Follow us on Facebook:
www.facebook.com/pages/713Trainingcom/112903945407672

Follow us on Twitter: www.twitter.com/713Training

Disclaimer: We at 713Training.com 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.

Troubleshooting Chapter 13 Plan Problems

Our office often receives calls about Chapter 13 bankruptcy petitions from people that are struggling with one thing or another in the Chapter 13 Plan, and can’t seem to resolve it.

What we usually find, is that because it is a Chapter 13 petition, that people tend to panic, and overlook the basics.

This week we received a call about a Chapter 13 petition where the Chapter 13 Plan was giving an error about unsecured debts being over 109(e) limit $360,475.

After getting a copy of the petition and looking at it, it didn’t take long to see where the problem was, as there were only two secured debts, and they were both mortgages.

What we found, is that all of the lien information had been entered for the house that the debtor owned, but the market value for the house had been left out. With the property information configured like this, it told the bankruptcy software that there was $374,395 owed on the house ($192,640 first mortgage, and $181,755 second mortgage), but that the house had no value. This means that all $374,395 of the house is unsecured, which exceeds the limit of $360,475 of unsecured debt allowed in a Chapter 13 bankruptcy.

After entering a market value for the house (e.g., $300,000), the the amount of unsecured debt on the house was reduced by the same amount, and eliminated the error in the Chapter 13 Plan.

What can we learn from this?

As you know, drafting bankruptcy petitions is not just data entry, and requires critical thinking and analytics capabilities, but just because the bankruptcy petition you are working on is a Chapter 13, don’t let this intimidate you, and remember the basics. Look through each of the items entered into the petition to make certain that nothing was left out or overlooked, or mistakenly entered incorrectly.

Have a terrific week!

Sincerely,

-The 713 Training Team
www.713Training.com

Join our LinkedIn group: www.linkedin.com/companies/713training.com-llc

Follow us on Facebook:
www.facebook.com/pages/713Trainingcom/112903945407672

Follow us on Twitter:
www.twitter.com/713Training

We at 713Training.com 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.

A Single Mother's Perspective on the Virtual Bankruptcy Assistant Business

This past week, I had the pleasure of doing some personalized training with Jennifer Tharp of Palm Coast, Florida.

Jennifer has been in business for herself for about 6 years as a notary signing agent, and is expanding into bankruptcy so that she can work from home, as she is a single mother of three.

Jennifer told me that being able to work from home as a virtual bankruptcy assistant will be a great blessing to her family, as it will give her more time with her kids, instead of being away from them so much, meeting with people for loan closings, etc.

When we first met, what she needed most in getting her VBA business going, is confidence in knowing how to properly complete the forms and schedules in the bankruptcy petition, so we took care of this by having her enter a petition for a real case for an attorney that I work with, as I coached her through it, taught her various details, and answered her questions.

Because opportunities for personalized training are limited, the training I most often recommend for learning these skills, and obtaining confidence includes:

1. Virtual Bankruptcy Assistant (VBA) Book and Workbook Set
www.713training.com/products/Virtual-Bankruptcy-Assistant-%28VBA%29-Book-and-Workbook-Set-%28EBOOKS%29.html

This book and workbook set walks you through each form and schedule, teaching you how to properly complete them, then gives you a sample case to try your skills at, and get some experience.

2. Bankruptcy Petition Case Training Collection
www.713training.com/products/Bankruptcy-Petition-Case-Training-Collection.html

This product gives you a mix of REAL Chapter 7 and Chapter 13 Cases to practice with, that when completed, allow you to compare your work against the real case filed with the court, by looking at the filed case in PACER (a good way to hone your PACER skills).

3. "How to Draft a Bankruptcy Petition" Training Videos - Complete 10-Video Package
www.713training.com/products/%22How-to-Draft-a-Bankruptcy-Petition%22-Training-Videos-%252d-Complete-10%252dVideo-Package.html

This video set with over 9 hours of instructions actually SHOWS YOU how to enter client information into the forms and schedules.

Wherever you are at in your VBA career, 713Training has something to offer, to help you expand your knowledge, services, and ultimately, your income.

After her training, Jennifer had the following to say:

“I am so thankful and blessed for the opportunity to receive personalized VBA training . The training gave me confidence and a better understanding of how the bankruptcy business is run. The insight I got on how to do a petition is going to allow me to do a better job for the attorney’s I work for. I now feel I am ready to reach my goals as a VBA.”

I look forward to hearing of Jennifer’s success, as I know she will be.

Wishing you all the best.

Sincerely,

Clay Holland
Operations Manager
713Training.com
www.713Training.com

Join our LinkedIn group:
www.linkedin.com/companies/713training.com-llc

Follow us on Facebook
www.facebook.com/pages/713Trainingcom/112903945407672

Follow us on Twitter
www.twitter.com/713Training

What to Do When You Have Missing Pay Stubs for a Bankruptcy Petition

It’s difficult to believe that it’s been almost 2 weeks since I started packing for the 713Training seminar in Atlanta, GA, but it has.

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

Where is the “Catch” in the Virtual Bankruptcy Assistant Business?

One of the services offered by 713Training.com is personalized one-on-one training with a dedicated instructor.

On April 9^th, Michael Hastings of Denver, Colorado came out to Salt Lake City, Utah for this training. Michael has been investigating the VBA industry for quite some time, and came out for training to finally decide if this is the right business opportunity for him. Conclusion? Read on.

First let me introduce you to Michael.

Michael has an A.S. Degree in Paralegal Studies from MTI College of Business and Technology, a B.A. from California State University, and a Masters' in Legal Administration from the University of Denver.

He has 5 years of experience managing large Inbound Call Centers, 5 years of experience as a Corporate paralegal, and 2 years of experience as a Project Manager for a Legal software company. On top of that, he does expansive volunteer work with the Denver Rescue Mission.

Throughout the day, Michael told of the extensive research he had done regarding the VBA industry, and on bankruptcy itself. I was amazed at the level of detail that he has gone to in his research; for example, he had found out EXACTLY how many practicing attorneys there are in the U.S., how many of those practice in bankruptcy, how many are large firms vs. small firms, etc., which boiled down to the fact that 80% of all bankruptcy cases are filed by small firms…the firms that Virtual Bankruptcy Assistants market their services to. That’s a HUGE market. I was personally further convinced that I am in the right business at the right time.

Michael is also attending a business class that covers business plan writing, so all of this research will go into his business plan. I’m hoping that Michael will let me share his research with you through 713Training.com.

The thing that I found most interesting about our visit, is that as Michael described all of the levels of detail he has gone into researching the virtual bankruptcy assistant field, he said that he kept looking for “What was wrong with it”…the “Where is the catch?”; as he figured there must be some fault somewhere. Instead though, Michael told me he couldn’t find anything wrong with the VBA field, and that his research proved it is a viable business.

The day that Michael was here, it just so happened that a 341 was happening for a case that I prepared the petition for, so I asked Michael if he would like to attend the 341, and see how this part of the business works. He said that he would, so we hopped in my truck and drove downtown to where the 341’s are held.

When we got there, we met up with the attorney and the clients he was there to represent, and went in for roll call.

It just so happened that our case was first on the list for the hour, so everything happened pretty quickly, and Michael got to experience how the clients felt afterward, as the attorney visited with them, and reassured them that everything went well.

The clients then left, but the attorney stayed to visit and answer questions for another 10-15 minutes, which was really good of him to do.

By the end of the day, Michael said that he had gotten all of his questions answered, and had decided that he is definitely going to become a Virtual Bankruptcy Assistant.

Because I find this business so rewarding both monetarily and personally, I was ecstatic to hear this, and look forward to Michael’s future success as a VBA, as I have no doubt that he will achieve great success.

Although Michael has a tremendous education, one of the great things about the VBA industry, is that you don’t need a degree, or even legal experience.

If you are a hard worker, reliable, have a desire to learn, and have good people skills, you’re halfway there. Learning the petition drafting skills gets you the rest of the way there.

Making a good living working from home for attorneys isn’t just a dream. There is great demand for highly skilled VBA’s. Won’t you come join us?

Clay Holland

Operations Manager
713Training.com
Join our LinkedIn group: www.linkedin.com/companies/713training.com-llc

How to Report Debtor's Income Tax Due When Not Withheld

Often as a person’s or couple’s financial situation experiences difficulty, the first thing they do to have more money available, is have their payroll department adjust their income tax withholding by adjusting the exemptions they claim, by filling out a new W-4 form, so that the money that would have been going toward the income taxes they owe, is instead given to them in their paycheck.

People do this thinking it will be a short-term solution to their problem, while a permanent solution is found.

Usually however, what this does is make their situation worse, as a permanent solution is often further away than expected, and months later, they’re not only still having the same financial difficulty they were experiencing, but now they’re also in a position of having to figure out where to come up with additional monies to cover the income tax that is due, but was not withheld.

When drafting petitions, this is something that is VERY important for the Virual Bankruptcy Assistant (VBA) to watch out for, as even though these income taxes have not been withheld and paid, they are still due to the government, and must be accounted for, both because this income tax liability must be paid (income taxes are a priority debt), AND not accounting for this income tax liability on the Means Test could be detrimental for the debtor in causing them to be in a Chapter 13, when they might otherwise qualify for a Chapter 7, OR have a much larger Chapter 13 Plan payment than they should have.

When drafting the petition, we can’t just blindly enter the information on the debtor’s pay stubs into Schedule I and the Means Test, and call it good, but rather, we must analyze the data we’re entering to look for things like this. If the amount of income taxes compared to the gross pay appears too low, it is a good idea to figure out what percentage of income tax is being withheld.

To do this, divide the amount of income taxes being withheld by the gross pay. For example, if the debtor’s gross pay for a two week period is $1,553 and the amount of income tax being withheld is $75 and you think this appears to be too low, use a calculator to divide the $75 withheld for income taxes by the $1,553 of gross pay, which results in .048, or 4.8%.

Everyone’s income tax bracket is different, but in communications with attorneys regarding what trustees are looking for, I have been told that it’s safe to assume a 25% income tax liability.

This means that in the example above, that the debtor is paying less than 1/5 of the income taxes he/she should be.

So how do you enter the income tax due into the petition, when the pay stubs show what is being withheld for income tax, but debtor owes more?

In petitions that I have drafted when this situation occurs, I have done the following:

1. As you look over the six months of pay stubs provided by the debtors, look for a higher amount of income tax being withheld several months ago, and less income taxes being withheld later, which may indicate that not enough taxes are being withheld.

TIP: It’s also possible that the debtor’s income tax withholding being too low goes further back than the six months, so if the income tax being withheld doesn’t look like enough, use the formula: income tax withheld divided by gross pay, to reveal the percentage of income tax being withheld.

2. Enter the information from the most recent pay stub into Schedule I, just as it is reported on the pay stub

3. Figure out the difference between what is being withheld for income taxes, and an approximation of what should be withheld for income taxes.

Using the example earlier in this article, if the debtor only has 4.8% of their gross pay being withheld, the difference between what is being withheld and an approximation of 25% would be 20.2%. 20.2% the $1,553 gross pay would be $313.70.

4. Account for this additional tax liability on Schedule I and the Means Test so that the court can see this additional tax liability.

In Schedule I, this additional income tax due that is not being payroll deducted, can be entered in the Other Wage Deduction Details

On the Means Test, you would need to add this additional income tax due to the amount already being withheld (in our example, $344.77 + $75 = $388.70), keeping in mind that the values entered into the Means Test are for a full month, so you need to adjust the withholding to be the value for a full month (in our example, if the debtor is paid every 2 weeks, that’s 26 pay days per year, so you would multiply the $388.70 by 26 pay days in the year, then divide that by 12 months in the year, to arrive at a full month value, which is $842.19)

As with all important items such as this, make a note of this on the attorney cover page for the attorney. For example, you might make an entry in the cover page that reads something like:

“The client’s income tax withholding is only 4.8%. I entered their pay stub information into Schedule I, but also calculated an additional income tax liability of 20.2%, and entered this amount in the Other Wage Deduction Details of Schedule I, and added it to the actual withholding, adjusted it to a full month value, and entered it into the Means Test”

Additional Tip: This additional tax due should be entered into Schedule E of the petition. The attorney may even have the client contact the IRS and obtain a repayment plan prior to filing.

Clay Holland

Operations Manager
713Training.com
Join our LinkedIn group: www.linkedin.com/companies/713training.com-llc

When Can You Cram Down a Car?

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:

The loan on the car (not the car) must 910 days old, or more (roughly 2.5 years old)
The debtor must be filing a Chapter 13 bankruptcy
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.

Clay Holland
Operations Manager
713Training.com
Join our LinkedIn group: www.linkedin.com/companies/713training.com-llc

Protecting Your Attorney’s Interests

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.

Clay Holland
Operations Manager
713Training.com
Join our LinkedIn group: www.linkedin.com/companies/713training.com-llc

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.

PayPal Accounts and Bankruptcy

We had a situation recently that ended badly for the debtor that you’ll want to be aware of, to prevent this from happening to others.

At the 341 meeting, the trustee requested information from the debtor in regards to a PayPal transfer of $1,000 the day before the debtors bankruptcy petition was filed, that appeared on his checking account statement.

What is PayPal?

PayPal is an e-commerce business allowing payments and money transfers to be made through the Internet, serves as an electronic alternative to traditional paper methods of payment, such as checks and money orders, and can be funded with an electronic debit from a bank account or by a credit card.

So now that we know what PayPal is, you can understand why a PayPal payment of $1,000 less than 24 hours before filing the bankruptcy petition looked really suspicious.

When I first heard about this, I have to admit, it sounded suspicious to me too, but it turns out that this transaction was actually legitimate.

What had happened is that the debtor had paid the 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 although the attorney corroborated this, the issue was further complicated by the fact that the debtor had made a mistake in sending the payment, and it never cleared his account, and the attorney didn’t get paid, so the money came back to the debtors account.

Now is where it gets ugly…because the trustee not being happy about this account not being disclosed, he seized it, and the debtor lost the money. 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 that we do our very best o help the debtor to disclose ALL bank accounts…even PayPal accounts, and other similar accounts.

Clay Holland
Operations Manager
713Training.com
Join our LinkedIn group: www.linkedin.com/companies/713training.com-llc

Does a Petition Expire?

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:

Schedule I
1. Income and deductions must be updated to reflect current pay stubs or business profit and loss statements (P&L’s)
Means Test
1. Income must be updated to include any months that have elapsed since previously entered
2. Double-check other items for changes, such as costs of insurance, 401k loan payments or contributions, etc.
Arrears on all Secured Property
1. Are the items previously documented as being in arrears, now additional months in arrears? Update this (Creditor tab)
2. Update the cure amount - # of months in arrears x Mo Pmt (Form 22 Means Test tab)
3. Are any previously current liens now in arrears? Document this (Creditor tab and Form 22 Means Test tab)
Form 7. Statement of Financial Affairs
1. Line 3. Payments to Creditors

The dates and payments to creditors will need to be updated, as well as the Amt. Still Owing

Re-Balancing Schedule I and &, and updating the Chapter 13 Plan
1. 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

Clay Holland
Operations Manager
713Training.com
Join our LinkedIn group: www.linkedin.com/companies/713training.com-llc

Resources

Our Newsletter

Featured Products

Recent News

Categories

Resources

Our Newsletter

Featured Products

Recent News