The following questions and answers were submitted to 713 Training.com either at a teleconference or by email during this past week. The answers are provided for training purposes only and no whole or part should be regarded as legal advice.
QUESTION
How successful have the attorneys you work for been in confirmation of a proposed strip down?
ANSWER
An attorney working as a virtual assistant in Victorville CA has been successful in the confirmation of two Chapter 13s where a strip down of the second mortgage was proposed. As soon as the attorney provided this information, training materials were quickly developed to teach other attorneys how it was done.
Additionally, the Central District of California Bankruptcy Court began offering classes to teach attorneys how to be successful in proposing strip downs. This fact alone confirms the value of this training information.
QUESTION
How successful have the attorneys you work for been in confirmation of a proposed cram down?
ANSWER
Only one case has been personally worked on where an attorney in Ohio was successful in getting a cram down of the primary residence confirmed. The mortgage company was Washington Mutual and the attorney filed the case during the same time they were transitioning.
However, attorneys in Texas, Florida and Missouri have discussed cases where they have been successful in negotiating cram downs and saving their clients money.
Again, as soon as something new is learned that can benefit the debtors it is shared through articles and training products. However, we cannot guarantee that all cram downs and strip downs will be successful. That would be impossible and illogical to even attempt.
QUESTION
If a strip down of a mortgage is confirmed, what will be the outcome at the end of the 3 or 5 year Chapter 13 plan period?
ANSWER
No one knows. The law could change at any minute or change 100 times between now and then. This question would be unpredictable by anyone at this time.
QUESTION
I am an attorney and I feel very uneasy about proposing a cram down or a strip down. I am afraid that it would cause additional litigation with the mortgage company and perhaps cost me more than I charged the client for the petition. Do you have any suggestions to ease my fear?
ANSWER
There are a couple of good choices available to you that you may want to consider:
1. If you propose a cram down or a strip down and the mortgage company files an Objection, this would open the door for negotiation to still save the debtors a great deal of money. Once a number was reached, the attorney would charge the client for this negotiation and enter into an Agreed Order with the mortgage company.
2. If you propose a cram down or a strip down and the mortgage company files an Objection, you can simply change the figures on Schedule A and file an Amendment if you are too timid to negotiate on the debtors' behalf.
Remember, all creditors must file a Proof of Claim. Most attorneys who propose cram downs and strip downs will monitor the case on PACER and look for any Proof of Claim filed by a mortgage company. They compare the claim amount stated by the mortgage company with the cram down amount proposed in the Chapter 13 Plan. At this stage, the attorney contacts the attorney for the mortgage company and begins the negotiation process to come to an Agreed Order.
QUESTION
Can I propose a cram down or a strip down for every client?
ANSWER
Not at this time. From teleconferences taught by judges and attorneys, cram downs and strip downs are only approved in HARDSHIP cases. In other words, if a debtor can afford to pay back more than the first mortgage, a strip down is then paid back as UNSECURED. If the debtor's income is considered hardship and they file a Chapter 13 (demonstrating their ability to at least try and pay back all they can afford), cram downs and strip downs are often confirmed.
QUESTION
Can you guarantee that my proposed cram down and strip down will work?
ANSWER
Of course not. No one can. The goal here is to TAKE A CHANCE to help keep homeowners in their homes. A cram down or a strip down may or may not work at this period in time. It is a chance you take. If you do not want to take the chance, and are not willing to take that extra step of CARE for your clients, then do not propose a cram down or a strip down and call it a day.
QUESTION
I am a publisher for the creditor side of bankruptcy. I heard that you are teaching debtor attorneys how to reduce mortgages. Could I interview your attorneys for my book?
ANSWER
Proposing cram downs and strip downs are something that attorneys must TAKE A CHANCE in proposing. The information being taught at this time will change at any minute; therefore, we only have a SMALL WINDOW of time to use these training methods. Publishing this information in a book is impractical because it will be out-of-date before the book is printed.
SUMMARY
Please STOP taking the drive to KEEP CONSUMERS IN THEIR HOMES and turning this into a she-said, he-said scenario. This article was written to help attorneys stop thinking about all the bad things that can happen and TRY to help your clients. Even if you should fail with some cases and excel in others, at least you know you did your best and provided your clients with the best possible service you can.
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