Hey Brady, how are you?
Can you hear me Brady I can't hear you
Mama now, there you go. Now I can hear you. Okay. All right
Oh, yeah, forget I was just I was gonna use my videomic me. This is so fancy
Yeah, this thing's pretty cool. It's a rode
videomic M II okay, pretty cool tool just you can take it on yourself out and
like
Windsock its hood. Yeah
You know how I do it's illegal to use it when I do face blue eyes on my deck
Good
Expense
alright we've got
We've got some folks here showing up
Sounds agree. I think it sounds great. Can you still hear me? Oh, yeah. Okay, so, okay. Yes
Looks like I need a mute num1. Yeah
Okay, you're unmuted I don't need it
Cool
Forget it
Eight folks about five more minutes or so. Let's say hey, I got some lunch at let's see. Ah
Excellent Derek, um
It's the Eric. So what's up? Bring it? Can't stay long. Just wanted to catch up a little bit. Oh, it's good. Let's see is
there
I'm you jerk
Can you talk loot your car you ha ha cuz I'm here to jerk
You still there may be already left. Oh
He says you that works. Let me go Oh
Recording good. Alright, it's recording. Oh good
Yeah, and so then I did what i'd like
You know, I can import it into YouTube in the Yaak. We can use the trimmer drop function in YouTube was pretty cool
Oh good cool, and and YouTube will even build your subtitles. Ah
Okay, yeah
Eric you're muted but he's got such computers probably no microphone on the work computer
So, um, yeah productive Tuesday
Huh, you know, I wasn't too terribly bad busy, but not too terribly bad. I
Had a lunch one friend and dinner with another friend so I don't usually do that
And usually I'm a creature of habit. I pack my lunch
My wife works with us. She works at the office
So we usually eat together and then come home for dinner and we you know
So it's just a little hectic today with with a couple of different
obligations out of the office but
Yeah, cool. You're ready. I hear you Eric. What's going on man? Thank you. Come on, buddy, you know staying warm
staying cool actually
ya know, it's been it's been I mean, I just saw Laura Post at 107 in Austin, but I'm like
I'm a cool 80 degrees. But you know as Californians we'd like to bitch about 80 degrees and some you know. Mmm-hmm
I'm not happy about that, but
I'm in my office
It's air-conditioned
And yeah, I just switch from my my work computer doesn't have a I can't I can't talk so now I'm my laptop
so I'm able to able to be here and giving my two cents and
Cool when you're experience would be bankruptcy funny your your your post was exactly me
I'm the guy that avoids them because I don't know, you know, I avoid the chapter 7 but chapter 13
I'd be a little more open to I know the payment plan, but I just don't know enough about them. So
I work just fine avoiding them, but I don't like doing that. I
Know more about him so I can I can say yeah, absolutely. I love the 13. I'll dive in and you know, whatever Hey
Chapter 13 sonken hands, my friend
Pretty low so so yeah, I'll charge a small fee and we'll be good
August well, I won't be there Gil. I'm just gonna mute everybody when I'm
I actually it's funny. I've used Franco
You know, I've just never met I met your boy here. So I would be good I've heard about you have senior high arc
Man, I've used Franco on quite a few
In fact, he just sent a demand letter out for us recently and the guy called. All right
I want to make a payment and he made his payment perfect
Idea, you know
Yeah
Yeah, it was great. It was good. So I love you guys
I love I've heard great things about you guys and so far. I've used Franco on everything
I just I email in and it's just Franco. I guess take some I don't know how you guys divvy up
Who knows what but I love working with Franco well for us
It's pretty simple Franklin does the state court stuff and I do the federal bankruptcy court stuff. So we
Divided up that way
Ok, cool. I keep on meeting people's microphones so big if they want to chime in, but I think they put them back on you
Yeah, I'm um, you know, it's
Never going through the
earlier virtual know buying courses and
for dummies course, and I remember they were talking about
Someone was talking about BK 7 and 13 and it's not that you know
it's nothing that really be you're worried about and then yeah, you know, you can find the files of pacer gov and
so I started just figuring like I'd actually had an
Asset I wasn't due diligence London
They did BK. Who's this was a third. There was a third
And I just reached out to a known investor. He mad frankerz Wayne Wayne. It was like hey Wayne, can you?
Help me. Well, can we do a zoom thing? I mean?
yeah, he
Broke it down and how many show what these files are talking about?
And that's when you pointed out that this this particular said how to cram down
Okay. So, um
which shouldn't I mean you're like when I partybot dagger like crammed down on a first how
We're gonna cover that a little bit tonight
You know like we talked about briefly. It's one of those things
You know, I don't see them because the code says you can't do that we'll talk about that
You know, I think some of these judges out there that are pretty debtor friendly. What are you gonna do about it?
I mean, that's kind of what are you gonna do about it? So
Get your lawyer to appeal them
Are you going to accept the cramdown value and I think in many cases these judges do that because they know
Especially the smaller investor the ones that they've never heard of, you know
They know they can't do that with Ocwen and US bank and and you know the big dogs out there
But they can do that with you know, mortgage medic USA. I mean because they don't know who that is and
Or if they do or if they know you know that the the the typical investor out there
You know, they're going to say oh, I'm sure they got this at a discount
So why should why should the investor make all the money? Let's get the the borrower to save a little bit of money and
What are you gonna do appeal me? I
Think that's what they do. I really do. Mm-hmm
Well going get started. I'll put everybody on foot every back by the back on mute and said you
Let's see, oh
They said he just had one discharge to date so we'll talk about that now
All right, so let's go ahead and get started everybody ready it's a two minutes after 7:00, okay eighteen folks here
It says this guy
Let me roll through and make sure everyone's uh
Muted except you and I we are recording
and we're going to
Lean
And this is
You're rocking and rolling here
Welcome everybody to
tonight's
Webinar, we're gonna talk about the top five questions. Note investors
Asked about chapter 7 and 13 bankruptcy
I know I've come across a well least note investor
He he passes on tapes when the notes indicate that the borrowers in Chapter 7 and 13
and I haven't I've actually I'm excited for the opportunity to go into pacer I go in and
See their life unfold in those documents
subsequently I have to pay my Pacer gov bill
Yeah, you're gonna pay your bill or they will lock your account out
So we're gonna talk about tonight. So we have a
Guest special guest Tony Sottile. He's with the law office of Sottile and Barile. They're out of Ohio and
we're just really excited that he
Volunteered or agreed to do this with us tonight, and I am proud that I'm his first
Webinar host.
We are very happy for that. So hey look, you know, let's connect. Here's my LinkedIn account Brady Durr.
We're not already connected somehow were already connected one way or another because either found me on Facebook or we
connected on meetup because I have the Fort Worth Notes Closers meet up or oh
You could check me out on youtube and subscribe that really be helpful and if I get a hundred subscribers
I can I'm on YouTube channel
how to recommend putting your content on Google+ it helps you to get on page one of Google
Google loves to retrieve Google content
So about me. I focus on non-performing first in Indiana, Ohio and Michigan. I just picked those states mainly because
Well the law office of Sottile and Barile service those areas. So when you find a tribe that works well
Don't rock the boat. So that was my thought process with picking, Indiana, Ohio and Michigan
I'm actually strategy to after the Air Force. It's my why might my family
Too that was this. This is my wise I've got four kids
I married my high school, sweetheart. And so we're really excited about the opportunities at the new space is going to bring to us
I'm not a guru. I'm not perfect
You know, I'm not going to be you know - educator or a mentor or anything like that
I'm just I'm just glad if I can if you can walk away with a couple of nuggets information and I've provided
Content that's helpful to you
That's A okay with me. Your objectives are my objectives. Typically if I have a joint venture partner, I like to
hear what your objectives are with assets so we know well I say
How am I gonna be performing and then I want to do this in this and I'm like well, what are your objectives?
What are your investment goals? Do you want this to be a long-term goal? Do you want the property?
Do you want this asset, what would you like to do? And as those processes go through I
Actually rather enjoy working with my JV partners to kind of create a win-win for them to match their investment objectives
Something that might be a little bit different perspectives from other folks
So this is like an example of of a contract for deed in South Bend
I picked this, up we're all in this thing for less than ten thousand
Got a cash offer twenty two thousand and my JV partner you have forty four percent ROI
But they want to try to rehab it because they are via seventy. So that's what we're trying to work on now
Let's see if we can get this thing rehab
Let's see, so I get a little
Non-performing Huber Heights. I picked this thing up. They're like 25 26 cents on the dollar
The cloud on this thing is out of control. And so
we just recently acquired quite a but there's a great opportunity to
To either if you take this thing back as a foreclosure
the there's all these different parcels and lots and so that you just never know what these assets are gonna have with them and
And that's part of the discovery process and seeing where it needs
So without further ado our objectives today are look at the top five issues note investor face as a lien holder
We're going to do a Q&A
To follow and with that I'm going to turn it over to our main guest and main guest Tony Sottile.
Let's not share. Now. You have control you have the con. All right. Let's see here. So
We'll go right there so I'll tell a little bit about myself
And my law firm. so I partner with fellow that a lot of people have heard of on this as well
Franco Bareli, we joined forces in April of 2015 and
Kind of have been growing
slowly and kind of organically since then. So we started just doing
Our kind of our core competencies of bankruptcy and collections.
We've done everything else in the past working for larger firms.
But we decided to stick with you know what we know best if you will
and that grew to
Becoming a lot more. It grew to getting back into the state court real estate space.
Doing a lot of foreclosure work, forfeiture work,
legal document drafting, document review.
Franco does a lot of a lot of document review.
I do a lot of reviews for bankrupt loans. So, you know note buyers that are looking to buy loans and bankruptcy,
I'll take a look at those.
So we've grown to to kind of what you see on the screen there.
We handle default matters in Ohio, Kentucky, Indiana, Michigan and now Illinois. We just opened up in Illinois
So some people like Illinois, some people are trying to stay away from Illinois, If that helps you all, hopefully you'll think of us.
Additionally, we handle not only bankruptcy matters in those states, but you can add, Wisconsin,
Colorado, and Washington DC to that we have an attorney that has some kind of random
Licenses, so that brought us into Wisconsin Colorado, and DC. And then lastly we do some national work, right!
So we do national limited filer work. Such as
Proof of claimed, transfers of claim, reaffirmation agreement, payment change notices, a lot of things like that that you've seen in chapter 13 cases.
One more thing real quick your slide if you could just share your screen
Okay. Well I
Should be at the bottom a little
Things that share and then you click and you can pick which screen like main screen or your your PowerPoint
Okay, perhaps I lost you there. There we go. Okay, so share screen. I
Thought I did that are oh, there we go. Okay, so
let's not have
This
share screen
Okay, and then alt tab right there you go now I'm just going to uh, I think it's a full screen
What is it? F12 f11? Yeah
From the beginning
Okay. Can you all see that looks great. See your slides. Okay, wonderful. Okay
So that's the slide we were on or that I thought we were wrong
We were chit-chatting. So that tells you a little bit about us and
you know really what we're gonna talk about tonight is is bankruptcy, you know, we're gonna focus everything tonight on on the bankruptcy space and
You know just relax. It's not the end of the world
You know, we've we've had the benefit of talking with a lot of people in the space
And I find that there's two spectrums people either really really liked bankruptcy or really really hate bankruptcy. So
It's just it's not the end of the world
I think there's a lot of deals to be out there because people are pretty scared of it
And if you've got good counsel, and hopefully if you're in a particular state
whether it's one of ours or another state, hopefully you have
counsel that you can trust counsel that you can pick up and ask questions to and that helps so
Let's head right to the first question
So the first question and I won't spend too too terribly much time
Belaboring this but I think we've got some folks on here. That that don't know a whole lot about bankruptcy
So I want to kind of cover a big question. I get what you know, what are the different types of bankruptcies?
What are the differences between the chapters so we're going to focus on sevens and 13s
12s chapter 12 are designed for the family farmer and fishermen chapter 9 is a municipality bankruptcy
chapter 15 is for
cross-border bankruptcies
So Canadian Mexican companies overseas companies cross-border bankruptcies that have business in the United States
So we're going to focus on sevens and 13
Will go straight into Chapter seven. So Chapter seven. That's your standard liquidation bankruptcy
So the trustee and I'm going to assume a couple of things
I'm going to assume that you all have heard of a lot of the buzzwords
so
If not, you know, just you know
Stop me here or post a question in the chat and Brady if you can kind of alert me out
I'll slow down or speed up or whatever. So
But briefly in a chapter 7 bankruptcy. That's your standard bankruptcy, right?
That's when a trustee takes the debtors assets if there are any and he's gonna liquidate them turn them into cash and pay creditors
Very very rarely. Is there anything to be dispersed?
Most chapter sevens are called no asset bankruptcies and they are done in about four to six months
If you have an asset involved, sometimes they can take a couple of years
But typically four to six months your nice standard Chapter seven bankruptcy
It's the most common chapter of filing
Something that you all want to know is that there is no code debtor state protection
So if you've got a new and only one of the note buyers filed bankruptcy
You can proceed against the other person
Now that's tricky because the collateral has the other person on it. So this is really more of a collection standpoint
So if you've already reduced it to judgment
You're somehow going after them that way if they're if your your judgment is against two people and only one file bankruptcy
Goes straight to the other one. So that's that's a benefit of chapter 7 bankruptcy
The other big one obviously is a chapter thirteen
I think that's what we're pretty familiar with here in the in the note buying space and the real estate space
That's probably a little more common
Even though it's not the most common chapter finally
it's probably the most common that you run into so chapter 13s are designed for debtors who have regular income or or
Possibly too much income to file a seven
We won't get in that what you can qualify for which bankruptcy to qualify for but for the most part
Debtors in chapter 13 bankruptcy have have regular income
They must be individuals businesses cannot file a chapter 13 bankruptcy a businesses have to file chapter 11 bankruptcy
So again trying to stay away from the eleven of the eleven talk and the other area talk, so
Sometimes people have too much money and can't file a chapter seven
Sometimes people have an asset that they want to protect
And can't file a seven. A lot of times you're going to see people with arrearage is
Unsecured debt that they want to keep real estate vehicles things like that. That's why they file a chapter 13 bankruptcy
Because we want our money right away or if it's the IRS the IRS wants their money right away
but if they file a chapter 13 bankruptcy
The debtors gonna file a plan a bankruptcy plan with the court that lasts three to five years and the debtor can take that long
To pay off the arrears. So if you've got, you know, you're on the eve of a foreclosure sale and the debtors got
$20,000 in in re rich and
They want to keep house. They have very limited options at that point. They file bankruptcy
They can pay that twenty thousand dollars over three to five years and their ongoing payments
But that's a big reason why people file chapter 13 bankruptcies
Reviewing and understanding. This plan is of paramount importance. I can't express that enough. So the debtors gonna file a plan
I'm gonna we're gonna do a little bit on pacer here
In a few minutes and we can look at what a plan looks like on pacer
But well when that plan is filed you have a very limited window with which you can object to that plan
So if you don't like how they're treating you, if you think they value your value your asset too low if they shorted
How much you are owed on your rear inch if they've shorted your monthly payment?
Anything if there's anything you don't like in that plan, you have to object to that plan. Okay
now you'll find plenty of attorneys we do this day in day out for
Dozens and dozens of clients and people we review plans all day long and provide you with a plan review
We tell you what we boil it down plans look different all over the country
So a good attorney that you'll find across the country can boil these down and tell you exactly what you're looking at
If you don't like the plan, you must object
We've got some debt limits in chapter 13. So if the debtor has if the debtor has more than these numbers more than friend written
$95,000 in
unsecured debt
And/or more than 1.1 84 million in secured debt
They can't file a 13. So that's when they get into the chapter 11 space and that's a lot of debt, right?
You know unsecured debts of almost
400,000 secured debts of of you know, almost 1.2 million, but if you think about your you know your your you know
Those of you know, the the the small town landlord, they might have a couple of properties things like that people get in trouble
People get in a little over their head the unsecured debt heck that's easy to get
$394,000 an unsecured debt. Just get some college loans, right?
So then you've got code data protection in chapter 13
That's another reason why people will file a chapter 13. You can protect your wife your husband your
Aunt your uncle dear old grandma. Whoever helped you get that loan. So
Just because I filed bankruptcy. For example, my parents maybe co-signed on a mortgage for me
they are protected by my bankruptcy if I file a chapter 13, so
Those are just again
30,000 foot overviews of the difference between chapter 7 and chapter 13 they both
Implement when they're filed something called an automatic stay that goes into effect as soon as that bankruptcy is filed
Nothing else needs to be filed. Just that voluntary petition page
There's no extra pleading nothing like that
This bars all creditors from any collection activity
so if you're on the eve of a foreclosure sale, if you're on the eve of an eviction if you're on the eve of
A door knock to collect anything like that and you get notice that they file bankruptcy
You have to stop what you're doing
You cannot proceed if you do inadvertently that has to be unwound if you do and you don't care
That's a problem and we we help clients that have those problems
Just just no bankruptcy kind of halts everything if
You want to proceed if you have ground to proceed and we'll talk about some of those
You must seek relief from that automatics day relief from stay. Yeah motion for relief from stay
there's a whole bunch of different buzzwords for it, but you must go into court and
Basically, tell the court usually by pleadings
You must tell the court why you are why you should be entitled to continue with your collection and your recovery efforts
Typically that's going to be because the debtors just not paying they may be in a bankruptcy their plan may say they're going to pay
But they're just not paid
So there's another default. There's a post-petition default. That's a reason to file a motion for relief from stay
Once you get that property out of bankruptcy once you get that automatic stay lifted
You can go right back in the state court and proceed with what you were doing foreclosure. Forfeiture
Eviction wherever you were in that process to get your to get your property back
That's that's what relief from stay will allow you to do
Kind of part of this automatic stay is the discussion of multiple filers. I hear that a lot
Well, this person was already in a bankruptcy. This person's got three bankruptcies
If a debtor has filed a bankruptcy
Let's say they file a bankruptcy today and they've already been involved in one bankruptcy within the last year
The automatic stay goes into effect
But only for thirty days
Within that thirty day period that debtor usually through their attorney that debtor has to file to extend that automatic stay
Beyond those 30 days that's readily granted. In fact when these laws went into effect
This happened in 20 our 2005
Week creditor councils we were very excited about this
Very excited, you know. Oh look, this is the second filing within a year
We're gonna go into court and we're gonna say why we should not have to abide by the automatic stay
We lost every single time and honestly once you take a step back from that rightfully, so it's a second chance
It's a second opportunity for that debtor
You know, I can't imagine anybody on this call has not benefited from a second-chance
bankruptcy courts are very big on second chances, so
That's two filings within a year
or one filing before the current filing put it that way if there are two filings before the current filing the automatic state is not
Going to affect okay
But typically what you're going to see is an immediate motion to implement the automatic stay being file
now
Those attorneys do have some success battling. Okay, they're very very case-specific. Very very fact-specific
Along with the filing of the motion to implement the automatic stay the debtor has to have an affidavit
They have to basically testify through an affidavit filed with that motion that says why there are two previous filings two or more previous
Filings failed and why this one will succeed?
If you want to object to that
Again, we can talk again. They're very very case-specific. Very fact-specific
issues
Very rarely. Is it a home run? Very rarely. Is it a slam dunk?
A lot of times it's going to be the pro se debtor
The debtor that doesn't have representation that we can go into court and kind of fight a little bit
but even then
Some judges man. I'm telling you. Some judges are very very very liberal when it comes to dealing with debtors and debtors without attorneys
They'll give many many chances to just a quick side story. I have an automobile client that I represent
We had a case in Chicago. I was telling Brady about this one earlier this morning
14 bankruptcies in the last seven years
And I finally finally got the court to bar that debtor from refiling for 180 days
To give my client who was an automobile lien holder
Give my client time to repossess and sell that car without threat of that debtor filing bankruptcy
So I'll be honest it cost my client about five thousand bucks. They're not cheap to do there's a lot of litigation involved
It was a high-value car
To some degree just as much value as some of the houses that we see
But again, very case-specific
so that's kind of the automatic stay and discussion of multiple filings a
Proof of claim I want to talk about those for a little while
A proof of claim it's it's a nationwide form used by the courts. It must
Absolutely must be filed in chapter 13 cases if you have an asset and that borrower files bankruptcy
You have to and they file a chapter 13 bankruptcy. You have to file a chapter. I'm sorry
You have to file a proof of claim in order to be paid
Okay
That plan may say they want to pay you that bankruptcy may say they want to pay you
When you talk to the borrower before they file bankruptcy
They said they want to pay you
But in Lesson until you have that proof of claim on file, you're in you're in kind of no-man's land
You have 70 days to file that from the day the case was filed
I used to be a much longer period but now it's only 70 days 7 0 days
There is a window that if you don't have all the documentation you need by the 70th day
You can file parts of that proof of claim and then within another 50 days you can file a rest of it
So basically just the supporting documentation
assignments
Those kinds of things a lawn just notes and whatnot
But within those first 70 days you have to file Form 410 and form 410 a if there's a ridge
Typically your attorney. Does this we do these across the whole country
But some attorneys just file them in their jurisdictions
we have limited filing access to be able to do this in all 94 bankruptcy jurisdictions, so
Courts often require additional documentation to these forms
So it's not just form 410 that you have to file its an addendum certain trustees have addendums
They want you to file
Most trustees. In fact I can't think of a single court make you file the mortgage the contract for deed the note
Any allonge any recorded assignments everything must be the recorded copy
Obviously except for the note a lot, you know, things like that if there is a recorded version of it
You must use that you must attach the recorded assignment the chain
the chain that shows you in the last in the
Position in the filing position of that proof of claim because it's your name on that proof of claim
It's the investors name
My name may be on the bottom as the filer of that claim, but your name is on there as the as the creditor
There must be a claim on file for that creditor to get paid in the bankruptcy
Again, I talked about chapter 13 cases. You don't file these in chapter 7 cases
Unless you are asked to by the court. So like I was saying before most chapter 7s are
No asset cases. There's nothing that's being divvied out for the creditors
So they don't want they being the court and the trustee don't watch
Don't want proofs of claim filed in sevens unless asked but in 13, they must be filed
They are used to show prepetition arrearage
So what you're going to include on this proof of claim and you've got to prove all your claims up?
So you've got to have receipts or you have to have pay histories things like that
You're going to use it for your prepetition arrearage
So attorneys fees that you've accumulated to date if you're in a state where you can get attorneys fees
Your midway through a foreclosure. You've already paid your attorney. You've already bought title work
You've already done a lot of stuff that all goes on your proof of claim form taxes that you may have paid
Fines that you may have paid things like that. That's all going to go on a proof of claim pre
petition or remarriage goes on a proof of claim if the debtor files today and
Tomorrow you pay taxes that does not go on a proof of claim that gets dealt with a little differently
I mean there's a little gray area there, but for the most part you don't put that on a proof of claim
It's everything up to the day the case was filed ah, then discussion of filing timeframes
We did talk about that. Right so you got to get that proof of claim on file within 70 days
Yeah, you should note I spent a lot of time on this slide proofs of claim are extremely extremely important in chapter 13 cases
Whether you use us for you use another attorney or you do these yourself
They're just very important that you file in a chapter 13 case
Just a little aside. That's new. Okay. It used to be that mortgage holders note holders
when a buyer file when a borrower filed bankruptcy
They didn't file a proof of claim because they were secured debt
They had they had a note and a mortgage they had
Evidence of of a security interest same thing with car holders. They've got a lien
You've got a lien in real estate
Not anymore
Nowadays, it's everybody. Everybody has to file a proof of claim
So that's only been within the last year and a half or so
So this is relatively new so if you've been in this space awhile, this is this is an area that's changed
Proofs of claim are very very heavily reviewed by trustees
by debtors counsel
If you have us do these proofs of claim, we will ask you for receipts
We will ask you to prove things up. If you can't prove something do not put it in a proof of claim
You just you don't want to call attention to?
You don't want to call attention to yourself like that. So be able to prove everything and either you or your attorney can file those
Have a quick question on this sure so
On the form for 10
For 14, would that be filed in a chapter 7 where the borrower wants to stay in a house?
No, you do not file a proof of claim in a chapter 7 if the only reason is the borrower wants to stay in the
house, okay, plenty of borrowers want to stay in a house in a chapter 7 bankruptcy
You'll only file a proof of claim in a 7 if the court tells you to file a proof of claim. Ok
that you will get notice in the mail of
Of
the need to file a proof of claim the pleading says notice of asset and
Request to file proof of claim and it's a very obvious pleading and it tells you what to do. Ok
Is this in this particular situation the borrower owes less?
Than what the house is worth
Yeah still no need to file a proof of claim in a 7, all right. Thank you
So options with secured debt into chapter 13, the big thing here is to look to the plan for guidance, okay?
there's many options that the debtors going to be able to avail themselves to some you might like some you may not like
The debtor may try to cram you down the trailermate the debtor may try to strip your lien if you're a second mortgage
There's just a lot of options and it's there's really too many options, there's almost an infinite amount of options
so the best thing to do in a chapter 13 is to look to the plan for guidance have your attorney help you have a
More experienced person help you with that, but you got to look to the plan in chapter 13 in a7. It's a little simpler
Okay in the 7 the debtor is gonna file something they're gonna file what's called a statement of intent or a statement of intentions
And it's going to list your property and it's going to say what do you intend to do with that property that secures the debt?
You can surrender it and you can see this list
It's kind of in the middle of the screen the debtor can either surrender the property to you
They can retain the property and redeem it that's not for real estate though. Ok, retain and redeem
That's only for personal property so cars computers jewelry things like that
Okay, so the third option retain the property and enter into a reaffirmation agreement
We're going to return to this we're going to return to reaffirmation agreement here in a little bit
So I want to get back to that and the last one I'm not going to worry about retain the property and explain
So that's you know, the debtors gonna sign that and say retain the property and keep paying I see that all the time
So it's a little more clear what that borrower wants to do in that chapter 7 bankruptcy
I do want to note just because that debtor says surrender the property doesn't mean you can
Start working on that case back in state court to get it back in your name
Just because it says surrender you still need to seek relief from staying abandonment. You still need to talk to your attorney about that
And again, we're gonna cover reacts reacts react formation agreements here in a minute
Okay, another question I get asked a lot what is a reaffirmation agreement and why is it important
So reaffirmation agreement, it is a term of art, okay
You're going to hear them a lot referred to as sometime here are a son really like that reacts. I hear a lot
Okay, they only apply in chapter 7 cases
So Scott
or I so Brady this kind of kind of
Correlates with the question you had a few seconds ago about a chapter 7 proof of claim
corollary it correlates, but but let me explain so a
reaffirmation agreement is
Basically another promise to pay on a debt that would ordinarily be discharged
Okay, so if you've got a note in a chapter 7 bankruptcy and that debtor does nothing in that bankruptcy
No rehab nothing like that that debtors liability on that note is extinguished. Okay, it is
discharged at the end of the bankruptcy
Okay, now if you can get that debtor to file or to not to file to sign a reaffirmation
Agreement another promise to pay on that debt and you get that completed and on file before that discharge date
Then that debt is not
Discharged that debt is still valid debt and that is and that debtor is on the hook for that debt
So they may be current at the time
And want to keep that property and want to keep paying on it. It is highly
It is a highly effective tool for you all I believe
The average note buyer out there who get borrowers to sign reaffirmation agreements
A lot of debtor attorneys you'll find are going to be opposed to them
Okay
because the idea of a chapter 7 bankruptcy
is a fresh start the idea of any bankruptcies a fresh start and a chapter 7 that happens pretty quickly four to six months and
Boom you're done
okay, so some debtors attorneys are pretty opposed that
You have the
The bit of an uphill battle of a possible rescission, okay
So once that debtor enters into that reaffirmation agreement and you file it with the court
They have some time to rescind that reaffirmation agreement
Okay, they have either the discharge you got to file this before the discharge
better can rescind that reaffirm a agreement up to the discharge date or
60 days after the reaffirmation agreement was filed with the court whichever comes second
Okay, it ever comes second. So
you've got
You've got some negatives there. Okay, but you've got some benefits and that big benefit
Is that debtors obligation on the note survives?
Discharge that's going to increase the value of that note that's going to open up
To other avenues to collect from that debtor post bankruptcy
Reaffirmation agreements are pretty pretty big. So talk with your preferred counsel in your states walk with us offline
These are things that your attorneys should be telling you about
Benefits like we talked about. Okay, so the benefit to you is that that is not discharged. It's a more valuable asset in your portfolio
Typically, your attorney is going to do the work
So it's a form and the attorneys going to communicate with letters Council to get that done the sooner you can get that
Desire to enter into an a reaffirmation agreement with that borrower to your attorney
But more likely that attorneys going to have success in getting that done for you
There's a lot of back-and-forth
You typically keep the same terms
But you also have an you also have the ability to change those terms. It's not a full-on low moderate thing
But if you want to shave off the interest rate if you want to shave off some principal in order to help
Convince that borrower to enter into that reaffirmation agreement. You're more than welcome to do that
Okay again, you do that through your attorney
benefits to the debtor usually
This will allow them to receive monthly statements
So those of you that use servicers for your your loans, even though even just the ones in bankruptcy?
Typically when they file bankruptcy those monthly statements are gonna stop
Those of you that report your credit reporting agencies Bursar's that you use that do
Typically a debtor who signs a reaffirmation agreement is going to receive positive feedback on their credit report helping them to rebuild their credit
It also allows your access to loan modification possibilities down the road. This is another big kind of gray area. Where
Different states and different jurisdictions do things differently, but if you have a loan that was discharged in a chapter 7 bankruptcy
How do you modify that loan post bankruptcy if that debtor wants to keep that loan?
That debtor doesn't have any obligation on that debt anymore. So there's some courts that say sorry. You can't do a loan mod
a reaffirmation
agreement
Nullifies all of that concern. So there's a lot of reasons why you as a note holder and
The debtor as a debtor would want to file a reaffirmation
Okay big question I get a lot at get asked a lot how we doing Brady anybody got any questions
They do but I think what we some of these are pretty in-depth and okay what it might do is just
unmute them at the end and
One so they cannot just ask directly. Okay, perfect. Perfect
Well, then I'll just kind of keep on going with the next question I get asked with reaffirmation
remember that can be a powerful tool the fact that you said that you know that makes sure no
You know worth more in terms of it helps its resale value, I would think so. I would certainly think so
So next question I get asked a lot. Can the debtor cram down the mortgage?
Okay. So what does the code say? It's very very clear. It's 11 USC
1322 B 2 the plan may modify the rights of holders of secured claims other than a claims secured only by the
Security interest in real property that is the debtors principal residence
it is pretty clear what that code section says you cannot modify the rights of a first mortgage holder on the
Debtors residential property. Okay, so that's what the code says
But it still happens, okay, so let's talk about it so cramdown
Boiled-down is just kind of legal speak for a bankruptcy court reducing the security interest to the value of the property
So you've got a you've got a note mortgage for $100,000 property's only worth
$50,000 the a cram downs going to willing to allow that debtor to only pay back fifty thousand dollars, okay
It's a big reason why debtors file chapter 13 bankruptcies is to try to get this on non residential property
You know a lot of chapter 13 debtors will have you know
Multiple homes, if it's a property they don't live in if it's a rental property
And this this may be the paper that you're dealing in in this debtors bankruptcy
This is something you need to look out for okay, and you can be crammed down
And that's a big reason why in a chapter 13 debtors can do that can't do it in a seven
Only in a thirteen this happens all the time with personal property. Okay. So what you saw in that initial that initial definition
It only talks about the debtors principal residence
So if you're dealing with a car, if you're dealing with something else like that the debtors crammed down all the time
but on mortgages again the code says
Only that you cannot do that on on the debtors principal residence
The debtor can cram down non primary residences
But if they do that, okay
So if they cram down a non primary residence if they cram down a non primary property
They must pay off that debt fully within that bankruptcy
Okay, that's tough to do because you're still dealing with many many thousands of dollars in most cases
so most debtors cannot do that you however
May not mind that as the note buyer who purchased that debt for a discount who purchased that note for a discount
They may put in the plan a term that you actually like so you may allow that cramdown
otherwise
You would want to object to that plan. Okay, that's where you're gonna find this you're gonna find all this in the plan
so if you're holding paper on
On a on an asset that that debtor is renting out to somebody else or something along those lines
Look and see how they're treating you in that plan if they're cramming you down and you don't like the value they're cramming you down
To you have to object before a certain timeframe and every jurisdiction is different
But again, I was as I was preparing this material for tonight
I'm thinking you know what?
some some people may really like with that value is you're gonna get your money within three to five years instead of
over the course of a lot more
You may you may really like that. So I certainly won't be the first person to tell you that all crammed downs are bad
But the word is a bit pejorative, you know the words basically telling you what's gonna happen. Your mortgage is gonna be crammed down
Okay, and I would just like that you'll never find out you're being crammed down unless you don't unless you dig into pacer gov
Yep
And and look at read
Every because it's gonna be buried it will look when I said when I saw and there's like it's buried under subparagraph page
You know 9 of 27 pages
so you got a
Scheme you got to repeat these things to see what's going on. And anyway, I just want to throw that in there
so if you're looking to see if you're being crammed down you're it's
It just it doesn't say. Hey, you're being crammed down
It basically what it what it did is it said? Hey, here's a here's a lien holder. Here's the asset
and here's if they meet the
if they meet the plan, here's the the prank here's the number amount that they're entitled to and
It did not match the actual you unpaid principal balance. Yep
Completes that bankruptcy and makes all those payments they have successfully crammed down that loan and your habla
T to object to that likely expired many many years before you figured that out. So that's why reading the plan
It's very important if you're looking to buy a loan that's in bankruptcy in a chapter 13 bankruptcy
Read the plan read I wouldn't necessarily trust what that sellers doing. They may not be trying to
To hide something from you. They may just not know how bankruptcy works
If you've got an existing borrower who files bankruptcy, you're gonna get served with a copy of that bankruptcy read that plan
So just a couple of reminders because I think there's a lot of talk out in the space
I hear it at conferences. I hear it in questions that I get don't believe everything you hear. I
Can't really stress that enough don't believe everything that you hear about
Somebody getting their lien stripped this that and the other thing it may have happened to somebody
But there's there's there could be fact that somebody is leaving out. It's I don't think anybody's lying necessarily
I just think that
Some of these are so fact specific
that
You really need to pay close attention and don't believe everything you hear
But but let's talk. Hey, look can it happen? You saw the Code section that says it can't but does it happen?
Sure, sure, it happens. And you know what guys what are you gonna do about it?
So you've got a judge who says?
You know what? I think this debtor can can cram down this first mortgage even though they live in it
I think they can cram it down. What are you going to do? Are you going to appeal that judge?
You're going to pay some attorney what will amount to thousands and thousands of dollars to appeal that judge
I think a lot of judges know that you're not
I just think a lot of judges know that you're not going to do that
These are not popularly elected judges. These are all nominated
Judges, they serve for 14 years they can serve for more after that
You know, so they're not pandering to a certain demographic
But I think at the end of the day these judges are trying to do what's right. A lot of them are in
very sensitive foreclosure jurisdictions
Where there's a lot of foreclosures and they're trying to do their part to keep another house from going into foreclosure
So they will allow it. Okay, if you don't like it appeal them and and I will be honest
I don't know if I've ever had somebody appeal that kind of decision
It's just very costly and at the end of the day that cramdown amount
That's only if they complete the bankruptcy and get a discharge, right?
So if they don't complete that bankruptcy that cramdown didn't take any effect whatsoever
So, I think that's why a lot of people don't don't appeal anything so I did find a case out of the Ninth Circuit
So that's out west
Okay. So here's the facts in that case just very briefly the debtor moved out of her house under the threat of foreclosure
Okay, so she got some foreclosure paperwork?
she decided to pack up and
But before the house went to foreclosure sale, she rented it out. Well, she you know, somebody needed a place to stay
She said, you know what you can take my house. I'm not living into there anymore
I've moved out this person moved into the property. I was paying rent to the to the homeowner
The homeowner the debtor filed a chapter 13 bankruptcy and proposed to cram down her mortgage
She listed that property as rental property
So the question that the court had to ask was when was the determination made of whether it was?
residential first residential property or whether it was a rental property and
The court in that case found no bad faith and allowed the cramdown
Even though she had just moved out was only renting it to a friend to help her out
She happened to go to a pretty savvy debtors attorney who said you know what I think we can cram down that mortgage
So this is a very very fact specific case that
I doubt anybody's ever heard of that name
I've never heard of that name but these are the facts that kind of get jumbled up. Okay?
So these are the facts that get out there so
Unless you really get into the case don't always believe the story that you're hearing about a first mortgage getting cramdown
Can the debtor strip off my mortgage I'm not going to spend a whole lot of time on this
You know because
It really doesn't happen a whole lot
It only happens primarily with second mortgages if there's people that are on here that deal primarily with second mortgages
You're very well aware of what a mortgage strip off can mean
It's basically a lien on a property
That's wholly unsecured
If the debtor files a chapter 13 bankruptcy and does everything right for that jurisdiction that lien can be stripped off
okay, so my example here is
The value of the debtors residence is determined to be one hundred and fifty thousand dollars
Okay at a first mortgage for one hundred and sixty and a second mortgage for forty thousand dollars
Under these facts if the debtor does everything right for that jurisdiction in that bankruptcy that second mortgage is able to be stripped
Every day of the week
Those are these are these are the easiest facts that I can come up with to make this
To make this work if there is even a doll of equity there's even a dollar of equity in that property
After the first that whole second mortgage survives, okay, so that's where you've got some wiggle room
We want to talk about value. We want to litigate over the value of that property
And if you're a second mortgage holder you want that value to be at least?
$1 more than that first mortgage because then your mortgage survives, okay
But again, this is common bankruptcy litigation
If you deal in the seconds, you're aware of this debtors attorneys are aware of this
Again also, very fact-specific so
In this particular case I had I posed a question
So what's the balance of the first mortgage if the debtor strips off the second it's a trick question
The first mortgage isn't cramdown. We just talked about that
So the first mortgage is still one hundred and sixty thousand dollars
even though the
Determination of the value is even though the value was determined to only be one hundred and fifty thousand dollars
So kind of a trick question
in this fact pattern the second is going to be stripped debtor still has a
Mortgage for one hundred and sixty thousand dollars on the house. That's only worth 150. We saw this a lot
several years ago when the market crashed
People had taken out seconds home equity lines
So many people were getting stripped in mortgages people were filing bankruptcy just to strip off a second mortgage
You see them a little bit less now that now that the property values have rebounded
But they're still out there and they're still happening. So
That's pretty much it for stripping second mortgages. I did want to get to some pastry because I'm asked this a lot
What are the documents that are important to review on pacer? Okay
So just a I wanted to talk about pastry, so we're gonna do kind of a live demonstration here
I'm if you can bear with me I need to get to that particular screen. I think I haven't already brought up
I just have to find it. I
Think this is not it
I think it's right and Paul tab works really well to toggle between Italy yeah
Hmm shoot shoot shoot I
Wanted to show you I haven't brought up. It's right here. How do I get to it? Let's see
Okay, are you able to do you see this screen you see this paper spring ready
I'll to the top five know by our questions to see your PowerPoint still. Okay, okay
So now I need to go and share this screen. Do I you have two screens or just one I
Have just one screen. Okay, please. I think you shouldn't be able to just do all tab
Hold all the key data tab and toggle through. There you go. Okay, okay
So this was a plan or this was a bankruptcy from the Southern District of Indiana
This was any case that I was working in the other day, okay
This is your basic main pacer screen
Now I could spend I could literally spend hours days talking about all of this on pacer
So this is truly truly just going to be a very very high
Overview of what I look at and what I think you should look at that's important when you're looking at pacer
Okay not going to go in here go here gold warning pure gold
You know, this is not
You know, this is this is again. Hi. Hi overview of this stuff. So when I'm looking at pacer, okay
If you are looking at let me put yourself
Let me put myself in your shoes. If you are looking at a debtor in bankruptcy, you're looking at purchasing a nuke
You're gonna want to look at several things. First of all, you're gonna see if they even filed bankruptcy
You're gonna want to see if if what you're looking at
If especially because social if you get a social man plug then into pacer and that pace that will tell you everything
I know you don't always get socials when you're looking at paperwork, but if you do check it out
So you're gonna eventually navigate yourself to this main pacer screen, okay
the big things that I want you to look at is
First of all, especially if it's a chapter 13, I want you to look in the claims register
Okay, so that's the first thing you're gonna do if you're buying a loan that's in bankruptcy look in the claims register
Okay, you don't need to click any of this stuff. You don't need to fill anything out just run the report, okay?
and
Then you've got this particular debtors claims registers. These are all the proofs of claim that were filed in Jody's case
Okay, so the scupper Bank Wells Fargo Bank, Indiana Department of Revenue
You got all these people that filed claims all these companies that filed claims
Okay, and then you're gonna get yourself down here and this is maybe the property that you well
This is maybe the property that you bought right here. You bought this loan from Wells Fargo Bank, so you just want to make sure
That you are buying a loan that has had a claim filed in that debtors bankruptcy
Okay
Again, because we're talking about that these proofs of claim need to be on file, okay?
Just because there isn't a proof of claim doesn't necessarily mean you shouldn't buy it
It just means you should probably talk with an attorney or a more seasoned note buyer about you know, hey
Is it still good?
You know
Am I gonna get paid those kinds of things a bankruptcy unfortunately is extremely fact specific in in many many ways
And this is one of them but this is kind of a nice general way that you can see what's going on with your case
okay, so
Let's use
Okay this
Is good right here? So let's say you bought this from
US Bank Trust National Association. Okay, this is your property
You know what your property because the numbers line up. There's a proof of claim that was filed nine point one
Anything related to that claim. So anytime that payment changed anytime that claim was transferred
Okay
All of that's going to be listed under that so it looks like there was a payment change that was filed at some point
And there was another payment change
Briefly talking about payment changes those need to be filed any time a payment changes in a chapter 13 bankruptcy
so if a
Interest rate increases decreases if that's kind of that's if it's that kind of a an adjustable loan
If taxes are going up so or taxes are going down. So the payment changes and they're escrowed
You need to file a payment change again. That's that's a topic for another day. So this is a very valuable screen
This screen it tells you kind of what's going on
With the case it lists the property address the whole nine yards. That's a good place to start
okay, so we're gonna navigate our way back to
Hopefully I can do that easily
Back to that main screen. Okay, the next big thing. I look at I live in these two sections. I live in that
In that claims register section and I live in this section the docket record. Okay. Um,
So you're gonna pull the docket report. I like to pull the oldest date first
Because that's gonna take you in chronological order from when the case was filed, okay
So the first thing you want to look at this is what when you hear somebody say show me the Pacer
This is typically what they're talking about. It's a docket
This is everything that's going on in the case goal like Brady said this is goal. Um,
You got some things to look at right up at the top
Okay, you could see the bankruptcy case number you can see when the case was filed
you can see when the plan was confirmed if it's been confirmed if
We're before the meeting of creditors that will tell you when that is so look at this case. This case was filed
August of 2016 and the plan didn't confirm
until April of 2018
almost
Darn close to two years later usually a plans going to confirm within about six months
So the fact that this took three times that long means there's probably some stuff going on before that plan confirm
discussions over value
plan objections dealing with a variety of things
Until that plan is in a confirmable position. It's not going to be confirmed and you may not be getting paid
So you want to do everything you can to help get that plan confirmed. So in this case plans confirmed?
If you're looking at buying this note, that's going to tell you. Oh boy. I've to see what's going on with this plan
I've got to see how my property is being treated
So you want to find?
wherever it is on here and control find control F can be your friend in this you want to find the
confirmation order so you know that that plan confirmed on 4 9 18 so scan down to 4 9 18 and
That will likely be around the date. Oh
There it is right there the order confirming the chapter 13 plan
So document 88 was the plan that was confirmed
Okay, you don't want to look at the first plan because the plan may have been amended
So you want to look at that order that confirms that plan and you want to look at the plan that was confirmed
So it confirmed plan number 88. So let's go to document number 88
By the way, you're getting charged for this every time you access pacer
Okay, so when we pull this plan, I'm gonna get a bill for 50 cents to pull this plan. Okay, 5 billable pages
There's a limit. I don't think it's more. So it's 10 cents a page. I think the limits 40 pages
So if you're pulling up a document that's a hundred pages
You're only going to be billed for 40 pages. There's a 40 page max. So, let's take a look at this plan
now despite
There being a form plan
A plan form different jurisdictions still use different versions of the plan
It's it's not when this all changed about a year year and a half ago
We were really hoping for a little more uniformity. It just didn't happen. There's still different plans being used. So
you got to read the plan and
Honestly trust an attorney to do that for you
But if you want to do it go right ahead read the plan and in this particular plan
You're gonna go to oh, look, there's the loan right there. Okay
So we've got payment of secured claims relating solely to the debtors principal residence
So they're coming right out and saying this is the debtors principal residence. They list it right there
They're estimating some arrears
Now if you're looking at this and you're pre confirmation and you know, the arrears are $20,000 you want to object to this plan?
Okay, because the debtor is only saying there's $12,000 in orders
Okay, what this plan confirmed with an estimation at 12,000 dollars in arrears, and it's a trustee pay
I actually prefer trustee pays because then the trustee is also keeping track of what and when the debtor is paying
Okay, the trustee can basically act as your bookkeeper to some degree
Okay, but that's not the only place you really want to look. Okay. This is the best place to look
This is the first place. You should look to see what's going on with with the property
But you also want to go to the end and at the end
you're going to see a
Section this particular jurisdiction calls them non-standard provisions, okay
This is where you're going to see some weird things
You may see things in here that says the debtor proposes to not make any payments for the first three years of the plan
If that plan confirms with that provision in there, that's a valid plan provision
That's something that I would object to you want you want monthly payments coming in?
That at least total what the current monthly payment should be and if there's a rear edge you want payment of your arrearage as well
Again the plan is honestly something that we could truly truly spend days on and we've got people from all parts of the country here
So that's about all I want to look at on the plan
Things you want to be aware of if they didn't properly list your mortgage like they did here
Right there
You can't see me pointing at my screen, but I actually did just point in my screen
You know, they listed it here. Let's say they wanted to list it
Under surrendered or abandoned collateral you would want to know that? Okay. The plan is your friend
It may not give you good information. But friends don't always give you good information, right?
So you got a look at the plan and look at the plan that confirmed because there could be multiple plans
filed
Before the last plan was confirmed
So that's the big thing you want to look at now
if you were looking at this case, if you already have this property and this debtor filed bankruptcy, okay on
August 2nd 2016. That's when this debtor filed bankruptcy
You'll get a notification to that probably a week or so after because the courts gonna mail that to you, okay?
so you're gonna get
Notification and you're gonna start looking at what's going on
And you'll want to review that plan let's see where the first plan is here
So the first plan. Oh, you filed it the same day. Usually they're gonna file it the same
They filed a voluntary petition. They filed the first plan
So that's the plan you're gonna want to look at and engage counsel or engage somebody who who can help you out with
reviewing that plan so
Um, those are the big documents
Okay, the plan I cannot stress it enough the plan the plan the plan
Okay, if you catch this bankruptcy early enough if you're buying a note that's in bankruptcy
You're gonna look at the confirmation order to see what plan with
What information is in that confirmed plan? If you've already got the note in the debtor files bankruptcy?
Honestly
You're at a very weak position if you sell that banker
If you sell that note right there I deal with a lot of people who soon as that loan goes into bankruptcy, man
They want nothing to do with that note and that honestly, if you ask me that may fit your reasoning and that's fine
I certainly want won't try to dissuade you from from a certain style of investing
But that that may be that may do wonderful things for you that debtor filing bankruptcy
Especially if they're in any kind of arrears to you
Could save you from an from expensive and lengthy foreclosure. There's a lot of things that a bankruptcy plan can do
So you'll just be you know, look through here
Things that would interest you things that interest you would be the trustees objecting to the confirmation of plan
That may be something that you want to read
Again you're gonna be charged every time you look at something so, you know pick and choose a little bit more
You'll learn hearing dates. So the hearing on an objection of confirmation of plan
These are all alarms. That should go off in your head
If things are happening in the case have somebody help you review that review the pace or like that?
What else on this main pacer screen
Parties are sometime helpful. If you want to get ahold of debtors counsel now again, don't forget that debtor filed bankruptcy
Okay, so you can't be working with that debtor. You've got to go through their attorney
So if you go to that party screen, you're gonna get all that information
Okay, you're gonna get that debtors attorney
So if Jodi's your homeowner dope Jodi's your uh your person on that note you can call. Mr
Bhatia now, I've worked with mr. Modeski. He's not gonna call you back, but you've got his information
So give him a call you can email him and his email address here
Sharon that's one of the one of the ladies that works in this office. She's wonderful. She will call you back
You've got the trustee here. So if you've got claims questions from the trustee, you can call the trustees office up
You you have a whole wealth of knowledge here right at your fingertips for just a few pennies
And a little bit of time
That's about all I wanted to cover with pacer. I hope that's not disappointing to most of you. I
Truly could spend hours going through a petition and everything
But those are the big documents that you really should review on a on a patient
you're wondering that and so
we give tapes that are often out of date and then I have notes on them like vk7 and BK 13 and
And if you go to pacer gov you might find that there's they've already started a motion to dismiss
Yes
So that's always helpful
so just because your your tape says, you know active BK or you know, this it
There might already be the minority. You don't want already documentation there that they're they're working on
Dismissing the case. Um, what how do you know?
What is it? What does it call when it's fully like what this smells like it's done
You're you failed your BK and it's over. What is that? I'll call that for god. That's a dismissal. Ah
Okay
dismissal, and you will see that
You can see the screen everyone Brady yes. Oh
So let's go
Go back into that case easily I can
Okay, so back to that docket report, okay
You would see
This section not that section this section right here what I've got highlighted here, this is where you
This is my favorite section honestly on a page. Okay, this is going to give you
All the information. So if this case was dismissed, there's going to be a line here that says dismissed and it's gonna have an eight
If it was discharged it's going to say discharged and it's gonna have a date so if that
Debtor is discharged on say say this is the discharge date 11:30
2016 and you're looking at a note that was entered into on on 12 1
2016
That debt wasn't part of that bank receipt, okay
That's something you would want to know
Then you can you can stop right
You don't even know who look at pacer anymore. Because if you're old if you're holding a note that was entered into on 12-1
2016 or after?
That's not part of that bankruptcy and you can just you don't even need to look at pacer anymore. Okay?
So that's where you would find that Brady right there
nice
So let's head back to that slide show
Um, I think this is we're getting towards the end here
But I wanted to talk about another
question that I'm asked and I think this is our sixth question that this is a bonus and so
Question, um, what are the cost and benefits of certain pleadings in bankruptcy cases? Okay, so
To combine two things because bankruptcy is not cheap. Okay
nobody's gonna tell you bankruptcies cheap
But you don't always need to file certain pleadings
And/or, you may want to file certain please. Let's talk about this. Okay. So here's your general here. What do I have after this?
Okay good
So these are some general
Costs this one's you know, we're still seeing your face your screen. Oh you are I'm sorry, not our
Hold on
Here we go, okay, let me go back there we go general costs. Okay. You see the greedy?
Yes costs
I'm sorry. Did you you can see this screen general cross? I'm upgrading the root screen. Okay, perfect
Okay, so just briefly and and most of your attorneys they should be following the Fannie Mae fee schedule
Okay, so it's the Fannie Mae fee guidelines. This is as of 7:21 when I pulled all this information
Okay, so this is what pleadings cost in bankruptcy
Common klieg there's tons more pleadings, but these are the most common ones, okay
So a motion for relief from stay seven fifty four seven eight fifty four thirteen plus your filing fee
Okay, so that that's not a little bit of money. I'm not going to tell you that that's not a little bit of money
That's a chunk of change. Okay
You may or may not want to file a motion for relief from stay
But if you don't you could be limited
We're gonna talk about some some musts and shoulds here next but but I just want you to kind of take a look at this
A plan review and a proof of claim
These are kinds of I call these kind of an insurance policy in a bankruptcy
If you're holding a note and that debtor goes into bankruptcy
You really want to have an attorney review that plan and file that proof of claim unless you know exactly what you're doing
plan objection
So if that attorney comes back to you and says you wanna I've reviewed that plan you want to object
Because they're trying to cram you down
I'll play an objections gonna cost you some money
If you buy that note from another note buyer and you need to file a transfer of claim, that's 150 bucks
Payment change notice response to notice a fund. These are just kind of common pleadings
We talked about reaffirmation agreements. Those are two hundred and fifty dollars a notice of appearance. This is not a
Fanny allowable feed type what that means
And and where you may see some differences in what attorneys charge you attorneys across the board should charge you most of these fees
Notices of appearance you're gonna find it a little different. I kind of price on our structure right in the middle
I see some attorneys only charging 75 bucks for a notice of appearance
I see some attorneys charging
Several hundred dollars for a notice of appearance all that notice of appearance means that once I enter a notice of appearance for you
I'm going to be notified of anything good or bad in that case and
We may have an agreement that says I'm going to let you know what's going on in that bankruptcy case as we go
Okay, so that notice of appearance is going to mean different things to different attorneys
So if you're having attorneys across the country filing notices of appearance
Make sure you know what you're getting if they're charging you something to file that
So for you to take a father here, I have a similar question someone this charting
I'm I'm looking at tweaking my RI calculator and I just bought a BK 13 file
Which of these?
Fees do I need to put into my heart I calculator
Is something that I know I'm going to have to pay for
It's like you're you're going to have to pay at a minimal these you know, which one of these these pleadings
will or minimum requirements if you buy a note that's in BK 13
Minimum you're looking at one hundred and fifty dollars for a transfer claim. Okay, best best thing the best case scenario
Transfer claim one hundred and fifty bucks that transfer of claim is basically just telling the court
This was the old buyer. This is the new buyer or this is the old note holder
This is the new note holder that tells the court where to send the payments that tells the court where to send any
notices that have to do with the bankruptcy
That is the basically the bare minimum
For exactly the situation you're talking about Brady. See your vine alone. That's already in bankruptcy. That's what you should be looking at
Now if you know that loan is not
Performing. You probably want to budget in the cost of a motion for relief from stage
You can get that out of bankruptcy or so you those payments in the high gear?
so
If you know that note is not performing in
That bankruptcy it may not have performed before the bankruptcy
But if it's not performing during the bankruptcy
You're gonna want to factor in that either
150 or 850 plus your 181 dollar filing fee. So that real quickly has the up to a little over a thousand bucks
Okay. So those are some big numbers if you know it's not performing
Factor in a motion for relief from Stacey what if I change loan servicers? Um
Well, it depends if the payment is going someplace different you're still transferring that claim
You're still transferring that from from one recipient of that payment to another recipient of that payment
So you'll still have to file that payment change just like if it's staying with the same servicer
you're still the holder of that and the holder has changed that the
Possession of that note has changed so you still need to file a transfer, but I would about the payment of change notice
Payment change notice. Okay, so anytime during that bankruptcy if that payments going to change
Okay
So you've got an adjustable rate note that you've worked out you have it's for some reason it's escrow and you're paying the escrow
Whatever if that payment is going to change to that borrower at least 21 days
Okay, at least 21 days prior to that payment change taking effect
You have to file with the court a notice of that
payment changing called a PCN payment change notice notice of payment change a lot of different terms for
But the fee for that's one hundred and twenty five dollars
Attached to that notice. Okay. It's a I think it's a two-page document
Attached to that notice is proof of what is changing. So if the escrow is changing you're going to attach an escrow analysis if the
If the payment is changing because of an interest rate deduction
You're going to attach proof of that deduction and look exactly we're not maybe
What's that? Maybe the property taxes went up property taxes went up exactly exactly
So anytime that payment is going to change if that debtor is in a bankruptcy. You have to file this you must file this
Before 21 days or more before that change takes effect
But one more question these in these these prices here. Is that are these attorney cost?
court cost or a combination of both
Well, I split it out. That's a good question. So these are all your attorneys costs
Your attorneys should be filing the fannie mae fee guidelines
If they're charging you more find another attorney unless you like them that much if they're charging you more. You should find an attorney
Who's following these guidelines? There are industry standards if you will
Okay. So the only filing fee on here is the motion for relief from stay and that's 181 dollars a
Transfer of claim I should have put this on here. I'm sorry a transfer of claim
has a
20 has a $25 filing fee as
a $25 filing fee
So that's the court that's what the court gets now your attorney will pay that and then bill you for that a reaffirmation agreement
There's no filing fee. There's no filing fee for anything else on here
Not a whole lot has a filing say put it that way
Okay, so when must you file a pleading, okay, so if the chapter 13 is filed
You must review the plan and file a proof of claim for your property. That's a review
We've just talked about that before if you don't like your treatment in the plan
You must object to the plan
If you don't you're going to be stuck with your treatment in the plan if you acquire a note in bankruptcy
You must file a transfer of claim. We've just talked about that
We just talked about the next one if the payment changes you must file a notice of payment change
When the trustee files a notice the final cure, okay. This is kind of a new one, too
A lot of people. I just had to educate someone on this today in a chapter 13 bankruptcy
If that trustee is paying the cure payment, so if that trustee is paying on the arrearage that was on that note
When that arrearage is paid off that trustee is going to file a notice a final cure
Okay, you must file a response to that. That's what the code says you
Must say I agree
The loan is now come the loan is now current or you must say I disagree the loan is not current and then you attach
of that so when the trustee files that notice the final cure you must file a response if
You want to and if you're able to cuz some states and jurisdictions have different rules
If you want to and are able to charge the debtors account for something
You must file a notice of the expense or charge so that attorney that charges you for that motion for relief from staying that thirteen
You may be able to attach that to that debtors account
But in order to do that, you have to file a notice of fee expense or charge
Typically, you're dealing with servicers and your servicers are gonna know that and they can help
They can help you with that
So when should you file a pleading?
Okay, if the account becomes delinquent, you should consider at least consider filing for relief from stay
So if you're in a chapter 7 bankruptcy
Account becomes delinquent, you should consider filing for relief from staying get it out of bankruptcy
Move it back in a state court
Work out some other agreement during that bankruptcy after you file that motion for relief from stay
There's a variety of reasons in a chapter 7 context. You should consider soliciting that debtor for a reaffirmation agreement
These aren't Musk's. Okay. These are when you should consider filing the pleading
So the scenario that I was about to go into a chapter 7 case typically lasts four to six months
But if there's an asset it could last a year or more. So what should you do?
If the debtor is behind or surrendering, you court
You should consider filing that motion for relief from stay. Ok reason being
Especially if it's an asset case
That debtor is not caring for your property. I can assure you they are not they are not taking care of it
They're not cutting the grass. They're probably accumulating fines
They're they're not paying the taxes the insurance none of that
You should consider filing for relief from stay in a chapter 7 in all cases
especially if they're behind or surrendering that property once you get relief from stay you can go straight in the state court and
Move forward with your forfeiture your foreclosure action
if the debtor is current under those circumstances
I would look into that reaffirmation
agreement and I would look in doing that as soon as possible because you have a hard cutoff date of
discharge
okay, so that debtor can get a discharge and that case could still be open for a while if there's an asset if there's something
that the trustee is working on so
Those are kind of two scenarios in a chapter 7 where you should consider doing something
That concludes the presentation
So
that's all of my information I
Would love to take some questions. So let's go back to that screen
How about that Wow that that was some
Fantastic room and that that's definitely one of those. Okay, I gotta go back and replay that again
Okay
Okay
How I can see questions and stuff Brady. Let me sure no, no worries. I'll have on policy
I'm going to completely butcher his name
let's
Talk about me it's straight. There you go
Yeah, just like Donnie amuse you had a question. So I thought I'd uh is going in a mutual IQ. Um, yeah
Tony by the way, I'm your current customer. I know how are you?
Good, how are you? Good
So from his npn ii non-performing second perspective in chapter 30, and I know they try to strip the second. I know
look for that and
You said that the intent of the borrower is not clear in Chapter 13. So what are the documents? Should I be looking at to
Other than motion to strip
Um
You're gonna look at that plan that plans gonna tell you what's going on
So if that debtor is trying to strip that lien, it's going to be listed in that Bank. She plan. Yep
I know that he's there anything else that I should be looking at? I?
Look for a motion to strip. Look for an order. I look for a motion to cram down or to strip look for a
Motion for that if it's not been ordered yet. Look for an order that that says that
I like to object to those. I will tell you that
Because I want to make sure there's something honor that says this this this mortgage is only stripped if the debtor
successfully completes the bankruptcy
So that's what you should be looking for
Okay, and just to come from I don't wanna take up too much time, but you are in Illinois. Yes
All right. I just want to notes in a life second. That's correct. We're in all
Right on. Thank you contacting
Thank you very much. Thank you ready?
Hey, no worries. I'm glad you I'm glad you joined us tonight Brady. I'm trying to get back - there we go. Okay, cool
let's see you get another one that's that's the
Question here. Okay, so
if you had if you hold a second on
a bankruptcy petitioners
second home or rental property
Can you avoid a cramdown by entering into a?
lender to lender agreement with the first
to cover the first
Something sense
Is when a banker on a bankruptcy petitioner second home or rental property
Can you avoid a cramdown by entering into a lenders courlander's agreement for the first?
to cover the first I
Don't really understand the question but if I'm a debtor or I'm a debtors attorney
First of all, I need to be involved in that you have to go to the court to do that
I would never allow that as a debtor or as a debtors attorney
I would I
Would be hard-pressed to think of why I would want that if this is not my personal if this is not my primary residence
I think that I would need a lot more information. I think I think that's going to be fact-specific
Okay to whoever had that question shoot me an email and we'll find a time to chitchat about it
Fantastic, I'm commuting
t Meisner
Guaranty Meisner
Think I'm you did you there
I'll see where is T
Meisner unless he left
Still here
His question was he has a note that he purchased
The borrower have a note that a purchase that the borrower filed chapter 7 that was a discharge about six years ago
Unfortunately, I don't have a reaffirmation agreement on the note
The good news is they are paying on the note, but I'm concerned that they may stop again someday
what would be the option if that happened a
Good question. You can go right into Fort Wright in a state court whether it would be a forfeiture or a foreclosure
It depends on I think you said it was a note not of contract. So it would be a foreclosure
and
Foreclose on that property you would only be able to get in an in rem judgment
It's called you'd only be able to get your property back. You wouldn't be able to
Sue that borrower afterwards for any kind of shortfall that may have accumulated
During the foreclosure sale. That's what that Chapter seven
Took away from you as as Lima or took away your right to to sue them on their their
deficiency balance of that
So no not much in all honesty
You didn't lose you didn't lose what you didn't already have basically look at it that way next one. Thank you
I think this is a second question in your experience. Do BK judges differentiate between a
petitioners simple financial dialogue versus any intent to defraud a second lien holder
Well sure, they'll look and see when that second was taken out so if that second was taken out recently and the money was spent
You know, there's definitely a look-back period
there's definitely there's definitely
Potential for fraud there. I think we can all think about scenarios like that and it's all a reasonable standard
so if that debtor took out that second mortgage, you know 10 years ago for
You know for a reasonable amount depending upon the value of that mortgage ten years ago, and that money is gone
You know, I was spent on a lot again ten years ago
There's not going to be fraud there. But if it was taken out, you know a couple of months ago and
The
If we stick it out a couple months ago then they file bankruptcy you want to strip off that second mortgage. That's a problem
So yes, you are dealing with fraud you are you are meaning to talk to somebody you are needing to talk to an attorney
Hopefully you can catch that before the 341 meeting of creditors. So every single bankruptcy case has a 341 meeting of creditors
341 is just a Code section that mandates this this meeting of the debtor and creditors
Typically happens in a room full of other people that are all filing bankruptcy
You know where and when that debtors going to be there and if you can get your attorney
That information. Hey, I think this is fraud the debtor took out the second mortgage two months ago
Now they're filing in bankruptcy and they're stripping off
My second mortgage that attorney can go to that 341 meeting and ask some some very specific
Questions to start to get to the bottom of whether or not there might be some fraud
and then report back, you know, it may be that they took out a second mortgage to
to live
You know if those are if that money was spent on ordinary allowable living expenses food clothing water shelter things like that
Probably not fraud. But if they took it to go on a worldwide vacation and then filed bankruptcy, you've got some issues
Great thank you. Next question. If an LLC owns the note I can come so so you find a note you buy
If the LS he owns a note does the LLC need to be registered in that state too. Well, this this question says file
Which I guess would mean make sure you file your proof of claim. Yeah
And no no any any for federal court like that
No
if you are the holder of that note if you are entitled to enforce that note if you
Have that if you are the owner of that note, you can file a proof of claim and you need to file a perfect
And you don't have to be registered with that state as a foreign entity. Correct? If this is federal
Yes, correct. Okay, excellent
going down to
Them all
So, I guess that's it um, oh can you put the contact and your contact information back up oh
Let me see if I had this all figured out earlier today. Let me see if I can do that
I'll give you a trimming. I know you showed me an easy way to do that
Not I'm stopping sharing. So you're in control. Okay, so I'm in control. I'm gonna share my screen and I'm going to share. Oh
You know what? I already I got rid of it
Yeah, you're close Bartlett. Hold on share screen
Okay, let's go back to Brady's in training
And
The last what you're doing that
could you go over the definitions of
dismissal and versus or compare contrast dismissal and discharge
can you see that screen I still I still see the
paper resume share
See we're gonna have you you're gonna be like working the circuits after after this, yeah
I can't I'm easy to find on Facebook put it that like oh, yeah
I just can't I I'd rather pay attention to the question than then. Yeah, come on
Don't be seen in crew and he's gonna answer you tagged him. Yeah
Yeah, that that's true. So there's a point. Yeah
You're very very accessible. I try. He's like a rock. So I think the question was to kind of compare contrast
Dismissal versus discharge, is that correct?
Yeah, the definitions sure very similar sounding and looking words could not mean anything
More different, okay
We're looking at a bankruptcy and you see the word dismissed you need to cheer for that
Okay, because that means it's like the bankruptcy never happened. Okay
So if you're if you're purchasing an odor you're already involved in a note in that case
Dismisses you go straight to state court. You don't have to Pasco don't collect $200 go straight to state court
If you see dismissal, or I'm sorry, if you see discharge, okay, that's something you need to worry about
That's that's where you need to look at. Okay, what what happened in the case was my loan discharge?
Did I have a was this a second that was discharged in the case?
You know, you may be looking at a lien, you know three Street
This recants with street street camp was talking about some seconds there that you know a plan may say strip
Mean that you know, the debtor may be two years into a five-year plan and then gets dismissed
You know if you're looking at that if Sri, Sri cants looking at that
That dismissal
Negates that lien strip. Okay, so Sri can still has two seconds
so that dismissal is very very different than a discharge if he's looking at that same case and he sees discharge and
Part of that was that second there's nothing to collect on. There's nothing to collect on that lien was discharged in a bankruptcy
stripped off in that bankruptcy
big difference
And so that mainly impacts the second limo because that's my understanding the first thing holder even though it's stripped
The person's not Mike and Kirk never wronged. The person is no longer
On the on the hook for that payment
But you can still for and get your ass in that correct?
Oh, yes almost definitely most definitely that's that's what you should do
You know just you you may not be out there to to collect financially from the borrower
If they if they want to surrender your property
So bankruptcy doesn't really matter to you in that regard. You may just want your property back
So if that debtors in bankruptcy that may slow that down there's things that we can speed up
Filing a motion for relief from stay things like that. But if your goal is to get that property back
Yeah, what you what a discharge does is it is it is it takes the debtors liability off of that note it?
doesn't
Take your possession away from that note put it that way
nasty
Well, that's all the questions. I see you here today, you know, they're I
Notice on through social media. There were three there are two other
really fantastic
folks putting on events this evening and you may have had something local that in your in your local area that to attend to I
Know it's here. It is probably 8:00 8:30 at night and central to in circle time and and you're hanging out with us
I will tell you it is an hour and a half past my bedtime
You're thinking oh, you know, we've got probably what 18 attendees here that showed up, you know, that's great
So I'm so comes just so grateful that you guys
you know took some time out of your day to kind of smart yourself to do some continuing education in the note space and
maybe now if you see assets on tapes that have BK 7 or 13
You won't be so hesitant to take a second. Look at them
And I couldn't second that any more no pun intended. I
Really appreciate this Thank You Brady for the opportunity. I'd stay up two more hours
I might not I might not function very well. But I would gladly stay up. Hit me up at 4 o'clock tomorrow morning
That's when I'll be right out of bushy-tailed
Yeah, all right well if you want to stop sharing your screen, that'd be just fine you can stop sharing can do boom oh
that's it guys, so
Go out and now work those tapes
Now, you know how to work pacer we've talked about
Six, we got not only do we get five we got six
great tips on
And the latest and greatest information on bankruptcy in and with this topic. There is a lot of people I showed up
This is my me something we need to do once a quarter. I
Am very good with that
a lot of it is it's situational like there's a lot of people entering this space and
It's one of those there's so much information. You're like I my brain can't handle
Bankruptcy right now, right but maybe two months down the line
You're like, oh I got this banker BX that said I remember someone had this video about that
Maybe I can go watch that video, you know kind of just in time learning
Yes, there's so much out there so so much diversity and in the notes, what are your first or seconds? And
so anyway
We're gonna put this out
We're going to make these part of the archive
So you'll be able to access this for many years to come and we'll definitely have to do this again
Thank you. All right. Good night. Y'all have a great evening
Bye-bye
Night everybody see y'all later
You
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