Cash for Clunkers

Prior to the 2011 decision, In Re: Ransom, courts were split as to whether a debtor in Chapter 13 could take an ownership deduction (currently, a $496 deduction) on the Means Test if they owned the car free and clear of any liens.

However, there was general consensus, among the courts that disallowed the deduction, that a “clunker” deduction of $200 could be taken if the debtor’s car was over 6 years old or had more than 75,000 miles on it, based on an allowance in the Internal Revenue Code manual.

Since the U.S. Supreme Court decided Ransom a year and a half ago, a number of courts have held that the clunker deduction is no longer valid.  So far, it would seem that none of the bankruptcy judges in Wisconsin have ruled on the allowance of the clunker deduction on the Means Test.  Whether this changes remains to be seen.

Default Mitigation Management

One of the biggest hurdles with the Mortgage Modification Mediation Program (MMMP) has been documentation.  To say that the underwriters are fussy would be a gross understatement.  More than just filling out forms and submitting supporting documentation – you’ve really gotta dot the i’s and cross the t’s.  Unfortunately, this means that we spend more time chasing down papers, figuring out exactly what’s wrong with them, resubmitting, updating stale papers, and… frankly, it is a ridiculous feat of endurance for us to get to the substance.
Last week, I tweeted that the Bankruptcy Court would be training us on the use of a new document portal – which would then become mandatory.  Well, we had that training yesterday, and I’d like to share some of the highlights.
The portal system is being run by Default Mitigation Management.
It has security features built in to the set up process so that only the parties associated with the loan modification will be able to see documents.
Everything is date and time stamped.
Everything is accessible from debtor’s counsel, the mortgage servicer’s attorney, and the mediator.  This will shed more light on the procedural side of mortgage modification mediation, making the whole process more transparent and creating more accountability.
I expect the Bankruptcy Court will be making this program mandatory once the three training sessions have concluded.  Holbus Law Office intends to implement the program immediately, as soon as our registration goes through (expected to be completed by June 6).
The cost is a mere $25 (one-time fee per account).  Clients can roll this in with the mediator fee ($125, for a total payment of $150).  The DMM fee, like the mediator fee, is refundable if the lender declines to participate in mediation.
A client account will be set-up immediately once the debtor is ready to file the motion to participate in mediation.  This will allow us to see EXACTLY which documents the mortgage servicer will be requesting for your modification application (though it doesn’t rule out the possibility of additional requests at later dates).
Although the client account will be set up immediately, the fee isn’t incurred until all of the documents are ready to be submitted to the lender.  Subsequent submissions and updates will not be charged additional fees.