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Kevin's Corner

Practice Management Tip on Giving Your Clients Tape Recorders

"Here's another interesting tip that I picked up at Max Gardner's Bankruptcy Boot Camp back in August.

"Consider giving each of your debtor clients a cheap tape recorder that they can use to record calls from debt collectors, establish violations claims, and ultimately build better cases in courts.

"While the automatic stay prevents creditors and debt collectors from contacting a bankruptcy petitioner during his or her case, we know firsthand how collectors will often circumvent this court order and try to intimidate our clients.

"By giving tape recorders to our debtor clients, we may help them capture some of these possible violations and maybe even get them some money as a result of harassing creditors.

"Of course, when giving a debtor a tape recorder, you will need to go over some important ground rules with them:

  • make sure that they understand your state's laws for recording phone calls (some states have one-party rules in which anyone can record a phone call; other states have two-party rules in which both parties have to consent to recording);
  • get their assurances that they will use their tape recorders -- if they don't seem committed to using their tape recorders, it may not be worth the effort (reinforce to them that recording calls and using these tapes may be worth money to them);
  • tell your debtor clients to inform the debt collector that they are already represented by an attorney and that the conversation is being recorded (this will often make the harassing creditors even more mad and prone to violations);
  • make sure your clients understand that they are being recorded and that they should avoid swearing (or the tape will be damaging to them); and
  • confirm that they understand that they must maintain custody of the tape (no tape = no claims).

"By getting your clients to understand the potential value of recording illegal phone calls from debt collectors and ensuring that they understand state recording rules and what they must to do, you may go a long way in making their bankruptcy cases even more worthwhile."

- Kevin Chern
President, Start Fresh Today

Full Disclosure: An Important Reminder

The U.S. Trustee Program made 1,163 bankruptcy-related criminal referrals in fiscal year (FY) 2007—an increase of 25.7 percent over similar referrals made in FY 2006, according to an Executive Office for U.S. Trustees report.

Last year the most common charges were bankruptcy filers making false oaths or statements (46.9 percent) or concealing their assets (41.5 percent). Bankruptcy fraud schemes (23.6 percent), perjury or false statements (23.3 percent) and identity theft matters (16.8 percent) were the other allegations listed in the report.

This report serves as an important reminder to us attorneys—we have a responsibility to consult our clients to use full disclosure when they file bankruptcy. For more information, view the full report here.

The Numbers Game

Here's a roundup of some important statistics to glance at since our last newsletter:

  • Consumer Borrowing Slows – according to the Federal Reserve, consumer borrowing grew at an annual rate of 2.1 percent in July – the slowest rate since the 1.9 percent rise in December 2007. This pace has been attributed to the slowdown in demand for car loans, which only grew .5 percent in July as compared to a 6.1 percent growth in June.
  • Foreclosures Increase at Slower Rate – According to RealtyTrac, August foreclosure filings were up 27 percent compared to the same time period a year ago; however, last month's foreclosure rate was at a slower pace than this past June and July, when foreclosures were up more than 50 percent.
  • Budget Deficit Jumps – On September 9, the Congressional Budget Office reported that the budget deficit will increase 246 billion this year due to increased government spending and a lack of tax revenues. This increase will bring the overall deficit to $407 billion.

On the Bankruptcy Calendar

Start Fresh Today President Kevin Chern can help you get a "preferred tuition" discount of 15 percent for Morgan King's Bankruptcy Academy on discharging taxes, taking place on October 31 and November 1 in Boston, Massachusetts.

Here's how:

  • Enroll here.
  • To get the 15 percent discount when enrolling, enter the following coupon code, kevin2008.

Other bankruptcy-related events of interest during the next couple of months include:

Are we missing anything on this list?

Let us know by shooting us an email to newsletters@startfreshtoday.com with any upcoming consumer-related bankruptcy events.





Introducing the SFT Prepay Functionality Program

Did you know that you can pay in advance for a set amount of our packages, courses and/or due diligence items with our Prepay Functionality Program rather than having to pay each time you set up a new client?

For example, let's say that you have around 30 clients a month. With the Prepay Functionality Program, you could prepay for 50 packages at a time for the month, thus allowing your clients to self-register without paying any fees or giving you the ability to set up your client at your office without having to pay at the moment.

Here's how the program works:

  • If you want to participate, simply fill out our Prepay Authorization form.
  • Upon filling out the form, you will receive a Promo Code that will be set up for the amount of items that you have paid for.
  • When self-registering, your clients will need two codes: 1) an Attorney Code to set up their accounts and link their information to your account and 2) the Promo Code for the payment section.
  • With the Attorney Code, you will be notified each time a client is certified.
  • With the Promo Code, SFT will be able to tell when your packages are running low and then replenish them if you wish.

To learn more about our Prepay Functionality Program, check out the following letter.

If you're ready to participate, fill out the form above.

If you have any questions or want more information about participating in this program, please contact Rori Endick at 954-377-9051.

Sign Up for a Free SFT Demonstration

In relation to the SFT Prepay Functionality Program, you can learn more about how our products can help you satisfy your BAPCPA needs by scheduling a free demonstration.

All you have to do is fill out our quick and easy "Demo Request" form and choose a time that works best for you.

Reserve your space(s) today!

Bankruptcy Article of the Week

Chapter 7 Means Test Median Income Updates: What You Should Know

Please note that the U.S. Trustee Program will apply updated family income data to all bankruptcy case filings as of October 1, 2008.

Supplied by the U.S. Census Bureau, the new income data will be used to complete Bankruptcy Forms 22A and 22C for compliance with the "means test" requirement when determining Chapter 7 eligibility.

To review the new income data, see the chart below.

Census Bureau Median Family Income By Family Size
STATE 1 PERSON 2 PEOPLE 3 PEOPLE 4 PEOPLE*
Alabama $35,507 $44,922 $51,130 $61,586
Alaska $47,501 $68,904 $69,414 $88,361
Arizona $41,792 $55,489 $59,709 $69,210
Arkansas $32,380 $43,755 $47,101 $54,721
California $47,363 $62,690 $68,070 $77,014
Colorado $45,036 $63,240 $68,219 $75,987
Connecticut $55,379 $68,208 $82,160 $99,584
Delaware $44,479 $58,501 $74,320 $76,085
District of Columbia $40,774 $70,035 $70,035 $70,035
Florida $40,898 $51,945 $57,937 $68,494
Georgia $39,253 $52,055 $59,668 $68,908
Hawaii $50,832 $63,778 $70,481 $85,577
Idaho $39,397 $50,025 $52,613 $64,464
Illinois $45,604 $57,829 $66,189 $78,182
Indiana $40,155 $51,203 $58,902 $67,911
Iowa $39,851 $52,608 $61,526 $71,309
Kansas $39,488 $54,070 $60,906 $71,867
Kentucky $35,274 $43,793 $53,343 $63,097
Louisiana $35,579 $45,013 $50,682 $64,170
Maine $39,116 $50,140 $61,963 $67,136
Maryland $53,489 $71,213 $81,811 $99,884
Massachusetts $52,814 $63,980 $80,031 $96,572
Michigan $43,050 $51,594 $60,997 $73,490
Minnesota $45,832 $59,778 $72,808 $84,394
Mississippi $31,152 $40,383 $44,752 $53,697
Missouri $38,100 $49,704 $56,311 $67,761
Montana $38,024 $50,844 $50,844 $62,765
Nebraska $36,405 $51,477 $60,491 $69,510
Nevada $46,412 $58,318 $63,351 $71,972
New Hampshire $53,704 $63,320 $74,161 $89,740
New Jersey $55,008 $67,270 $82,239 $99,224
New Mexico $34,585 $46,907 $51,058 $53,938
New York $44,803 $54,898 $65,477 $79,966
North Carolina $37,055 $50,419 $55,182 $67,541
North Dakota $36,813 $51,415 $65,143 $69,098
Ohio $40,888 $50,965 $59,949 $71,489
Oklahoma $36,830 $49,424 $52,479 $59,755
Oregon $43,506 $54,235 $58,789 $70,046
Pennsylvania $43,036 $51,051 $64,775 $75,867
Rhode Island $44,748 $57,121 $70,117 $88,035
South Carolina $37,296 $48,944 $52,806 $63,535
South Dakota $34,219 $49,180 $55,985 $66,451
Tennessee $36,308 $46,927 $53,149 $62,226
Texas $37,120 $52,878 $54,943 $63,945
Utah $47,026 $54,715 $61,437 $69,260
Vermont $39,365 $56,318 $61,934 $73,130
Virginia $47,852 $62,926 $70,485 $82,598
Washington $48,783 $61,172 $67,004 $79,397
West Virginia $37,275 $41,280 $49,111 $57,552
Wisconsin $41,233 $55,525 $64,622 $74,885
Wyoming $44,554 $58,207 $66,033 $77,432
*Add $6,900 for each individual in excess of 4

Source: U.S. Trustee Program

Quick Breakdown of New Median Income Data

In comparison to the median income data for Chapter 7 bankruptcy cases filed between March 17, 2008, and September 30, 2008, here are some interesting tidbits about the new data.

  • Overall, the median income increased in 33 states, but remained stagnant in 16.
  • Michigan was the only state to see a drop in median household income and an increase in its poverty level. More specifically, the median income for a family of three in Michigan decreased from $61,796 to $60,997.00 (-$799).
  • States that experienced an increase in median incomes include Alaska and Wyoming. Alaska posted a median increase of 5.2%, with the median income for a family of four increasing by $14,536.00. Wyoming saw a 5.4% jump in median income, with the earnings for a family of two increasing by $5,517.00.

As the myths surrounding the means test are corrected, experts are predicting that there will be an increase in the number of bankruptcy filings.

BAPCPA Provision Ruled Unconstitutional

A St. Louis-based federal appeals court ruled that a BAPCPA provision was unconstitutional as it applied to attorneys.

The provision stated that debt relief agencies were prohibited from counseling their clients on accumulating additional debt. At issue was whether attorneys were considered "debt relief agencies."

The 8th Circuit Court of Appeals ruled that attorneys were indeed considered "debt relief agencies;" however, the provision was unconstitutional when applied to attorneys because it violated their right to free speech and prevented them from wholly counseling their clients.

The ruling stated, "There are certain situations where it would likely be in the assisted person's, and even the creditors', best interest for the assisted person to incur additional debt in contemplation of bankruptcy."

The court gave the examples of a person who may need to purchase a car to get to their job or someone who could get a lower interest rate if they applied for refinancing.

Although similar challenges to BAPCPA are making their way through lower courts, the ruling is the first of its kind from a federal appeals court. Of course, this ruling only applies to the Eighth Circuit area.

It's expected that this issue will be taken to the U.S. Supreme Court.

For more information, see the following article:



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