J. Thomas Black - Consumer Bankruptcy Law

If you consult me about the possibility of filing a bankruptcy case, there is no charge for your first office visit with me, and it usually takes about an hour. Please bring with you a list of your creditors, an estimate of your income for the past 6 months, and any important papers that I need to see, such as lawsuits or foreclosure notices.
The Bankruptcy Code was changed in the fall of 2005, and the credit industry was behind the changes. It is now somewhat more difficult and costly to file bankruptcy, but it is still possible.
Also, it is possible that you may not qualify for Chapter 7 bankruptcy, depending on your income, the number of people in your household, and other factors. I need you to come into the office and meet with me, to determine if you are eligible for bankruptcy, and what your other options are in dealing with your debts.
If you decide to file bankruptcy, I will need a lot of information from you. Also, you must have a credit briefing before you are eligible to file, and you must complete a financial management course before you will receive your discharge in bankruptcy.
I estimate that you would have to spend between 10-20 hours of your time to file bankruptcy. It takes time, some money, and effort; and, you must be absolutely truthful about the information that you provide us. The FBI investigates bankruptcy crimes.
I have a detailed questionnaire that you can print at my web site at www.jthomasblack.com, that asks you for all of the information that we need to file your case. It may take you 1-2 hours to fill it out. You do not need to fill it out just to come see me the first time; but we will need it filled out, all of it, in order to determine if you can file, and if it is the right thing for you to file.
The questionnaire includes questions about what your average living expenses are, such as your rent or monthly house payment, utilities, groceries, gasoline, insurance, day care, and child support you pay, as well as any other monthly expenses you have. I'll also need to know what your net take home pay is, so bring a paycheck stub.
If you own a small business, I'll need to know how much it "grosses" each month, the total gross income per month that the business makes, and the average expenses for the business.
Next, we'll discuss what can be done in your case. If there's a way to avoid filing a bankruptcy case, we'Il discuss that and I'll probably suggest that you not file one.
But, most of the people that come in to see me do so because they need to file some type of bankruptcy case. They are so heavily in debt that it's affecting their mental or emotional health, or they are about to lose property to creditors or have judgments taken against them.
If you need to file a bankruptcy, I'll discuss Chapter 7 and Chapter l3 of the U. S. Bankruptcy Code with you. There is also a Chapter 11, but it's usually used for businesses, and it's outside of the scope of this topic. There is also a Chapter 12, but it's for farmers. Chapters 7 and 13 are those chapters of the Bankruptcy Code usually used by regular people, "consumers".Ā I'll discuss Chapter 7 first.

If you're so swamped with debt that you can't pay any of your creditors, I'll probably suggest that you file a Chapter 7 case.
In a Chapter 7 case, you are seeking a discharge or a cancellation of your debts. Beginning with the day your case is filed with the Court, an automatic stay goes into effect, and your creditors are not allowed to call you, send you bills or statements, file a lawsuit against you, or repossess or foreclose on your property or take any other actions against you. Of the more than one million bankruptcy cases filed in the United States each year, about 70% are Chapter 7 cases.
In a Chapter 7 case, if you have substantial luxury or investment property, such as a large amount of stocks or bonds, a rent house, or other valuable property that cannot be claimed as exempt, this property has to be turned over to the Chapter 7 Trustee, a court official, who sells it and pays the creditors as far as the money will go.
But in most cases, at least here in Texas, all the property that you have can be claimed as exempt from your creditors, so you lose no property, only your debts.Ā If you hire my office to file a Chapter 7 case for you, we will be able to tell you before we file whether or not it's likely that you will lose any property to your Chapter 7 Trustee.

Dealing with Secured Creditors

Now, it is very important to understand that if a creditor has a lien or mortgage on property that you are buying from them, such as your mortgage company, car finance company, furniture or jewelry store, then you will probably have to pay that creditor if you wish to keep the property.
Actually, you have several options for these "secured creditors" in a Chapter 7 case. First, you can return the property to them, and the debt is discharged, and never has to be paid.
You can also sign what's called a reaffirmation agreement, and pay the regular payments, which revives your personal liability on the debt. This is normally the best route to take to keep your house and vehicles.
As another option, if the property is worth less than what you owe on it, it's possible to redeem property, by paying the creditor what it's worth, in a lump sum or in agreed-upon payments, rather than what's owed against it.
About a month after your Chapter 7 case is filed with the Bankruptcy Clerk, there is a Meeting of Creditors. You and I would be there, as well as the Trustee, and any creditors that care to appear. Very few, if any, of your creditors usually appear. Usually the only ones that appear are secured creditors, and they usually appear only to find out if you're going to keep the collateral or return it.
All of your other creditors, such as bank credit cards, doctor and hospital bills, oil company charge cards, department store bills, and any one else you owe money to that does not have some kind of collateral, normally will not appear. There's just no use. Their debts will be discharged or cancelled, and the court will usually have already notified them that there will be no money available to pay their claims.
Your meeting should just last a few minutes. There is no judge present, but your Chapter 7 Trustee will ask you a few questions to be sure there is no non-exempt property that he or she could sell to pay your creditors. You should allow at least 2 day off of work- it takes time to park, and wait for your turn.
After your meeting, you should receive your Discharge in a little over 2 months. Your Discharge is a permanent court order or injunction that tells your creditors that they can never try to collect the discharged debts.

Non-Dischargeable Debts

Chapter 13- "Adjustment" of Debts

If you can afford to pay your creditors, but just need more time, or if you can pay part of what you owe, but not all of it, you may want to file a Chapter 13 case.
When you file a Chapter 13 case, the same automatic stay goes into effect as in Chapter 7 - your creditors cannot harass you in any way. But instead of the harsher remedy of Chapter 7, in Chapter 13 we propose a plan for you to repay your creditors at a level you can afford.
In my experience, most people that file Chapter 13 do so for one of five reasons: (1) to stop the foreclosure of their home, and allow them to "catch up" the past due mortgage payments over a period of time; (2) to stop the repossession of vehicles, to permit the vehicles to be paid over a period of time; (3) to stop the IRS or other tax authorities from seizing paychecks or other property;Ā (4) to permit them to keep property that they would otherwise lose to a Chapter 7 Trustee; or (5) if they have so much extra income ("disposable income") that they can afford to pay a substantial part of their debt, and they would not be permitted to file Chapter 7.
To prepare a plan, we first review your income and your budget. You pay a monthly payments to a Chapter 13 Trustee, who then pays your creditors, even if they don't get all they're owed. The difference is discharged or canceled, just like in Chapter 7. A Chapter 13 plan generally lasts from 36 to 60 months.
If you're in financial trouble, the U.S. Congress would prefer that you file a Chapter 13 instead of a Chapter 7, if you can, so that your creditors get something instead of nothing. Because of this, Congress has written Chapter 13 so there are advantages to you to file Chapter 13. Besides, most people want to pay their debts, if they can.

What are some of the advantages to Chapter 13? Well, let's say you're several payments behind on your home loan. Chapter 13 allows you to catch up these past due payments, as well as your other debts, over a period of time, up to 5 years. This is true even if your mortgage company has already posted your home for foreclosure.

Another advantage in filing Chapter 13 is that your secured creditors, such as your car or truck finance company, furniture or jewelry store, are paid over the length of your plan, which often reduces the amount that you have to pay monthly and allows you to keep the property. Also, depending on the type of property and how long you have had it, we can sometimes reduce the amount that you have to pay on the property to its value, as opposed to what you owe on it.

This same refinancing or modification of secured claims also applies to your other creditors with collateral, such as furniture, appliance or jewelry stores (NOT your home, except in very limited circumstances). Interest on other debts, such as credit cards, stops entirely on the day your case is filed.

This sounds complicated, but it's really very simple for me to show you how Chapter 13 can allow you to "adjust your debts" once you come into the office and let me prepare a plan to show you how it can work. And, it's all perfectly legal.

In fact, if you're in financial trouble, Congress wants you to use Chapter 13 to reorganize your bills and get back on your feet. Once your plan is approved by the Court, instead of paying 10, 20, 30 or more different bills a month, you pay only your normal living expenses and one monthly payment to your Trustee. He pays your creditors for you. And you're allowed to live and work in peace; your creditors can't bother you in any way.

Stop IRS Collection Actions with Bankruptcy

Another advantage of Chapter 13 that many people don't know about is that the automatic stay also applies to the IRS and all other tax authorities. If you owe the IRS, they can be paid under your Plan. It's also possible to reduce or eliminate your tax debts, interest and penalties, depending on how old the tax debts are, and other circumstances.

Whatever your decision about how to handle your financial problems, I urge you to get experienced advice. Don't be anxious, afraid or ashamed to seek help from a professional such as myself. Everything that you tell me is absolutely secret and confidential, and will not be disclosed to anyone without your permission.
Besides, many, many people are having money problems these days. And from all walks of life- businessmen, lawyers, doctors, engineers, laborers, office workers--someone you know has probably had to file bankruptcy at one time or another.
So you are not alone. And I'll bet that after a consultation with me or another experienced bankruptcy attorney about your financial problems, you'll feel a whole lot better and will have a solution to your problems in mind.

Attorney Fees

You're probably concerned about attorney fees for these cases. Your first consultation with me is free, with no obligation. For the usual personal (or couple) Chapter 7 case, I charge a flat fee, based upon the complexity of your case, plus costs. If you're working or have a source of income, we offer limited terms, but in a Chapter 7 case, all of the attorney's fee and the court filing fee must be paid prior to the filing of the case. Once you retain me as your attorney, with even a minimal down payment, bill collectors are prohibited from contacting you, at least for a period of time sufficient to get the fee paid and the case filed.

In the usual personal Chapter 13 case where the plan payments can be deducted from your pay through a payroll deduction order, I charge a down payment to file your case of $400-$420 and can be paid the rest of my fee through the payments made to your Chapter 13 Trustee. My total fee for your Chapter 13 is regulated by the Bankruptcy Judge assigned to your case. I will quote you a Chapter 13 fee and give you a written fee agreement for you to take home and look over when you come in to the office.

Well, the next step is up to you. If you'd like to visit with me to review your debt problems, give my office a call to set up an appointment. The telephone number is 713-772-8037. Or if you like you can set up an appointment on this website, by clicking on the red button on the upper right-hand side of any page.

Please bring a list of your creditors and how much is owed each one. My office is at 2600 So. Gessner, Suite 110, Houston TX 77063. It's at the intersection of Westheimer and So. Gessner in the Capital One Bank Building. There is free parking. Please call the main number, 713-772-8037, if you need directions.

I am Board Certified in Consumer Bankruptcy Law by the Texas Board of Legal Specialization.

Chapter 7- Discharge of Debts

Non-Dischargeable Debts

Chapter 13- "Adjustment" of Debts

Attorney Fees