Your Frequently Asked Questions about Debt and Bankruptcy in Houston

Although you may feel very alone right now, you should take solace in the fact that we didn't just invent these questions—we hear them frequently from individuals just like yourself. Consumer debt is a nationwide problem and with a little legal guidance, you can be well on your way to living a fulfilling life.

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  • If I claim federal exemptions in bankruptcy can I claim 100% interest in assets as exempt?

    Yes, says the 5th Circuit Court of Appeals, but only up to the "capped" values stated in 11 U.S.C. Sec. 522(d). See Peake v Ayobami (5th Cir. 2018).

  • I owe more on my home than it is worth. If I file chapter 13 in Houston can I make my mortgage company accept it to satisfy the debt?

    Yes. The standard chapter 13 plan in the Southern District of Texas, including the Houston and Galveston divisions, was amended effective December 1, 2017. 

    One of the provisions allows chapter 13 debtors who no longer want property, to transfer it to their lienholders to satisfy debt, so long as the lienholders fail to timely elect to either foreclose on it or accept a deed to the property.

    This can be very helpful for people who are "stuck" with an "underwater" property and the mortgage company or other lienholder either doesn't want the property back, or just refuses to foreclose on it.

  • My chapter 13 payments fell behind because of Hurricane Harvey. Will the bankruptcy court give me any relief?

    Yes. If you are currently in chapter 13 bankruptcy in the Corpus Christi, Galveston, Houston, or Victoria areas and were impacted by Hurricane Harvey, the bankruptcy court has issued a Fourth General Order which may help you.  

    It gives chapter 13 trustees discretion to not file motions to dismiss for non-payment through November 1, 2017 in the Corpus Christi, Galveston, Houston, and Victoria Divisions. The bankruptcy court discourages motions to suspend or put a moratorium on payments, but if someone has gotten behind on payments during the period of August 28 through October 31, 2017, the court encourages the filing of motions to modify plans to catch up the delinquent payments. This could increase the amount of your plan payments.

    The court states that it will consider emergency motions to suspend wage orders, but debtors must maintain their chapter 13 payments if they are able to do so. 

    Finally, default provisions in agreed orders that require that debtors make all payments due to the chapter 13 trustee after the date of this order, are modified. If the failure to make a payment to the chapter 13 trustee is due to Hurricane Harvey's substantial and adverse effect on a debtor, missed payments for the period from August 28, 2017 through October 31, 2017 will be a default only if the Court determines that it is, after notice and hearing.

  • Is there help available for my mortgage after Hurricane Harvey?

    Probably. If your loan is owned or guaranteed by HUD, VA, Fannie Mae or Freddie Mac, you almost certainly can get some help from your mortgage lender. Call them or go to their website to review the help available. 

    Even if they are not on this list, call them and ask for help, assuming that you are in the disaster area. They may be able to offer you a forbearance, loan modification, or other help with your mortgage.

    If nothing else helps, and you are able to make your payments going forward, consider filing chapter 13 bankruptcy to catch up the delinquent payments. Contact our office at 713-772-8037 for your free consultation or to request more information.

  • If I receive an exempt worker's comp recovery after filing chapter 13, is it safe from my creditors?

    Maybe. But just claiming it as exempt is not enough.

    To keep a chapter 13 trustee from being entitled to the exempt asset, you must also be able to show that the recovery is "reasonably necessary for the maintenance and support of the debtors." If this happens in one of our cases, we have the debtors make a list of things that they need, like car repair, dental work, roof repairs, etc.

    If the asset is exempt and if the proposed use of the money is reasonable, we have not had any trouble with our chapter 13 trustees here in the Houston Division of the U.S. Bankruptcy Court for the Southern District of Texas. They generally will let the debtors keep the money and use it for the intended purpose.

  • Is it an FDCPA violation for a debt buyer to file a proof of claim for a time-barred debt in a bankruptcy case?

    No. The U.S. Supreme Court ruled in Midland Funding v Johnson (U.S. 2017) that it is not a violation of the Fair Debt Collection Practices Act (FDCPA) for a debt buyer to file a proof of claim for a "stale" or too-old to be enforceable debt in a a bankruptcy case.

    The debtor still has the right to file an objection to claim to seek to have the bankruptcy court disallow the stale claims, but it is permissible for the debt buyers or creditors to file them.

  • I'm in chapter 13. My mortgage company filed a notice for fees incurred more than 180 days before they filed the notice. Are they allowed to do that?

    No. You should ask your attorney to file an objection with the Bankruptcy Court.

    In a chapter 13 bankruptcy case, under Bankruptcy Rule 3002.1, post-petition mortgage fees, expenses or charges are allowed to be paid to mortgage lenders only if they file a notice with the bankrupt court within 180 days of when the particular expense is "incurred." In a recent case from the Southern District of Texas, a debtor objected because some of the fees were incurred before 180 days before the notice was filed. They were invoiced to the mortgage company within the 180 days, but they had been incurred before that.

    U.S. Bankruptcy Judge Eduardo Rodriguez held that a mortgage "fee, expense or charge is incurred when there is first a legal obligation to pay the debt, not when an invoice is issued." In re Raygoza, (Bankr. S.D. Texas 2016).

  • I am in chapter 13 and Wells Fargo is my mortgage company. Will I receive a payment from a settlement?

    Yes, it is possible.

    In November 2015, Wells Fargo agreed to a settlement of a court case - In re Green, Case No. 11-33377, in the U.S. Bankruptcy Court for the District of Maryland. They agreed to pay over $81 million to settle charges that they had failed to timely send out Notice of Payment Change under Bankruptcy Rule 3002.1, or in some cases failed to timely perform escrow analyses on some loans.

    If you are a homeowner and are in chapter 13 or have been recently, you may receive a payment or a credit to your mortgage loan account. The payments average $1254.00. If they are not credited to your loan by Wells Fargo, they may be sent to your chapter 13 trustee, we are not yet sure if the trustees will refund them to you, or apply them to your case.

    Homeowners with questions should consult their attorneys, or can call Wells Fargo directly at 1-800-274-7025. 

  • Can my homeowner association foreclose on my Texas home for unpaid HOA dues?

    Yes.

    Homeowner's associations in Texas can foreclose on Texas homes for unpaid HOA dues. Under a new law, they must first file a lawsuit and get a judgment against you. But then they can proceed with foreclosure. 

    Don't lose your home to a foreclosure! If you qualify, it may be possible for you to file a chapter 13 bankruptcy to stop the foreclosure and allow you to catch up your delinquent HOA dues, and possibly also deal with your other debts, in a way that you can afford. If you live in the Houston, Texas area or surrounding counties, call our office at 713-772-8037 to arrange your first complementary consultation with one of our lawyers.

  • If I'm evicted from my home after a Texas foreclosure, what happens to my personal property?

    If your home is foreclosed upon in the State of Texas, and a judge orders that you are evicted and must leave the home, a sheriff or constable will likely come and move you and your possessions out of the property. A judge gives the constable a "writ of possession" or court order to remove you and your stuff from the foreclosed property (or a rental unit if you were renting).

    During the actual eviction, your personal possessions such as furniture, household goods, books, clothes, toiletries, etc. are all removed from the home or rental unit and stacked on the curb. They used to have moving companies come and remove and store the items, but apparently that is no longer profitable for the moving companies, as they have stopped doing it.

    That's why it is important, if you see that you cannot stay in the property, to go ahead and remove your items following a foreclosure sale and put them in a friend's garage or in a storage unit or somewhere safe. Otherwise, they will likely just be stacked in a pile and are subject to being stolen or rained on and ruined.

  • Lost oilfield-related job; can I save my Houston Texas home from foreclosure?

    Maybe. 

    If you were laid off but you are now re-employed and able to pay the regular mortgage payments, plus an extra amount to catch up the delinquent payments, and you otherwise qualify to file chapter 13 bankruptcy, we should be able to propose a plan under chapter 13 for you to keep your home and get your other debts under control so that you can pay them at a level that you can afford.

    If you live in Houston, Texas or in any of the surrounding counties, contact our office anytime at 713-772-8037 to make an appointment to meet with one of our attorneys for your first free consultatin or to request more information from us.

  • Can my chapter 13 plan propose an early payoff of the mortgage loan on my home?

    Yes.

    U.S. Bankruptcy Judge Jeff Bohm sitting in Houston, Texas held that a chapter 13 plan could provide for the early, full payoff of a mortgage loan on a debtor's principal residence within the 5 year term of the plan, without the plan violating the "anti-modification" provision of Bankruptcy Code Section 1322(b)(2). In re Gaetje, Case No. 15-30130, U.S. Bankruptcy Court, S.D. Texas 2015.

    So you are permitted to pay off your mortgage on your principal residence early in chapter 13 (subject to objections on other grounds), but the mortgage would still have to be paid in full during the maximum 5 year term of the plan, and you cannot change the interest rate. For most people, this would be unaffordable; but at least it is an option.

  • Does a chapter 13 bankruptcy plan in Houston have to pay 6% interest on child support claims?

    Yes.

    U.S. Bankruptcy Judge Jeff Bohm ruled in In re Lightfoot, Case No. 13-32970, SD Texas 2015, that child support arrears being paid through a chapter 13 bankruptcy plan must be paid in full and to be paid in full, they must in addition be paid 6% interest according to the Texas Family Code.

  • If I'm in chapter 13 but convert to chapter 7, can I get a refund of what I've paid to the trustee?

    Only the amount of money that has not already been distributed to creditors.

    The U.S. Supreme Court held in Harris v. Viegelahn (May 18, 2015) that chapter 13 debtors who convert their case to chapter 7 in good faith, are entitled to the return of the undistributed money held by the chapter 13 trustee.

  • Can I modify the mortgage on my property in chapter 13 bankruptcy, if the property is not my principal residence on the filing date?

    Yes.

    In a recent Houston bankruptcy court case, a lady lived in one house when she filed chapter 13, but decided to sell it. She moved into her second house, that she owed over $100,000 on, but was worth only $60,000.

    The Court allowed her to propose a plan to pay only the $60,000 in full during her 5 year chapter 13 case, plus some interest. The other $45,000 would be paid only a small amount as an unsecured claim and discharged or canceled when she completed her case. She would have the property paid for in only 5 years. If the second house had been her principal residence on the date she filed bankruptcy, she would not have been allowed to do this.

    The court found that the "the date on which a debtor’s principal residence determined for purposes of 11 U.S.C. § 1322(b)(2) is the petition date." In re Collins, Case No. 14-34816, US Bankruptcy Court, Southern District of Texas.

  • Can I stop my title loan company from repo'ing my car or truck by filing bankruptcy?

    Yes. If you qualify, filing chapter 13 bankruptcy can stop your title loan finance company from repossessing your vehicle. It can also let you pay them back over time, at a reasonable interest rate, at a level that you can afford. 

    If you are delinquent on your title loan payments or you see that you won't be able to pay it back anymore as fast as they want, and you live in the Houston, Texas area or surrounding counties, give our office a call at 713-772-8037 for your free consultation.

  • If I file chapter 13 in Houston, can I put money aside in emergency savings, in case something happens?

    Yes. As of January 1, 2015, chapter 13 plans in the Southern District of Texas (Houston, Galveston, Brownsville, Victoria, Corpus Christi, Laredo, and McAllen divisions) can contain a clause that permits you to pay extra to your chapter 13 trustee, as an emergency savings account.

    The trustee will hold the money and if you need it during your plan, distribute it to you after your attorney files a 15- day notice, so long as no one objects. If you don't need the money during your plan, the trustee will give it all back to you at the end of your plan.

    The Bankruptcy Court encourages you to save money for emergencies, so that your plan has a higher probability of success. You can also save money yourself, from money that you don't need to pay your living expenses or your chapter 13 plan payment.

  • Can my Houston chapter 13 plan "vest" or put unwanted property in my mortgage company's name?

    Yes.

    While it has not been universally approved by all courts yet, we recently proposed such a plan, and it was approved here in the Houston Division of the Southern District of Texas.

    Section 1322(b)(9) of the U.S. Bankruptcy Code specifically states that a chapter 13 plan can "vest" property in another entity, such as a mortgage company. There is no specification that they consent to receive the property, as would be necessary if you just deeded the property to them.

  • Can a Bankruptcy Court order the removal of neglected animals from their bankrupt owner?

    Apparently so. In a recent Houston bankruptcy case, the Court ordered the removal of 100 Collie dogs from their owner who was in chapter 13 bankruptcy, and had them turned over to a rescue group for care.

    Animals are considered personal property, and a bankruptcy court has jurisdiction over all "property of the estate," which is pretty much everything that a bankrupt person owns.

    A person can exempt or keep their "household pets" from their creditors under Texas law, but animals held for breeding, making money, likely wouldn't fit the definition of household pets.

  • Can I get my repossessed car back if the finance company has already had it picked up? I can't afford to catch it up or pay if off.

    Yes, assuming that you qualify for chapter 13 relief, and the case is filed before the car is actually sold by the finance company, it is possible to get your car back.

    Then a chapter 13 plan can be filed with the court to propose that you pay the car off over time, at a level that you can afford, up to 5 years. Your other debts can also be included, and this often can give people control over their finances to let them live and work in peace.

    For an appointment, call our office at 713-772-8037. Be sure to tell the receptionist that your case is urgent and that you have had a repossession. We can usually work you in the same day or the very next day, to save your car.