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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  • My ex-spouse took property that was to go to me in my Harris County divorce. Can he or she discharge the debt in chapter 7 bankruptcy?

    Not if you fight it.

    The 5th Circuit Court of Appeals recently decided that if an ex-spouse takes property that was awarded to the other spouse in a divorce, the resulting debt may not be discharged in a chapter 7 bankruptcy because it is a "willful and malicious injury" under the Bankruptcy Code Section 523(a)(6). In the Matter of Shankle, Court of Appeals, 5th Circuit 2014.

    But keep in mind that this is only in chapter 7. If the debtor (the person that filed bankruptcy) files chapter 13 instead, then the debt may be discharged, so long as the debtor completes the plan.

    And don't forget that even if it is a willful and malicious injury in a chapter 7 case, to keep the debt from being discharged you must file an "adversary proceeding" or lawsuit in Bankruptcy Court to challenge the discharge of the debt, and there are strict time limits. Currently, you must file your complaint within 60 days after the first date set for the Meeting of Creditors, or it is too late. See Bankruptcy Rule 4007(c).

    You will almost certainly also need a lawyer to file an adversary proceeding. Only you can decide if it is worth it to you to do it. And keep in mind that even if you win, that doesn't mean your ex-spouse will actually pay you. A civil judgment, even a non-dischargeable one, is not enforceable by contempt. In other words, if they don't have the money you may just be out of luck anyway.

  • I forgot to list a debt in my Chapter 7 Bankruptcy and now the case has been discharged and closed! Can I still list the debt?

    So long as it was a "no-asset" chapter 7 case and you did not intentionally leave the creditor off, it is probably discharged anyway, even without listing it. According to a court case from Houston in 2013, even unscheduled debts are discharged in a no-asset chapter 7 case, unless the creditor can prove that the debtor left off the debt fraudulently. The Court held:

    A Chapter 7 discharge grants a debtor a discharge under § 727. Section 727(b) declares that: "[e]cept as provided in section 523 of this title, a discharge under [§ 727(a)] discharges the debtor from all debts that arose before the date of the order for relief . . . whether or not a proof of claim based on any such debt or liability is filed." (emphasis added). Thus, unless excepted by § 523, a creditor's pre-petition claim is discharged. E.g., In re Guzman, 130 B.R. 489, 490-91 (Bankr. W.D. Tex. 1991) (finding that § 727 discharges all pre-petition debts, but that creditors may attempt to prove an exception under § 523).

    But please make every effort to list all of your creditors. You are swearing under penalty of perjury that you are listing all of your creditors, and if you intentionally leave one off, you likely will never be able to discharge it in bankruptcy.

  • I already have a judgment against me for credit card debt. Can I still get rid of it by filing bankruptcy?

    Yes, so long as you qualify to file bankruptcy and you did not incur the credit card debt through fraud, the fact that they have a judgment against you already, does not make any difference. Many people are surprised by this, and think that once a state court grants a judgment against them, that is it, they can no longer discharge the debt in bankruptcy.

    That's simply not true. But if the judgment-creditor has a reason to object to the discharge of that debt, say for example if you "charged up" your card right before filing bankruptcy, after you had decided to file bankruptcy, then they can object to the discharge of that debt, even if they don't have a judgment against you.

  • Can I Discharge A Debt For Breach of Fiduciary Duty? I Spent The Money That My Mom Left for My Brothers and Sisters; I am the Executor

    (question) I was executor over my deceased mom's estate. I needed money, so I spent the money that was in the estate, and didn't distribute it to my brothers and sisters, as the will required. They have now sued me for breach of fiduciary duty. Can I get rid of this debt in bankruptcy?

    (answer) Probably Not. Section 523(a)(4) of the Bankruptcy Code says that you cannot discharge in bankruptcy a debt "for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny." Also, the U.S. Supreme Court held in Bullock v. Bankchampaign, N.A. that if you were a fiduciary and either you knew what you did was wrong (intentional or immoral act), or if you were grossly reckless in your conduct, the debt should be denied discharge for defalcation in a fiduciary capacity.