Bankruptcy in Texas is a process designed to help consumers and businesses eliminate their debts or repay them under the protection of the Bankruptcy Court. There are generally two types of bankruptcy that consumers and small businesses use:
A Chapter 7 Bankruptcy is for an individual that is over their head in debt and wants a fresh start. It allows the individual to wipe the slate clean and eliminate their debt in most cases. Depending on the circumstances, it may require the debtor to give up their property but they will no longer be liable for those accounts.
In a Chapter 13 Bankruptcy, the consumer can keep ownership and possession of all or some of their property, but must pay back their debt through a proposed plan with the Bankruptcy Court. The creditors are generally paid over a period of three to five years. You must repay some debts in full while others may be repaid partially or not at all.
Chapter 7 and Chapter 13 Automatic Stay in Texas
When a Chapter 7 or Chapter 13 bankruptcy is filed in Texas, the automatic stay immediately goes into effect and prohibits creditors from continuing with collection activities which includes foreclosure. The automatic stay is triggered as soon as the debtor files bankruptcy. No action besides filing the bankruptcy petition is required for the automatic stay to go into effect. This is a legal option many debtors exercise to stop the foreclosure. As a creditor, it is your goal to either a) start receiving payments from the debtor or b) foreclose on the property if there is no repayment plan in place. The action taken to remove the automatic stay will depend on which type of bankruptcy the debtor files. Getting the automatic stay removed quickly is the difference between a good and great real estate investment. Get a Free Consultation from an experienced bankruptcy attorney in San Antonio (by appointment only), Houston, or Edinburg, (by appointment only), Texas to find out what your options are.
Filing a Proof of Claim in Bankruptcy Court in Texas
In order to determine the amount of what is due from the borrower, a proof of claim is filed to the bankruptcy court. A proof of claim is a written statement that notifies the bankruptcy court, the debtor, the trustee, and other interested parties that a creditor wishes to assert its right to receive a distribution (pay out) from the bankruptcy estate. The deadline for filing a proof of claim for non-governmental creditors in a Chapter 7 or Chapter 13 bankruptcy case is 90 days after the first meeting of the creditors. It is important to file a proof of claim on a mortgage or you may not be able to recover the arrears, late fees, attorney’s fees, or any other pre-petition fees, expenses, or charges you are entitled to. This can be a devastating loss if not handled properly.
Objection to Proof of Claim in Bankruptcy Court in Texas
The bankruptcy court usually accepts the proof of claim at its stated amount unless the debtor, trustee, or another interested party objects. Some of the most common reasons that someone might object to a claim include:
- the amount is incorrect
- the claim includes improper interest or other penalty charges
- the claim indicates that it is a priority or secured claim when it is not
- the creditor filed the claim with the purpose of harassing the debtor, or
- the creditor did not attach supporting documentation.
In order to object to a creditor’s claim, the party objecting must file a written objection with the bankruptcy court and serve a copy and any notice of hearing on the creditor, the debtor, and trustee at least 30 days before a scheduled hearing.
Debtors file for a number of reasons including but not limited to stopping a foreclosure, stopping repossession of their car, and eliminating unwanted debt. Our law firm understands the struggles you may be facing when trying to find a new way to alleviate your debts. We are prepared with the legal skills and tools to put together a financial plan that can help you immediately. Every case is different and you could lose valuable property or rights if you are not familiar with the bankruptcy in Texasas. The bankruptcy court staff is not allowed to advise or help you with your case so you should consider a Free Consultation from an experienced bankruptcy attorney located at one of our offices in Houston, San Antonio (by appointment only), or Edinburg (by appointment only), Texas to find out what options are available when seeking bankruptcy counsel.
Chapter 7 and Chapter 13 Adversary Proceedings for a Bankruptcy in Texas
An adversary proceeding in bankruptcy is a separate lawsuit filed within the bankruptcy case. Like most lawsuits, it starts when someone (the creditor, the bankruptcy trustee, or debtor) files a complaint. In most adversary proceedings where a mortgage is involved, the debtor will dispute the amount of the claim. If a debtor fights the amount of your claim, it can be a lengthy and expensive process. An experienced bankruptcy attorney in Texas can help expedite the adversary proceedings to minimize time and expense.