Voluntarily Dismissing Ch 13 - What can a creditor do?

[craig1023]

What is the name of your state (only U.S. law)? Texas

As per an earlier thread, I'm going through a divorce and need to sell home that's jointly owned - met with my ch 13 atty yesterday to see if I can convert my 13 to a 7 - it does not pass the means test so that's a no go. The chapter 13 is confirmed, only in my name.

There were two options presented to me:

1) Petition court for approval to sell home (which they may or may not grant), review the divorce documents to determine how the home will be sold, any proceeds apparently have to be applied to a new home loan within 6 months or the funds have to go back to the creditors. There's concerns that I won't be able to qualify for a new home loan within 6 months as my bankruptcy is new and score is low.

2) Voluntary request the case be dismissed - the court would then not be involved in the sale of the home or the proceeds. The downside is that I lose bankruptcy protection from the courts. My understanding in Texas is that pay cannot be garnished if the company is based out of Texas (it is) but a creditor could sue and garnish from a bank account in Texas.

I'm leaning towards option two but have a few questions:

Is this correct about the garnishments?

Does a creditor typically try to negotiate before performing this action?

Is there a typical response you have to reply with if you receive notice of a lawsuit from a creditor?

Do they try to sue and include frivolous charges (attorney fee's, late fees, etc)
​

Thanks!

 

[adjusterjack]

I'm leaning towards option two but have a few questions:

Is this correct about the garnishments?

Yes. The Texas constitution and statutes prohibit wage garnishment for most consumer debt.

Article 16 Sec. 28. GARNISHMENT OF WAGES. No current wages for personal service shall ever be subject to garnishment, except for the enforcement of court-ordered:
(1) child support payments; or
(2) spousal maintenance.

Texas Statute Sec. 63.004. CURRENT WAGES EXEMPT. Except as otherwise provided by state or federal law, current wages for personal service are not subject to garnishment. The garnishee shall be discharged from the garnishment as to any debt to the defendant for current wages.

Does a creditor typically try to negotiate before performing this action?

No.

Once the creditor successfully sues you and gets a judgment, it goes right for the bank account.

Is there a typical response you have to reply with if you receive notice of a lawsuit from a creditor?

When you get served a summons and complaint the summons will tell you whether you have to file a written answer or just appear on a particular date.

Do they try to sue and include frivolous charges (attorney fee's, late fees, etc)

There is no try to sue, there is only sue or not sue.

There is nothing frivolous about attorney fees, late fees, etc. If a debt contract (credit card for example) allowed for all that they will sue for all that.

 

[Taxing Matters]

There is nothing frivolous about attorney fees, late fees, etc. If a debt contract (credit card for example) allowed for all that they will sue for all that.

Texas is one of the few states that flips the usual rule for attorney’s fees in contract cases. In most states the winner of a contract case does not get his lawyer’s fees included in the judgment unless the contract expressly says the loser pays the winner’s legal fees. But in Texas, the winner gets to claim the attorney’s fee unless the contract expressly says that the winner does NOT get his attorney’s fees paid by the loser.

 

[quincy]

Here is a link to craig1023's other recent thread: https://forum.freeadvice.com/consumer-bankruptcy-2/confirmed-chapter-13-now-divorce-mixed-home-sale-advice-646416.html

 

[latigo]

Texas is one of the few states that flips the usual rule for attorney’s fees in contract cases. In most states the winner of a contract case does not get his lawyer’s fees included in the judgment unless the contract expressly says the loser pays the winner’s legal fees. But in Texas, the winner gets to claim the attorney’s fee unless the contract expressly says that the winner does NOT get his attorney’s fees paid by the loser.

If successful in prosecuting its claim, the credit card company would (conditionally) be entitled to an award of reasonable attorney fees even in the absence of the passage and signing into law of Texas H. B. 274 (effective 9/1/2011 as adopting the European Plan) and regardless of whether or not such litigation costs were "expressly" called for by contract. (See: Texas Civil Practice and Procedure Code Section 38.001 (8) Recovery of Attorney Fees - (effective 9/1/1985)