MMI provides financial guidance and counseling, and if you qualify can put you on a debt management plan (DMP) to repay your debts over time. DMP’s don’t generally reduce your debt; they are “consolidation” plans, where you make one payment a month to MMI, and MMI pays your creditors for you.

For the people that can afford these DMP plans, they are fine. It can help you avoid bankruptcy. Many of my clients have consulted with credit counselors before they come see me, and legitimate ones like MMI will just tell them whether or not they can help them, or if they should consult an attorney about their debt problems, and possibly consider filing bankruptcy.

Most if not all of the “shady” debt settlement companies, are not even legally operating in Texas. To operate legally, they have to be registered with the Texas Consumer Credit Commissioner, and comply with the Texas Debtor Assistance Law, which almost none of them do.

To see if your debt settlement company complies, go to http://www.occc.state.tx.us/pages/searches.htm and click on “List of Debt Management Service Providers. If your company is not on that list, they are not operating legally in the State of Texas.

I just had a couple come in to the office this morning, that had paid a debt settlement company $9000 in fees, and the company had only settled one debt for them. Then they were sued for $19,000 by a creditor, and the debt settlement company told them they needed to file bankruptcy.

So the debt settlement company basically did them no good at all. We will likely put them into a Chapter 13 bankruptcy, paying $450 per month for 5 years. That will repay 30% of their $75,000 in unsecured debt, with the rest being discharged or cancelled. And no one can sue them or call them at work trying to collect, once they file Chapter 13.

If you are interested in consulting with me about your options, including filing a bankruptcy case, and you live in the Houston Texas area or surrounding counties, give my office a call at 713-772-8037 and make an appointment to meet with me. Or you can make an appointment on my website at http://www.jthomasblack.com. There is no charge for your first visit.

Anyway, welcome to Sugar Land, MMI. I’m sure you will be a good neighbor!

In my experience, that is not real common here in Texas, but it wouldn’t surprise me if it begins to increase. Particularly where there are second mortgages, or so-called “80-20″ financing.

Like you don’t have enough to worry about, if you are losing your house, to have the lender or a collection agency coming after you trying to collect. They could file a lawsuit against you for the rest of the money, the money that they did not recover from the foreclosure process. If they got a judgment, they could seize your non-exempt assets such as bank accounts, investments or possibly other property.

But one cause of the lenders beginning to pursue people, is the “strategic” foreclosures, where people are letting their houses go back, even though they could afford them if they want to do so.

Not so much here in Houston, but in other areas of the country, home prices have fallen precipitously in the past few years. And if you owe $50,000 or $100,000 more on your house than it is worth, it is understandable that some people would choose to just “walk away” from the house, rather than struggle to continue to pay it.

Particularly so if they have an adjustable rate mortgage or ARM, and their payments are high. That would be another reason for some people to just give up and walk away.

If you are considering walking away from your home, and letting the bank or mortgage company have it, you should consult with an attorney experienced in these matter such as myself. It could be that your lender will try to pursue you for the debt.

If so, filing bankruptcy is one option to eliminate any chance that they can collect a foreclosure deficiency from you. There may be other options in your situation. To call my office for an appointment, call 713-772-8037. Free first visits are available for residents of the Houston Texas metropolitan area and surrounding counties.

The report by the GAO, the Government Accountability Office, was presented yesterday at a Senate Commerce Committee hearing, and it included recordings of salesmen describing their companies as “government approved” and linking settlements to the federal bailout of troubled banks.

Debt settlement companies charge a LOT of money, and they are heavily regulated in Texas.

A Rocky Mountain Trail Near Tucson, AZ

If you are a Texas resident, and file Chapter 7 bankruptcy, usually most or all of your property can be claimed as “exempt” or safe from your creditors, which are represented by your Chapter 7 Trustee.

Texas was settled by folks with debt troubles. Many of them came from Tennessee or other states, just one step ahead of their creditors. Some wrote “GTT” for “Gone To Texas” in chalk on their cabin doors, so their creditors would know not to bother to pursue them. So our laws are written so that most or all of what most people own, can be claimed as exempt.

For example, your Texas homestead can consist of 10 acres of land plus all improvements, if in an urban area. In a rural area, you can exempt up to 100 acres of land plus all improvements, or 200 acres if a family. You can claim as exempt up to $30,000 of personal property if single, $60,000 if a family. The property must be certain listed property in the law, but it consists of most everything that most people own, including furniture and household goods, clothes, vehicles (just the “equity” or value over any loans counts towards the exemption), even two guns.

Also, a Texans’ retirement plans, IRA’s, whole life insurance and annuities can be claimed as exempt. Frankly, you can exempt a lot of property in Texas. So much so that some people move to Texas to take advantage of our exemptions. This is limited somewhat now by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), which provides among many other things, that to use a state’s exemptions, you must live in that state for 2 years, and to exempt more than $136,000 in home equity, you must have owned the property for more than 1215 days (about 3 yrs and 4 months).

But to keep property, you must pay any valid liens on the property. If you have a mortgage on your house or a loan on your car, you must continue to pay those loans or the lienholder can eventually get permission to repossess or foreclose, after getting permission from the Bankruptcy Judge, or after the bankruptcy is over. You may also need to sign a “Reaffirmation Agreement” to keep such secured items.

If you are considering filing bankruptcy, hire a good lawyer. Hire a lawyer that is experienced in these cases. I have been practicing consumer bankruptcy law in Houston Texas since 1982. I am Board Certified in Consumer Bankruptcy Law by the Texas Board of Legal Specialization. You can look me up at www.tbls.org. To make an appointment, please call my office at 713-772-8037, or make an appointment at my web site at www.jthomasblack.com by clicking on the red button on the upper right-hand side of any page.

It's Rough Country Outside of Tucson, Arizona- But Beautiful

I hear this one quite a bit, people are afraid that a bankruptcy  Trustee or someone from the Court will come in their house, and take their TV or their furniture or their microwave. I’ve never had it happen yet here in Texas, and I’ve filed about 8,000 cases.

In Texas, it’s possible to claim as “exempt” or safe from creditors, up to $30,000 worth of personal property if you are single, or $60,000 if you are a couple. “Personal property” is everything that you own that is not land or real estate like a house. So it includes cars and trucks, but it only refers to the equity in your property.

So if you own a pickup truck or SUV, and it’s worth $15,000, but you owe $16,000, there is no equity in it at all that counts toward the $30,000/$60,000 exemption limits.

Very few people that come in to meet with me have any non-exempt personal property. And that makes sense; if you are having money problems, you will usually have already spent down your savings and investments, and sold your truly valuable items to raise more cash to pay down debts.

So generally, if you have lived in Texas for at least two years so that you can claim the exemptions that are available under Texas law, you don’t have to worry about a bankruptcy Trustee coming into your house.

Now I understand it is different in other state. I read once that in Florida, it is common for Trustees to go to people’s houses and take an inventory or inspect the property, and that is because (at least at that time) Florida’s exemptions were very low, like $1000. If you filed bankruptcy, all you could keep was $1000 worth of stuff.

You either had to let the Trustee take all the rest of your personal property like furniture and appliances, or you had to “buy back” your items from the Trustee. That just doesn’t seem right; you’re broke, and you are expected to live in an empty house or apartment? If the Florida exemptions are still that low, they ought to change them.

If you have been a victim of violent crime in Texas, you may be entitled to a cash award from the Texas Crime Victim’s Compensation Fund. And it is flush! The total amount that it has for victimized Texans is now $1,000,000,000! That’s billion with a “B.”

You can be eligible for up to $50,000 if you are a violent crime victim in Texas, and another $75,000 if you are totally and permanently disabled.

An excerpt from the Texas Attorney General’s website reads as follows:

The Crime Victims’Compensation Program is administered by the Office of the Attorney General and is dedicated to ensuring that victims of violent crime are provided financial assistance for crime-related expenses that cannot be reimbursed by insurance or other sources.

State law requires that reimbursement first be sought from other sources, such as health insurance, Medicaid, Medicare, auto insurance, or Texas Workers Compensation. CVC program staff assists applicants in coordinating the use of all available resources.

Claims may be approved for benefits up to a total of $50,000. Individuals who suffer total and permanent disability as a result of the crime may qualify for an additional $75,000, which may be used for specific and limited expenses, such as lost wages, prosthetics, rehabilitation or making a home accessible, depending upon the law in effect on the crime date.

The financial assistance may be limited or unavailable depending on laws in effect when the crime occurred and is dependent upon the applicant providing necessary and required documentation.

For More Information

In your community, contact your local law enforcement agency’s Crime Victim Liaison or your prosecutor’s Victim Assistance Coordinator.

Or e-mail:crimevictims@oag.state.tx.us or Call (800) 983-9933 or (512) 936-1200 (in Austin) or Fax: (512) 320-8270.

View from Max Gardner's Farm, No. Carolina

The American Bankruptcy Institute (ABI) reported recently that the July 2009 consumer bankruptcies reached the highest monthly total since the Bankruptcy Code was reformed in 2005, according to the records of the National Bankruptcy Research Center (NBKRC). The July 2009 total was a 34.3% increase over a year ago, and an 8.7% increase over June 2009 filings of 116,365. Chapter 13′s are about 28.3% of all consumer cases, with the rest Chapter 7′s.

Obviously, the economy is pushing a lot of people into bankruptcy, with job layoffs and downsizing. I also see a lot of medical debt and people that can no longer work because of medical issues and disability.

One prospective client that came to see me with a chronic, life-threatening disease was told by his car finance company to “go ahead and die,” so that they could repossess his car. It’s really pitiful when one human being treats another like that.

What the heck is a “strip off”? Well, let’s say that you have two mortgages on your house. When you bought the house, you used “80-20″ financing that has been so prevalent in recent years.

Let’s also say that the first mortgage is $80,000, and the second is $20,000. When you bought the house, it was $100,000 purchase price, so you financed 100% of the purchase price.

After buying the house, the value of your house fell. And fell a lot, to where it was only worth $75,000. If you file Chapter 13 bankruptcy, it is possible to “strip off” the second mortgage, but having the Bankruptcy Judge declare that there is “absolutely no” equity to support it.

This turns the second mortgage into an “unsecured debt” which is usually paid very little and discharged or cancelled, when you complete your Chapter 13 plan.

So now, instead of owing $100,000 on a $75,000 house, and being tempted to walk away (hurting home prices even more), you owe only $80,000 on it, and will more likely stay. Your other creditors would also likely receive a larger distribution during your Chapter 13 case because of the strip off; that is the real reason it is permitted.

If you live in the Houston metropolitan area or surrounding counties, are having financial troubles, and think you may qualify for a strip off, make an appointment to see me by calling 713-772-8037.