Texas Bankruptcy Blog : Texas Bankruptcy Lawyer & Attorney : Fears Nachawati law Firm : Chapter 7, Chapter 13, Consumer Bankrutpcy : Dallas, Fort Worth, Austin, Houston, San Antonio

 Years ago, few attorneys specialized in any particular area of the law. These "general practitioners" handled criminal cases, family law matters, real estate disputes, and a host of other complex legal matters. Today law schools teach aspiring attorneys the general principles in many different legal disciplines, and the bar exam tests the basic knowledge of these subjects. However, the idea of the "general practitioner" is outdated. In today's world, a complex legal matter such as a bankruptcy case is best handled by an attorney that has specialized knowledge and experience.

Bankruptcy law is an area of the law that many attorneys avoid - and for good reason! Bankruptcy law is a complex amalgamation of federal and state laws, court rules, case precedent, and customs. While the federal Bankruptcy Code is intended to be applied uniformly across the country, bankruptcy judges in different districts have interpreted and applied the provisions of the Bankruptcy Code differently. For this reason it is often important to know how the views and opinions of the bankruptcy court judge assigned to your case. Additionally, your bankruptcy attorney is familiar with the negotiation practices of your creditors and can anticipate an outcome before your case is filed.

An experienced bankruptcy attorney is able to review your case and identify any potential problems. For instance, it may be advantageous to wait a month or longer to file your case. Perhaps you have a preferential transfer, or your income is too high because of a bonus you received five months ago. Your bankruptcy attorney knows which questions to ask and how to avoid problems in your case. As the saying goes, "there is no substitute for experience."

An attorney who practices primarily bankruptcy is also able to move quickly and efficiently through the stages of your case. Bankruptcy courts are streamlined to provide quick relief to deserving debtors, and your bankruptcy attorney has customized the processes in the legal office to maximize efficiency. This not only saves you time, but also money. 

Using your family attorney or cousin who just passed the bar may sound appealing, or may even save a few dollars up front, but the costs may quickly mount up when you experience problems in your case. When you think about it, hiring a bankruptcy attorney for a bankruptcy case is a no brainer. The bankruptcy attorney works every day in the bankruptcy law and can handle your case quickly, efficiently, and without surprises. 

On July 25, President Obama addressed the country asking the American public to encourage their Congressmen to raise our nation’s debt ceiling. The debt ceiling is the legal limit on the amount of money the United States can borrow. It is analogous to a credit card spending limit; however, while the limit on a personal credit card may be $5,000, the debt ceiling limit is $14 trillion. The U.S. Treasury estimates that we spend about $120 billion more than we take in each month, and this requires borrowing money each month to make up the difference. Since the United States always pays its bills, it is able to borrow money at the best interest rates. The down-side of this is that borrowed money must be repaid with interest; and the U.S. is spending a great amount of its income on paying interest on its loans. Our nation’s spending is clearly out of control.

Sound familiar?

The interest payments on monthly credit card and loan payments can quickly eat up a family’s (or nation’s) income. Take for example the interest on $30,000 in credit card debt at a 15% annual interest rate. Repaying this debt at a minimum payment rate of $600 each month, this loan would be paid off in 44 years and cost $48,913 in interest charges! The Federal Reserve has a Credit Card Repayment Calculator that you can use free of charge to estimate of how long it will take you to pay off your personal credit card balances.

Just like our national government, many Americans have fallen into a vicious cycle of debt. Instead of paying down their credit balances, they make a monthly payment, then use the available credit for food, gas and other necessities. Fortunately, individual Americans can take charge and stop this debt nightmare. The federal bankruptcy law provides a way to eliminate or repay your debt under the direct supervision and protection of a federal bankruptcy court judge.

The Bankruptcy Code offers two distinct ways to deal with out-of-control debt. First, if you cannot afford to pay back unsecured creditors (e.g. credit cards, personal loans, medical bills, etc.), a Chapter 7 bankruptcy will discharge unsecured debts without repayment. Under Chapter 7, you are able to keep and continue paying on secured debts, such as a house or car loan.

Second, if you have a higher income and are able to pay something to your unsecured creditors, Chapter 13 allows you to pay what you can afford over three to five years. Any unsecured debt remaining at the end of the bankruptcy is discharged. Chapter 13 also has useful provisions that allow a debtor to “cure” past payment on a house or car loan; can strip away an unsecured second mortgage; can “cram-down” an under-secured car loan; and a host of other financial options.

The Bankruptcy Code contains many powerful and flexible options for managing overwhelming personal debt. Whether you need time to repay your creditors, or simply need to rid yourself of the debt, bankruptcy may be the most sensible option. Consult with an experienced bankruptcy attorney and discover how the federal bankruptcy laws can help your family.
 

 There are many myths circulating regarding bankruptcy. One of the most popular myths is that a bankruptcy debtor can pick and choose which debts are included in the bankruptcy discharge. This myth is simply the result of a misunderstanding of the discharge process.

When you file bankruptcy you are required to honestly disclose all personal financial information to the best of your ability. That means listing all of your income, expenses, assets, and debts in your bankruptcy schedules. Intentionally failing to list a debt is a very serious matter and the bankruptcy court could deny your discharge if you are less than honest.

In many cases a bankruptcy debtor has a good reason for wanting to continue paying on a debt. The most common reason is to retain property used as security for a loan (e.g. a car or house loan). In bankruptcy, secured property must be paid for or returned. Fortunately, the bankruptcy code allows the debtor to continue paying the secured creditor and keep the property.

In other cases a debtor may want to continue to pay an unsecured creditor. This is normally the case when the discharge of a debt in bankruptcy will cause financial harm to a co-debtor. For instance, you may owe money to a family member that you want to repay. The bankruptcy discharges the legal obligation to pay the debt, and enjoins the creditor from seeking collection. However, while the bankruptcy prevents your family member from asking for payment, it does not prevent you from making voluntarily payments after the bankruptcy.

The same voluntary payment principle applies to medical bills, credit cards, and any other financial obligation. Voluntary payments do not alter the bankruptcy court’s discharge injunction. A discharged creditor is forever prohibited from taking any action to collect on the discharged debt, including asking for payment, sending a bill or statement, or filing a lawsuit against you.

If you need a bankruptcy attorney in Texas, but also want to continue to pay certain debts, discuss your situation with an experienced Texas bankruptcy lawyer. Your attorney can explain your obligations under the federal bankruptcy code, and can help you decide which debts you should pay.

Many clients ask, "When can I stop paying on my credit cards?" The answer seems obvious: immediately. If you are filing bankruptcy and discharging your credit card debt, you are throwing money away by continuing to pay the monthly bill. Right?

But hold on! There are good reasons to consider the consequences before stopping your credit card payments.

First, when will you file your bankruptcy case? Your first step is to work with your attorney to determine the actual date you will file. When a client is filing bankruptcy within 30 days, there are very few repercussions to consider. However, not every bankruptcy client can or should file their case immediately. Some clients may need to wait in order to qualify for Chapter 7 or lower their plan payments in a Chapter 13. Other clients may need to postpone filing to eliminate a potential preference payment issue. Every case is different.

Second, once you miss a payment you can expect collection calls. The creditor may call your home, your cell phone, or even your work phone to discuss your delinquency. These calls are at best an annoyance, and often cause additional stress. Credit card bill collectors know that the more uncomfortable you are, the greater the likelihood that you will pay them. Fortunately, once your bankruptcy case is filed, the telephone calls will stop.

Third, missed credit card payments will damage your credit. While your bankruptcy case will substantially harm your credit, missed payments additionally harm your score making it more difficult to improve your credit after bankruptcy. Some bankruptcy attorneys recommend that their clients can stop credit card payments for six months or longer - until the client is facing a legal judgment. While the bankruptcy stops any lawsuit or collection action, and discharges the credit card debt, the bankruptcy will not erase the history of non-payment.

Finally, a few clients will decide to not file bankruptcy. Clients who stop making credit card payments and later change their minds about bankruptcy are left with late payments, fees, default interest rates, and collection harassment. Be sure you are filing before you stop credit card payments!

Here is the best answer to our question: consult with an experienced bankruptcy attorney before making the decision to stop paying your credit cards. Your attorney can review your finances and uncover any problems that may delay your bankruptcy filing. In many cases the client is able to stop paying credit cards immediately and the case is filed quickly without any negative consequences to the client. However, every case is different and your case deserves the careful attention of a qualified professional. 

The Washington Post recently reported that the Obama administration is not planning another large federally funded program to relieving the troubled housing market. This news comes despite the President's acknowledgement that the billions of dollars already spent to bolster the weak housing market has not solved the problem.

The Post reports that the housing market is suffering from a glut of inventory. The article cites David Stevens, head of the Mortgage Bankers Association, who says that it would take more than nine months to sell all of the homes on the market at the current sales rate. To add to this grim news, industry statistics suggest that more than four million homeowners are having trouble paying their mortgages.

In direct opposition to promises made to the federal government, many banks have been reluctant to write down the balances of underwater mortgages. In some cases banks have misled homeowners into spending their savings with false promises of modifying their mortgages. So what can a homeowner do to take control?

The federal bankruptcy law can restore balance between the struggling homeowner and the bank. Filing a bankruptcy will immediately stop the foreclosure process, and provides time to consider available repayment options. A Chapter 13 bankruptcy case can force a creditor to accept monthly payments for mortgage arrears over a three to five year period. Additionally, an entirely unsecured junior mortgage can be stripped away and included in a discharge as an unsecured debt.

For those debtors with underwater mortgages, the bankruptcy discharge acts as a hammer during the negotiation process. If the lender refuses to negotiate, the homeowner can walk away through a Chapter 7 or 13 bankruptcy discharge with a fresh financial start. Bankruptcy debtors are also eligible to participate in loan modification programs. Finally, a Chapter 7 case provides an opportunity to negotiate a new contract between the lender and borrower in the form of a reaffirmation agreement.

If you are experiencing trouble with your home mortgage, consult with an experienced Texas  bankruptcy attorney and review your options. The federal bankruptcy law provides a distressed homeowner with options to cure a serious financial problem.
 

Discharging student loans through the federal bankruptcy court is extremely difficulty. Since 1978 Congress has increased restrictions on bankruptcy debtors seeking to discharge student loan debt. Today, nearly all student loans are dischargeable only if the debtor can prove that repaying the debt would impose an “undue hardship” on the debtor and his dependents. This standard applies to both federal student loans and private student loans, although a bill was recently introduced in Congress aimed at making it easier to discharge private student loans.

While student loans nearly always impose a hardship on a bankrupt debtor, the bankruptcy courts have interpreted the “undue hardship” standard to be an exceptionally high bar. First, the debtor must file an adversary action and have a hearing to determine whether repayment of the debt would constitute an undue hardship. At that hearing the debtor must show that: 1) the debtor cannot maintain a minimal standard of living and also repay the loan; 2) the debtor’s financial inability to repay the loan is likely to continue for a significant portion of the loan’s repayment period; and 3) the debtor has made a good faith effort to repay the loan. In one particularly harsh case out of Ohio, a bankruptcy judge told a blind debtor receiving $811 each month in social security disability that, “It remains to be seen . . . whether [the debtor] will find work or remain unemployed.” Wallace v. Educational Credit Management Corp., 2010 WL 5764771 (Bky.S.D. Ohio Dec. 1, 2010).

While discharging a student loan debt may be extremely difficult, lenders often find it equally challenging to “prove” the student loan debt during a Chapter 13 bankruptcy case. First, the lender who claims to currently own the debt may not be the original creditor on the contract. The current creditor must then prove that it has standing to collect on the loan. Second, the creditor must also demonstrate the amount owed. Financial records may be hard to produce if the loan has changed hands several times.

Even when bankruptcy cannot discharge or otherwise eliminate your student loans, it can provide some temporary relief. The automatic stay stops all collection action during the bankruptcy case and a Chapter 13 bankruptcy case provides an opportunity to make payments under court supervision. After the bankruptcy case is concluded, non-bankruptcy options are available including deferment, forbearance, loan forgiveness, and income contingent repayment plans. If you are experiencing financial difficulty and have student loans, consult with an experienced bankruptcy attorney and discover your options.
 

 Your bankruptcy filing contains financial information that is accurate as of the day your bankruptcy is filed. This information paints a complete picture of all of your assets, debts, income, and expenses. Generally, the bankruptcy court has jurisdiction over your debts as of the day your bankruptcy petition is filed, called “pre-petition debts.” But what happens if you incur debts after the bankruptcy petition is filed?

The general rule is that post-petition debts are not included in the bankruptcy case. For instance, if you file a bankruptcy case to get rid of credit card debt, but then have a medical emergency the day after filing, the post-petition medical debt is not included in the bankruptcy case. However, the debtor still has options to pay or discharge the medical debt.

First, a Chapter 7 debtor may have two options to discharge the debt: (1) dismiss the case and re-file a second Chapter 7 bankruptcy; or (2) convert the case to a Chapter 13 bankruptcy. Re-filing a bankruptcy case is never a pleasant option, and the second bankruptcy further harms a personal credit file. A Chapter 7 debtor does not have an absolute right to dismiss his case prior to discharge and must “show cause” why the court should dismiss the case.

A second, better option for a Chapter 7 debtor who needs to discharge post-petition debt is to convert the Chapter 7 case to a Chapter 13 repayment case. All debts that arise after the Chapter 7 filing and before the Chapter 13 conversion are included in the Chapter 13 case. Only one bankruptcy case is counted on your credit file, and the post-petition debt may be included in your discharge at the end of the case.

Likewise, Chapter 13 debtors may elect to convert to Chapter 7, if they otherwise qualify. Chapter 13 debtors have an absolute right to dismiss their Chapter 13 bankruptcy case prior to discharge, unlike Chapter 7 debtors. In some cases a Chapter 13 debtor may ask the bankruptcy court to include a post-petition debt in the bankruptcy case. The debtor must file the appropriate motion to include the post-petition creditor in the Chapter 13 repayment plan and file an amended plan providing for full payment of this debt. If the creditor objects to being included in the Chapter 13 repayment plan, the debt will not be added to the plan. However, the creditor is prohibited from collecting the debt until the case is concluded. If the creditor agrees and files a proof of claim, the creditor will then be allowed as part of the Chapter 13 plan.

Post-petition debts can cause a few stumbling blocks for any bankruptcy debtor. Discuss your options with your bankruptcy attorney as soon as you discover any post-petition debt. Acting timely is often a serious consideration and delay could limit your options for paying or discharging your post-petition debt through bankruptcy.

The federal Bankruptcy Code is codified in Title 11 of the United States Code. The Bankruptcy Code contains nine chapters, six of which provide rules for the filing of a bankruptcy petition. However, only four chapters can be used by individuals to file bankruptcy. Each of these four chapters relate top a specific type of bankruptcy case and the individual bankruptcy case is known by the chapter that defines it in the Bankruptcy Code: Chapter 7, Chapter 11, Chapter 12, and Chapter 13. All individual cases under the Bankruptcy Code can be filed as a single or joint married petition.

Chapter 7 is the most common type of individual bankruptcy case. Chapter 7 is sometimes called a “straight bankruptcy” or “liquidation bankruptcy.” When a Chapter 7 case is filed, the debtor is declaring an inability to pay his debts and volunteers whatever non-exempt assets that are available to pay his creditors. Statistically, only about one case in twenty pays anything to creditors in a Chapter 7. In the other 19 cases all of the debtors’ property is exempt under state or federal law, and creditors are paid nothing. The typical Chapter 7 bankruptcy case takes four to six months to complete.

Chapter 13 is a repayment bankruptcy. The debtor is a Chapter 13 case is expressing a desire to pay some or all of his debts over a three to five year period. The Chapter 13 repayment terms are approved by the bankruptcy court and supervised by the bankruptcy trustee. Creditors are paid based upon a priority hierarchy. For instance, owed child support is paid before owed taxes; and owed taxes are paid before credit card debt. The debtor does not lose property during a Chapter 13 bankruptcy. Chapter 13 provides many advantages to Chapter 7, including the opportunity to reduce monthly vehicle payments and catch-up a delinquent mortgage. A Chapter 13 debtor must have a regular income, unsecured debt of less than $360,475 and secured debts are less than $1,081,400.

Chapter 13 is most commonly used by corporations, although an individual may file a Chapter 11 bankruptcy case when the debt limits for Chapter 13 are exceeded. Chapter 11 is in many ways like a Chapter 13 case. The bankruptcy trustee cannot take property from a Chapter 11 debtor. The debtor proposes a plan to repay debts; creditors vote whether to accept the plan; and ultimately the bankruptcy court orders a reorganization plan which binds all parties to the terms of the plan.

Chapter 12 is only available to family farmers or family fishermen who wish to reorganize their finances. Many provisions in Chapter 12 are similar to a Chapter 13.

The Bankruptcy Code offers four powerful types of bankruptcy cases to individuals. If you are struggling with debt, speak to an experienced bankruptcy attorney and discover how the Bankruptcy Code can help you reorganize or eliminate your debt headache.
 

The Internal Revenue Service has enormous power to garnish a tax debtor’s wages. The IRS does not require a court order to garnish assets or wages, called an administrative levy, and can levy upon wages, bank accounts, social security payments, accounts receivables, insurance proceeds, real property, and, in some cases, a personal residence. The IRS has only a few simple requirements to meet before garnishing wages:

• The IRS must assess a tax debt and send a Demand for Payment;
• The tax debtor must neglect or refuse to pay the tax; and
• The IRS must send a Notice of Intent to Levy and Notice of Your Right to a Hearing at least 30 days before the garnishment.

Bankruptcy can stop an IRS tax levy. Under the automatic stay provisions of the federal Bankruptcy Code, once a bankruptcy case is filed, the IRS must stop garnishing the tax debtor’s wages. The relief is immediate, whether or not the IRS knows about the bankruptcy filing. If wages are garnished after the bankruptcy case is filed, they must be returned immediately. This legal injunction continues until the bankruptcy discharge is entered, the case is dismissed, or the stay is lifted by the bankruptcy court.

Some tax debts can be discharged in bankruptcy. In general, an income tax debt may be discharged if the tax is more than three years old. Additionally, if the income tax debt is discharged, any tax penalty is also discharged. If the underlying tax debt is not discharged, in some cases the tax penalty may be discharged.

Even when a tax debt cannot be discharged, a tax debtor may find relief through the bankruptcy process. Since the IRS cannot garnish wages during the bankruptcy case, a tax debtor may delay a tax levy for up to five years by filing a Chapter 13 bankruptcy. During that time some or all of the tax debt can be repaid and no new tax penalties will accrue.

In some cases the debtor may consider filing bankruptcy and then making the IRS an Offer in Compromise for any non-dischargeable tax debt. The IRS will not consider an Offer in Compromise during a bankruptcy case. After the bankruptcy has discharged, the IRS will consider an Offer in Compromise, and, in many cases, the recent bankruptcy filing will serve as powerful evidence of the inability of the IRS to collect on the tax debt.

The federal Bankruptcy Code can protect you from IRS garnishment and can help you resolve your tax debt. Bankruptcy can provide you with time to repay your obligation, without the threat of IRS seizure or garnishment; or, in some circumstances, can permanently discharge your tax debt. Your bankruptcy attorney can explain your legal rights and the available opportunities to free yourself from your income tax burden.
 

The purpose of a Chapter 7 bankruptcy is to liquidate all of the debtor's non-exempt property to pay creditors, and to legally discharge any remaining debt the debtor is unable to pay. The creditors get whatever the law allows them to take from the debtor (usually nothing), and the debtor gets a fresh financial start, without the heavy burden of debt.

While a Chapter 7 bankruptcy case will discharge many types of debts, there are 19 categories of debts that Congress has identified as not dischargeable (called "excepted from discharge"). A complete list of the 19 categories is below:

1. Most taxes. In some cases tax debt can be discharged. For instance, if an income tax debt is more than three years old, it may be dischargeable.
2. Debts incurred through false pretenses. This category includes debts for luxury goods or services within 90 days before the bankruptcy was filed, and cash advances within 70 days before filing.
3. Unlisted debts, if the failure to list the debt prevented notice to the creditor and an opportunity to file a claim or object to the discharge of the debt.
4. Debts for fraud or embezzlement.
5. Most domestic support obligations (including alimony, spousal maintenance or child support).
6. Debts for willful and malicious injury caused by the Debtor.
7. Government fines and penalties.
8. Student loans, unless the debtor can show that repayment of the student loan poses an undue hardship on the debtor and debtor’s dependents.
9. Debts resulting from DWI.
10. Debts which were or could have been listed in a previous bankruptcy and which were not discharged.
11. Debts owed to a spouse or ex-spouse arising from a divorce or separation. In some cases these debts are dischargeable.
12. Association dues for the Debtor’s interest in her home.
13. Debts incurred to pay non-dischargeable state or local taxes.
14. Federal election law fines and penalties.
15. Property settlements owed to a former spouse or to a child.
16. Condo or homeowner’s association fees.
17. Certain fees imposed on prisoners by a court.
18. Loans on pensions.
19. Certain debts arising from securities violations or wrongful acts of a fiduciary.

Some of these debts can be discharged under certain circumstances. Some of these debts may also be eligible for discharge or reduction in a Chapter 13. If any of these categories apply to one of your debts, speak with your attorney to determine how the bankruptcy discharge will impact the debt. Your Texas bankruptcy attorney will propose options for eliminating, reducing, or paying the debt. 

The steady increase in bankruptcy filings since 2005 may have finally leveled off. According to the American Bankruptcy Institute and National Bankruptcy Research Center, fewer individual bankruptcy cases were filed during the first six months of 2011 than the same period in 2010.

“The drop in bankruptcies for the first half of the year shows the continued efforts of consumers to reduce their household debt, and the overall pull back in consumer credit,” said Samuel J. Gerdano, executive director of the American Bankruptcy Institute. The statistics show an overall 7.9% decrease: 709,303 personal bankruptcy filings this year versus 770,117 filings in 2010. More than 1.5 million personal bankruptcy cases were filed last year.

However, not all states are reporting a decrease in bankruptcy filings. Southwestern states, the hard-hit by the housing crisis, are still reporting high bankruptcy rates. Nevada remains the state with the highest number of bankruptcies per capita, although Nevada bankruptcy filings have fallen 16% this year compared to 2010. Bankruptcy filings have dropped significantly in Vermont, West Virginia, North Dakota and Washington, D.C.

So does bankruptcy actually help? Yes! Over 6.2 million personal bankruptcy cases have been filed since 2005, and many of these bankruptcies were filed as joint husband and wife cases. Our national adult population is around 250 million, so a ballpark estimate is that one adult out of 30 filed bankruptcy from January 2006 to July 2011. The national rate of repeat filers is around 10% (different sources estimate this rate at between 8% and 13%), so only one out of ten needed federal bankruptcy relief again. The rest were able to reorganize their finances and move on to a better future.

If you cannot pay your monthly expenses and need debt relief, consult with an experienced Texas bankruptcy attorney and explore your options under the federal Bankruptcy Code. The bankruptcy laws contain many powerful provisions that can assist you in reorganizing your finances, eliminating overwhelming debt, and give you financial peace of mind.
 

Much of an individual's bankruptcy case revolves around the date the case was filed, also called the petition date. On that date the debtor submits a financial snapshot of his income, expenses, assets and debts. Many aspects of a bankruptcy case depend upon the circumstances present on the petition date.

For most bankruptcy debtors, what happens after the date of the filing does not significantly impact the bankruptcy case. However, in some cases circumstances may necessitate a change. Sometimes it doesn’t make sense to continue with the original Chapter 13 bankruptcy case, especially when the debtor is unable to meet the financial obligations ordered in the Chapter 13 repayment plan. When this happens the debtor should discuss three options with bankruptcy counsel: (1) obtaining a hardship discharge; (2) conversion to Chapter 7; and (3) dismissal of the case.

A hardship discharge discharges the debtor before completion of the plan term, and may be available when income suddenly drops and is not expected to improve in the near future. The debtor must show that the income reduction was beyond his control and that the creditors have received as much as they would have if the case had been a Chapter 7 bankruptcy.

Conversion to Chapter 7 is often contemplated when the debtor is unable to pay for a home he was trying to save in the Chapter 13 case. In order to qualify for conversion to Chapter 7, the debtor cannot have received a Chapter 7 discharge within the last eight years, must meet certain income guidelines, and the conversion must be filed in good faith. A debtor converting from Chapter 13 to Chapter 7 may include any debts that arose between the Chapter 13 filing and the Chapter 7 conversion. Additionally, money paid to the Chapter 13 trustee, but not yet distributed to creditors, is returned to the debtor (minus the trustee’s expenses).

Finally, the debtor may consider the advantages of dismissal. Unlike a Chapter 7 case, a debtor has an absolute right to dismiss a Chapter 13 bankruptcy case. Because no discharge was entered in the case, the debtor may be eligible to re-file the case as either a Chapter 7 or Chapter, although some restrictions may apply.

If you have difficulty making your Chapter 13 payments, or find yourself with circumstances that have significantly changed, consult with your Texas bankruptcy attorney and discuss your options. The federal Bankruptcy Code is very flexible and contains options to assist you in your path to financial recovery. 

National banks that took federal bail-out money also agreed to participate in government home modification programs. These banks have created in-house loan negotiators to assist in home-loan modifications, which may reduce loan principle or interest to adjust the loan to an affordable rate. Many American homeowners have applied for these programs, but few have been approved. In many cases the empty promise of home loan modification leaves the homeowner in a worse position than when he started.

It has become clear that these banks are simply not playing fair. Several lawsuits have been filed against national banks alleging fraud. A federal lawsuit was recently filed by the State of Nevada Attorney General against Bank of America, the nation's largest home loan servicer, alleging deceptive practices. Additionally, a class-action lawsuit against Bank of America is pending in Massachusetts federal court. These suits claim that Bank of America deceived consumers into depleting their savings by making mortgage payments based on false hopes they'd be eligible to modify their home mortgages. The lawsuits allege that BOA accepted $25 billion from the U.S. government in 2008 as part of the Troubled Asset Relief Program (TARP), but has failed to participate in programs such as the Home Affordable Modification Program (HAMP) aimed to minimize foreclosures.

If you are in need of a home modification, review your options with an experienced bankruptcy attorney. Many bankruptcy debtors are able to strip away a second or third mortgage, or pay past-due payment over three to five years. Bankruptcy debtors can also apply for government programs such as HAMP during the bankruptcy case, while under the protection and supervision of a federal bankruptcy court judge.