Bankruptcy FAQ – Frequently Asked Questions

Congressman Ruben E Hinojosa's sealed documents posted on bankruptcy attorney Alex Wathen's website.

Due to the efforts of Bankruptcy Attorney Alex Wathen’s IT staff a previously corrupted file has been partially restored to allow the public to read some more of the documents Congressman Ruben Hinojosa is trying to hide.  It is funny that while his New York colleague Congressman Anthony Weiner is fighting to stay in office, Congressman Hinojosa does not get the hint and abandon his efforts to keep his original and an amended bankruptcy petition sealed.  Click below to read more and to view the newly unveiled documents:

Access Sealed Documents from Congressman Ruben E. Hinojosa’s bankruptcy

Would you believe someone if they said they filed bankruptcy and the case number is 11-11111?

Hard to believe isn’t it.  A case I just filed was assigned case number 11-11111.  It is incidentally also a Chapter 11 case.  I am awaiting reactions from the parties that have been notified.  I feel bad for the clients who will have to tell some creditors that they filed bankruptcy and the case number is 11-11111.  I always send the clients the pdf file of the notice of bankruptcy filing so that they can send it to creditors or show them if in person if they are not believed.  Somehow I think these clients will need to show the notice.  It is a good thing that creditors who have been informed about a bankruptcy filing act at their own peril.

Congressman Ruben E Hinojosa has filed for Chapter 11 bankruptcy.

Congressman Ruben E. Hinojosa who represents the 15th District of Texas, which starts in Harlingen and McAllen and goes up almost all the way to San Antonio, filed for Chpater 11 personal bankruptcy on December 18, 2010. 

The case was filed in the Southern District of Texas in the McAllen Division and Judge Richard Schmidt of Corpus Christi is assigned to the case.  The case number is 10-70900-M-11.

Congressman Hinojosa has the distinction of being the first member of Congress who voted for the nasty anti-debtor bankruptcy reform bill in 2005 (BAPCPA) to now be subject to it.  He took credit counseling by phone the day before he filed, presumably being lectured by Money Management International about what he can do better regarding his finances.  He also filed a means test form describing his income, but since he is in Chpater 11, the rich mans bankruptcy, he does not have to fill out nearly as detailed form as in Chapters 7 and 13 where debtors also have to list standardized IRS collection manual based expenses.

Congressman Hinojosa’s district starts at the Rio Grande and spans a large part of South Texas:

Congressman Ruben E. Hinojosa, District 15 of Texas - Chapter 11 bankruptcy filing.

The documents in the case can be accessed by clicking below:

Docket Reports – All filings as of February 13, 2011

1 Bankruptcy Petition

2 Certificate of Credit Counseling

3 Disclosure of Compensation of Attorney for Debtor

4-1 Application to Approve Employment of Attorney

4-2 Proposed Order

5 Order to Set Hearing and Setting Deadline for Filing Disclosure Statement and Plan of Regorganization

8 Schedules of Assets, Liabilities, Current Income and Expenses

9 Statement of Financial Affiars (Including Payments to Attorney)

10 List of Creditors Holding 20 Largest Unsecured Claims

11 Chapter 11 Statement o fCurrent Monthly Income – the means test Congressman Hinojosa voted for.

12 Amended Disclosure of Compensation of Attorney for Debtor – What was paid to the attorneys.

18-1 Motion for an Order Authorizing Continued Use of Existing Bank Accounts

18-2 Proposed Order Authorizing Continued Use of Existing Bank Accounts

24 Agreed Order Authorizing Contuinued Use of Existing Bank Accounts – Perk for a Member of Congress?

45 OperatingReport for December 2010 – Monthly income and expenses.

Lowe's hiring an additional 8,000 to 10,000 part time workers for the weekend allows people who need additional income such as those in Chapter 13 to supplement their checks. Photo couretsy of Ildar Sagdejev.

The home improvement chain Lowe’s while cutting as many as 1,700 middle managers according to MSNBC, are hiring as many as 8,000 to 10,000 part time workers to work weekends.  “This is an excellent opportunity for those in Chapter 13 bankruptcy who need to supplement their incomes to make it easier to afford the Chapter 13 plan payments,” said Austin and San Antonio Bankruptcy Attorney Alex Wathen.   Apparently applications will be taken the next few days or next week.

Being able to earn more money is one of the best things you can do to make a Chapter 13 plan more viable.   Most Chapter 13 cases that fail are dismissed for non-payment.  As long the debtor can make the payments chances are it will succeed.

Hotels often go empty these days. Photo courtesy of Ryoma on Wikimedia Commons.

At least the way I measure the economy.

The jobless recovery is a reality - this scene of people standing in line for unemployment benefits is bound to repeat.

July 4, 2010 – This morning on This Week on ABC one of the big topics was the “Jobless Recovery.”  Finally the media is acknowledging that any recovery that may exist (I dispute that we are in recovery) is  a jobless recovery.  There was the temporary jump in new jobs in April which turned out to be the census takers and of course those jobs did not last.  The show also acknowledged that there will be a double dip recession.  I think either we are already in the second dip or it is coming very soon.

I have been saying for quite some time that any recovery will be a jobless recovery.  I feel vindicated.  The lesson to learn from this is that the powers at be do not care about us will lie to make themselves look good until we do not buy their statements anymore.   If you think you will find a new job soon think twice.  This may be a good time to file bankruptcy when your means test 6 month income will be at the lowest as someone who is unemployed.  Also do not expect a new job soon or if you are lucky enough to get a new job it will probably pay less and be without benefits.  Chapter 13 is also available as a good way to save your house from foreclosure and save cars from repossession.

Banks violate the automatic stay when they require you to pay past debts in order to open an account.

June 29, 2010 – Today Judge Isgur of the Southern District of Texas suggested that banks may be violating the automatic stay when they require payment of overdrafts or other debts in order to open an account.  He stated that this is a frequent occurrence in his court that debtors are required to pay these balances.  He did not make a definite ruling but invited the debtor in a case to file a stay violation lawsuit.

The thing to do is to tell the bank that they are violating the automatic stay, ask for a supervisor, and most importantly ask them to put it in writing then go to your bankruptcy attorney and file the lawsuit.  If we as debtors’ counsels get more aggressive the banks will change their behavior.  This case involved First Convenience Bank which I recommend clients to avoid because I think they are predatory when it comes to overdraft fees and authorize debit card purchases when there is no money in the account only to charge a $30 plus overdraft fee and let the consumer run up hundreds of  dollars before they stop.

Moving from one state to another sometimes means that you still pack with you the laws of the old state.

Most bankruptcy judges will let you claim the federal bankruptcy code exemptions to keep your property in Chapter 7, even if you moved to Texas less than two years ago from a state that does not allow you to use these exemptions.  The reason for this rule is that most of the states that have opted out from the relatively generous federal bankruptcy exemptions have limited their opt-out law to its own residents.  A concern however is that a growing minority of judges are ruling that regardless of explicit residency restrictions the old state’s exemption laws apply.   This means that if you move from another state to Texas less than two years before filing that state’s law applies and if you lived in more than one state during these two years then it is the state where you lived the majority or greater part during the 180 days before the two years that applies.   This may sound complicated, but I do this analysis all the time as many of my clients have recently moved from out of state.

Attached is an opinion from Judge Marvin Isgur that is an example of this troubling trend.  The solution is to get a bankruptcy attorney who does not mind anaylizing your rights under another state’s law in case you end up with a judge who takes this position.  I have found though that most of the time there is little resistance to claiming the federal bankruptcy exemptions, but in cases where there is a lot of property caution should be exercised in case you end up with a judge that takes this position.

Opinion holding that prior state’s laws apply