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August 2010 Archives

Contempt

A 2007 case out of Fort Worth had the following set of circumstances:  Under a 2002 New York family court order, the mother was given custody of her child and her mother was given four annual periods of visitation.  These periods were specifically detailed with 3 to occur in Dallas and 1 in New York and then further providing the length of each visit in each location.  

Under the NY order the maternal grandmother had a minimum of 19 days of visitation each year, some of which could occur during the Christmas and Thanksgiving holidays with notice to the mother.  

In 2005 the grandma registered the NY order in Denton County, Texas and moved for enforcement, or alternatively clarification.  After a hearing, the Texas court ruled that the NY order was not sufficiently specific to be enforced by contempt and entered a clarification order.  That order reduced the grandmother's visitation from 19 days per year to 12 and precluded her from exercising any of these days during Christmas and Thanksgiving.

Delivery of Meth

In State v. Powell, during Appellee's trial for possession with intent to deliver meth, the court suppressed the drugs because the seizure of two safes, one of which contained the drugs, violated his Fourth Amendment rights because these safes were not "particularly described" in the search warrant as items to be seized.  There is no dispute that while executing the search warrant, the police could have searched the two safes.  However, the police seized the safes and took them to the police station, where they searched them the next day and found the methamphetamines.

The appellate court held that the massive remedy of exclusion of the meth is not required in this case.  The meth was not obtained because the police may have unlawfully seized the safes but because of a subsequent search pursuant to a lawful warrant.  The police could have seized the safes in the home because the safe defendant bought with a forged check was property described in the affidavit and the police could have reasonably believed that one of the safes was the one purchased with a forged check.  Any remedy that Appellee might have is a civil suit for damages for his alleged unlawfully seized safes.

Texas Exemptions

In a West Texas case named In re Wilkinson the debtors claimed as exempt six guns under Section 42.002(a)(8) (sporting guns), and 17 antique guns and one "dummy gun" under Section 42.002(a)(1) (household furnishings).  The trustee objected, asserting that the debtors may exempt only two firearms under (a)(7).  

The debtors amended the exemptions to include seven of the antique guns, two under (a)(7), and the remainder under (a)(1).  The debtors argued that the antique guns were manufactured before 1899, were each affixed to a bronze plate, and should not be considered as firearms, relying on the definitions in Section 46.01 of the Penal Code, which criminalizes possession of a firearm by felons.

The court held that the Penal Code was not to be read in pari materia with the Texas Property Code, because the two statutes do not have a similar purpose.   The court, after consulting the Black's Law Dictionary and the Webster's Dictionary definitions of "firearm," determined that the antique guns were firearms within the meaning of the Texas Property Code.

Wrongful Foreclosure

The Northern District of Texas heard the Cunningham case in 2008 concerning a Chapter 7 debtor who filed a complaint alleging that her home was wrongfully foreclosed and sold, and seeking that the court set aside the foreclosure sale and subsequent sale of her home and/or award monetary damages and possibly other relief. 

The debtor was current with her mortgage payments when she filed her first bankruptcy petition, but due to some confusion over mortgage payments the case was dismissed, with the debtor filing a second case a few days later.  However, the confusion from the first case over a pre-petition arrearage spilled into the second case, and eventually the debtor's house was foreclosed upon.  

The debtor sued, alleging that this foreclosure was wrongful.  The court agreed, finding that the nonjudicial foreclosure did not comply with state law, specifically the two-stop process required under the property code.

The court conducted a lengthy damage analysis, ultimately ordering the lender to pay damages equal to the fair market value minus the amount owed on the loan plus attorney fees.  The debtor was ordered to pay rent to the third party purchaser out of the money she received from the lender, since the debtor had remained in the house.

Appeal of a Criminal Conviction

The Texas Court of Criminal Appeals decided last year that in determining that a plea was involuntary, an appellate court may not rely on unsworn allegations made by trial counsel in a document that was faxed to the court coordinator, and later filed with the district clerk, when no fact-finder has evaluated that statement.  

The court of appeals erred to rely on the allegations in the "Motion for Appeal" because post-trial motions such as these are not self-proving and any allegations made in support of them by way of affidavit or otherwise must be offered into evidence at a hearing.  

Second, when a defendant enters an open plea of guilty and the trial court, after admonishing the defendant , accepts the plea and finds the defendant guilty, the trial court's subsequent offer of a non-negotiated sentence-settlement does not constitute judicial coercion or judicial plea bargaining affecting the voluntariness of the plea.

Plea bargaining by the trial court concerning the appellant's punishment could not have influenced appellant's decision to enter and "open" plea of guilty the day before. 

Enforcement and Contempt

In re Parks is a case out of Houston where the father filed a motion for enforcement alleging that the mother had violated the underlying decree regarding the father's periods of possession with the child on 12 separate occasions.  The trial court held mother in contempt for 5 violations and sentenced her to 180 days of jail for each violation to run concurrently.  

The father pled for make-up visitation and the trial court ordered that father shall have possession of the child "until further order of the court" and set a compliance date.  The mother filed a writ of habeas corpus claiming that the contempt order was void because it effectively modified the parties' decree by giving custody of the child to the father and she had no notice of this claim and therefore no due process.  The court of appeals agreed, noting that father had not pled for modification and that while the trial court has authority to provide for the child's car while a parent may be confined, it has no authority to make this for an indefinite period absent proper pleadings and proof.

Disproving Paternity

When the child was 16 years old in a Houston case, the Attorney General brought suit to disprove paternity of the child's presumed father based on non-access and to establish paternity of the alleged father.  The alleged father challenged jurisdiction and filed a motion to dismiss which was denied and the trial court issued an order disproving the presumed father's paternity.

The alleged father file a mandamus which was denied and the case was sent back to the trial court for further proceedings.  The alleged father then filed a no evidence Motion for Summary Judgment on these issues.

The AG filed a response and attached certain evidence in support of the claim.  The alleged father objected and filed a motion to strike the response and the evidence based on three grounds. 1. untimely; 2. unauthenticated; and 3.  the evidence contradicted the AG's prior responses to requests for admissions. 

The trial court granted the Motion, and the court of appeals affirmed that those rules should not be softened in family court.

Shoplifting

Putting something small in your pocket and not paying for it can be a very costly mistake.  It does not seem like the end of the world, but theft is considered a crime of moral turpitude.  People just do not like those who steal from them, and so there are some serious consequences if there is a conviction for theft.

Think about it, if you were a hiring manager would you want to hire an employee with a conviction for stealing from someone?  Of course not.  Especially not in this economy.

Just because you are under investigation for a theft crime (such as shoplifting) does not mean that you are necessarily going to be convicted.  For one, the State of Texas must prove to the fact-finder (judge or jury) that you committed the act beyond a reasonable doubt.  That is the highest burden of proof in the American system of jurisprudence.  However, if they do convince the judge or jury that you are guilty of a theft crime then you will likely suffer a lifetime of consequences.

Often times, if you hire a lawyer that is competent in the field of criminal defense then you can avoid many of the consequences of the behavior that you are being accused of.  It can make a world of difference, especially the time and money that you have put into your education and future.

Exempt property

In a case out of the Southern District of Texas styled In re White the Chapter 13 debtor objected to the claim of the debtor's former spouse, asserting that the secured claim she asserted as to the debtor's homestead was invalid.

The divorce decree awarded the debtor a fee simple interest in the homestead, and awarded the claimant $30,000, secured by a lien in the homestead.  The divorce decree was not recorded in the county in which the property was located.  The claimant filed a proof of claim for $6,800 (the amount remaining due on the $30,000), secured by the homestead.

The debtor objected to the claim, contending that the security interest was unenforceable against the debtor and debtor's property because it was unperfected.  The court disagreed, holding that under the Texas Property Code, the unrecorded divorce decree bound the debtor and the claimant, as parties to the decree.  

The court also held that the lien created by the divorce decree was a judicial lien, not avoidable under the Bankruptcy Code because the divorce decree extinguished the preexisting joint interest of the debtor and the debtor's spouse in the property and created a fee simple interest in the debtor which was not possessed before the lien was "fixed."

Child Support and Attorney General

In a 2008 case out of Dallas, the Attorney General filed suit to establish child support from an alleged father.  The alleged father filed an answer and asserted statute of limitations as an affirmative defense and asked the court to deny genetic testing.

The trial court entered an order dismissing the suit with prejudice and the Attorney General appealed.  

The appellate court held that procedurally there is no device such as a motion to dismiss under the rules of civil procedure and that in this case, a motion for summary judgment on the limitations defense would have been the appropriate tool for the alleged father to obtain relief.  Because proper procedures were not followed, the court of appeals reversed and remanded the cause back for further proceedings.

Since the wrong motion was filed, the alleged father had to go through further litigation to determine whether he would have to pay child support.

ALR hearings and D.W.I. prosecutions

There are essentially two parts to any D.W.I. arrest.  First, the citizen accused has the option of whether or not to provide a blood or breath specimen.  If the driver refuses a blood or breath test, then the Texas Department of Public Safety will suspend his/her driver's license a minimum of 45 days after the date of the arrest.

However, if an administrative license registration hearing is timely requested, then the suspension of the license is abated until the hearing.  At this civil hearing the department has the burden of proving beyond a preponderance of the evidence that there was a reason for the stop and probable cause for the arrest.

Whether or not the department is able to prove that has no bearing on the criminal prosecution.  Although the state has the burden of proving intoxication beyond a reasonable doubt, the result of the ALR hearing has no weight to carry in criminal court.  In legalese, that means that there are no collateral estoppel or res judicata issues between the civil and criminal aspects of a D.W.I arrest.

Filing Fees

In the Southern District of Texas in 2008, the Chapter 13 debtor filed an application to pay the $274 bankruptcy filing fee in installments over 120 days, with a minimum of $50 per month.  The trustee objected to the application because the debtor had filed Chapter 13 twice before, and both cases were dismissed for failure to make payments.

The debtor testified that she currently had expenses in excess of her income, but she argued that she could increase her income in the future to make payments under the plan.  The Chapter 13 bankruptcy court denied the debtor's request to pay the filing fee in installments and required that she pay the fee within 10 days because of her past failed plans and her current circumstances.

Means Testing

In Schultz v. United States, the above median income Chapter 13 debtors from Tennessee brought an adversary proceeding seeking a determination that the "means testing" provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA") violated the uniformity requirement of the Bankruptcy Clause of the United States Constitution.  The parties cross-moved for summary judgment.  The district court granted the government's motion for summary judgment and dismissed the complaint.  The Sixth Circuit affirmed.

BAPCPA's centerpiece is the imposition of a "means test" for Chapter 7 filers, which requires would-be debtors to demonstrate financial eligibility to avoid the presumption that their bankruptcy filing is an abuse of the bankruptcy proceedings.  The debtors argued that because median-income calculations are based, at least in part, on the state and county in which the debtor resides, BAPCPA is not a uniform law under the Bankruptcy Clause of the Constitution.  At the time of their Chapter 13 filing, the Debtors had an annualized current monthly income ("CMI") of nearly $85,000 which is an amount that is above the median family income for a family of five in that state by over $22,000.

However, their income was below the median family income of 7 other states.

The court concluded that BAPCPA is a constitutionally uniform law because Congress is allowed to distinguish among classes of debtors, and to treat categories of debtors differently, whether it be through the incorporation of varying state laws affecting dower, exemptions, the validity of mortgages, priorities of payment and the like.

Probation Revocation

In 2009, the trial judge at the hearing on a motion to revoke Amber Lovill's community supervision amended the terms of supervision to account for Lovill's pregnancy.  Lovill filed a motion for new trial alleging that she was subjected to gender-based selective prosecution in violation of the Equal Protection Clauses to the U.S. and Texas Constitution's due course of law provision, and the Texas Equal Rights Amendment.  The trial judge denied the motion.  

The Court of Appeals granted habeas corpus relief.  The Court of Criminal Appeals held that Lovill forfeited her selective prosecution complaint because her revocation proceeding statements were not specific and timely as required by Rule 33.1 of the Texas Rules of Appellate Procedure.

Lovill's statements were not specific enough to apprise the trial judge that she was complaining about gender-based selective prosecution in violation of her constitutional rights. Lovill did contend that but for her pregnancy, the probation department wold not have reported her violation of supervision, and the District Attorney would not have moved to revoke supervision.   However, at no time did Lovill challenge the legality of the entire revocation proceeding on the basis of gender-based selective prosecution or discrimination.

Motion to Modify

Mother and father were divorced in January 2005 and designated as joint managing conservators of their child.  In July 2005 father filed a motion to modify seeking sole managing conservatorship.  Motion filed an answer and counter-petition.  Further, mother filed a jury demand.  The trial court ordered mental examinations of mother and child.  Mother refused to cooperate.

After repeated requests to compel the examinations and orders requiring them, all of which mother refused, the trial court struck mother's answer and counter petition as sanctions and entered a default judgment appointing father as sole managing conservatorship.

On appeal, mother argues that even in the face of the sanctions, she was still entitled to a jury trial because the trial court did not strike her jury demand and father was nevertheless required to prove the elements of his modification case.  The court of appeals held that a court must always make a best interest determination even in the absence of contest from an opposing party and that in a child custody case, a default may not be granted on the pleadings alone but the moving party must go forward to supply evidence in support of their requested relief.  

Suit to establish paternity

The Fort Worth Court of Appeals heard an appeal from the father from a default judgment issued against him in a suit to establish parentage brought by the Attorney General.  The father argued that he was unable to attend the hearing because of a car accident and that retroactive child support was ordered paid to the mother was improper because the child had not lived with the mother for an extended period and that he had evidence to show he provided some child support.  The AG filed suit to establish paternity when the child was 17.  The father was served with citation and notice of trial but did not appear.  Based on the mother's testimony, the court entered a default judgment ordering retroactive child support to mother.

The father did not file a Motion for New Trial, but instead filed an Affidavit of Inability 21 days after judgment in which he claimed he could not pay court costs due to unemployment.

The Court of Appeals determined that the affidavit was insufficient for filing as a proper Motion for New Trial.  Even if they could they do not contain sufficient proof to meet the elements required.  The default judgment was affirmed.

Criminal History & Employment

An article in Voice for the Defense explains about how a criminal history can effect one's ability to obtain employment.  Every school district performs a background check on all applicants for employment.  This is on area where board policies are often remarkably different.  Furthermore, districts regularly conduct background checks on current employees.  School districts exclude from employment those persons with certain criminal histories:

For the purposes of restricting employment to applicants with a criminal history record, "conviction" is defined as a finding of guilt or acceptance by the courts of a please of guilty or nolo contendere.  The District shall not employ an applicant who:
1. is a convicted felon; and/or
2. is convicted of a misdemeanor involving moral turpitude; and/or
3. is charged with a felony or misdemeanor involving moral turpitude, until there is a final disposition of the charge; and/or
4. is on probation for any offense (including deferred adjudication) that would otherwise restrict unemployment.

If someone is eligible then it is important to file a petition for expungement or petition for non-disclosure.

Means Test and Household Size

In order to qualify for a Chapter 7 bankruptcy or to determine how much of unsecured debt must be paid back at zero percent interest through a Chapter 13 bankruptcy, a debtor must pass a Means Test analysis.  The means test is Congress's 2005 legislation that compares what most families of the debtor's size in Texas gross pay is according to the IRS's guidelines compared to what the debtor's family's gross pay was in the six months prior to the month in which the bankruptcy is filed.  The second part of the two part test compares the debtor's local housing, utility and transportation expenses to what the IRS's guidelines indicate is normal for the area in which the debtor lives.

Courts have reached different conclusions on whether non-family members residing with the debtor may be counted as part of the household size in order to determine which Chapter the debtor was eligible to file.

In the In re Napier case, the court held that debtors may not include boarders as members of their household for purposes of the means test.  However, two years later in In re Smith, the Western District of Michigan court held that "household" as defined by Section 1325(b)(4)(H) means all persons, related or not, who reside in the same housing unit as does the debtor. 

The courts in Ohio and Minnesota in 2007 agreed with the Michigan court that the debtors could include all members of the household in the means test calculation.

Deadly Weapons and DWI

In Quincy v. State, The defendant's hands were found to be a deadly weapon essentially because the defendant was bigger than the victim and also due to the fact that "a shelf in the pantry may have actually caused the wound is of no consequence."

The court found, "Here, the evidence showed there was a size difference between the victim and Quincy....He grabbed the victim's throat with his hand and caused bruising consistent with choking near her collarbone.  He struck the victim on the head with his closed fist with force sufficient to create a significant gaping would that split the victim's scalp, caused profuse bleeding, and required fourteen staples to close.  That a shelf in the pantry may have actually caused the wound is of no consequence where the defendant's striking of the victim caused her to fall into the pantry.  After knocking the victim into the pantry, he punched the victim again with his closed first in the side of head and then her back."

In Scillitani v. State, the Defendant's conviction of DWI was reversed even though evidence showed that he was intoxicated at the accident scene upon the Trooper's arrival and even though the defendant admitted to driving the vehicle--because no evidence was presented to show how recently the vehicle was driven or how much time elapsed between the accident and the Trooper's arrival.

Motions to Modify and Paternity

In the Interest of W.R.M.D. is a case out of the Waco Court of Appeals where the father's paternity was established in 2004 when the child was 20 months old.  In that order, the mother was given the exclusive right to determine the child's residence.  18 months later, the father filed a Motion to Modify Custody.  

The trial court precluded the mother from offering evidence that before the child's birth, the father had threatened the mother that he would take an active role in the child's life if he turned out to be the dad, that he would seek custody, that he had asked the mother to get an abortion and that the father wanted to relinquish his rights before DNA testing was conducted.

The court of appeals acknowledged that evidence predating the order to be modified was inadmissible unless offered to corroborate subsequent similar conduct.  The mother argued that because the father followed through with his threats to become involved with the child and seek custody, the father was attempting to punish the mother for failing to get an abortion.

The court stated that there was no evidence to suggest whether the fathers actions were taken to punish the mother or instead simply efforts to be a good father but recognized that the prejudicial effect of the evidence outweighed its probative value.  The court of appeals found no abuse of discretion in excluding the evidence.

What do I do about my home in another state or a failed modification?

The housing market across the United States has taken a turn for the worse in the last several years.  Foreclosure rates continue to rise, and people are left with deficiencies left owing on the note after the foreclosure sale.  After the sale of the property, the creditor or mortgagee bank typically pursues the former home owner on the remainder of the amount owed.

The former home owner is served with a lawsuit, and if a judgment is taken against them, then interest will continue to accrue on the judgment and the amount that is owed will continue to grow.  Many of the states across America are even having a more difficult time with the depreciation of their real estate than Texas.  Many people move to Texas and are unable to sell their old home in their former state and are forced to file a Chapter 7 bankruptcy in Texas to discharge the entire amount of the old mortgage loan.

Another trend across America is a failed loan modification attempt.  Banks often indicate to people that they believe they are eligible for a modification.  After months of sending in documents to the bank to get approved, many people are ultimately turned down for the modification under the Obama Plan and have no other means of saving their house than filing a Chapter 13 bankruptcy.

High Asset Divorce

Community property is a difficult concept to understand.  Just because something is brought into the marriage does not mean that it will always completely remain separate property.  The interest that accrues on a separate property asset is community property.  

When there are large marital estates, many times community assets and separate property have become co-mingled over the years.  Sometimes those issues and ambiguities can be resolved through Alternative Dispute Resolution or mediation.  However, a lot of times those issues cannot be resolved amicably.  An experienced trial lawyer who is both comfortable and confident in the courtroom is absolutely critical.

With large marital estates there are often pre-nuptial agreements and post-nuptial agreements that are contested.  These contractual disputes are often litigated in divorce court.

Repossession of your Auto

There is a difference between a secured creditor and an unsecured creditor.  A secured creditor is a creditor that you owe money to who can take property away from you if you fail to pay them what they are owed.  Examples are car loans, mortgage loans, and some furniture loans.  

An example of an unsecured creditor is a credit card debt.  Medical bills are also unsecured, as is the IRS unless they have a lien filed against your property.  The difference is, the IRS is a priority unsecured creditor and the debt to them is non-dischargeable in either a Chapter 7 or Chapter 13 bankruptcy unless the debt is old.

If you fall behind on your vehicle then they typically will call you after the first 30 days.  They typically hound you after 60 days.  Most of the time they start hunting for the car after 90 days.

Filing a Chapter 13 bankruptcy will stop the repossession and buy you 5 years to pay off the car.  That almost always reduces the monthly payment on the vehicle.

Defenses to Crimes

First and foremost the best defense to any criminal allegation is that the defendant does not have to play offense.  There is a presumption that the defendant is innocent, and the jury will be instructed on the presumption of innocence.  The judge also admonishes the jury prior to trial that they are not allowed to use the defendant's election not to testify as evidence of his or her guilt.  Having said that, the defendant does have the same subpoena power as the State.  The defendant is absolutely entitled to call his or her own witnesses, and have their lawyer cross examine all the witnesses that the State calls to testify against him.

Also, the State has the burden of proof in a criminal trial.  The State must prove all the allegations in the charging instrument (indictment or information) beyond a reasonable doubt.

However, there are also defenses listed in the Texas Penal Code as well as justifications for committing criminal offenses where the conduct is excusable.  For example, the most fundamental of these defenses is the right of self defense.  Likewise, if you are defending another who is being attacked and it forces you to assault their assailant you have a defense.  Also, if a fight is consented to there is the defense of mutual combat.  

There are also justifications, such as necessity whereby the defendant is entitled to have the jury instructed that if his conduct was illegal and admitted to and there was a factual issue raised which might indicate that it was done out of necessity then they are made aware that they can find him not guilty.

Who does my child want to live with?

The current law provides for a child to actually state a preference to his caretaker pursuant to the Texas Family Code Section 153.008.  That law allow a child to file his/her preference with the Court, if the child is 12 years of age or older.  The statute states as follows:

Probation Problems

There are essentially two types of probation.  One is regular probation.  If the court grants a person probation, then they avoid incarceration altogether as long as county jail time is not a condition of probation.  As long as the probationer does not break the law and follows all of the terms and conditions of probation, then they should be timely discharged and released from community supervision.

There is a special type of probation called deferred adjudication that is a wonderful and dangerous alternative in certain types of cases.  Deferred is a type of community supervision where if the probationer successfully completes the terms and conditions and is discharged from probation then the case is dismissed.  Although unless a Petition for Non-Disclosure or Expunction Motion is granted the arrest will remain on their record, no conviction will appear on the criminal history report.

However, with deferred the punishment range is not capped if the State can prove a violation of community supervision occurred and it files a Motion to Adjudicate as is the case with a Motion to Revoke Probation.

Unsecured Debt

Americans are having a difficult time in this recession.  The unemployment rate is sky high, and many are forced to live off of their credit cards.  The biggest problem is that when we borrow from our credit cards, the amount that is borrowed is substantially increased by the interest rates that are charged against the debt.

For instance, if one spouse loses a job and in order to make ends meet, $30,000 is borrowed over a period of time then interest is going to accrue.  If the interest rate is 20% APR, then that means approximately $6,000 per year or $500 a month is being charged in interest.  If the minimum credit card payments are only $650 a month, then that is a lot of money that is being spent for the debt only being reduced at around $150 a month.

When something like that occurs, then there is a danger of repossession, foreclosure, or a lawsuit being filed against the borrower.  There are options to avoid those scenarios, like bankruptcy or debt settlement.

Credit Card Debt and Bankruptcy

Filing bankruptcy can allow a debtor to discharge his or her unsecured non-priority lines of credit and credit card debt.  It also can enable someone who is burdened with overwhelming medical bills to receive relief from those debts.

In today's economy and recession, many businesses have failed.  If a business owner is faced with a mounting small business loan (SBA loan) which he or she is no longer able to pay on a monthly basis, bankruptcy can help to discharge that debt.  Also, leases can be rejected through the bankruptcy court.

For example, suppose that someone owns a business which sells trinkets.  If people quit buying trinkets because the recession has scared everyone away from buying such items, then the business owner is going to have financial problems.  If the trinket business has a lease with the building that it is located in that they are paying $3,000 a month for and there is 18 months left on the lease, most bankruptcies will allow the debtor to reject that lease and discharge the remaining $54,000 that is owed on the lease.

Chapter 7 bankruptcy is typically the easier avenue to follow if someone is eligible.  In order to qualify for Chapter 7 bankruptcy, the debtor must pass a two part Means Test Analysis.  If the debtor does not pass the Means Test, or if the debtor is faced with foreclosure or repossession, then Chapter 13 bankruptcy may be the best route to take.

Fraud on the Community

In Schlueter v. Schlueter, the question was answered of what remedies are available to a spouse alleging "fraud on the community" committed by the other spouse.

In that case, the husband transferred various community assets to his father shortly before he filed for divorce.  The wife brought independent tort claims against her husband and father-in-law, seeking damages for fraud, breach of fiduciary duty and conspiracy in her counterclaim for divorce.  Based on favorable jury findings the trial court ordered a disproportionate division of the community estate in favor of the wife, and rendered judgment for the wife against the husband and his father for actual and exemplary damages.

Holding that a tort cause of action for fraud on the community exists independent of a divorce proceeding, the Austin Court of Appeals affirmed.  The Texas Supreme Court granted petition for review to resolve the conflict among the Courts of Appeals on this question. 

The Supreme Court held that because a wronged spouse has an adequate remedy for fraud on the community through the "just and right" property division upon divorce, the Court held there is no independent tort cause of action between spouses for damages to the community property estate.  The Court reversed and remanded for a new division of the marital estate.

Double Jeopardy and False Statements to Obtain Property/Credit

The Texas Court of Appeals held that pursuant to Tex. Pen. Code 32.32, the gravamen of the offense was the obtaining of credit, and that, ergo, the State could not get a conviction for each of the six false statements (the appellant was convicted six times under the statute) that the appellant made in order to obtain that credit in Jones v. State.  

Juvenile Law

In Meadoux v. State, the Texas Court of Criminal Appeals had to decide the issue of whether the assessment of a sentence of life without parole to a juvenile for the crime of capital murder constitutes cruel and unusual punishment under the Eighth Amendment to the U.S. Constitution.

This case, and perhaps others in the appellate pipeline, may be remanded to the various lower courts to consider the issue in light of Graham v. Florida, a U.S. Supreme Court case.  In Graham, the Supreme Court declared unconstitutional a Florida statute that provided life without parole to some non-homicide cases.  The question left unanswered is whether homicide cases will also be affected.  Texas cases that are in the window between the life without parole provision will be the primary cases affected by Graham.  The Texas Court of Criminal Appeals may decide this question itself, or it may remand for further consideration.

This area of juvenile law is not yet settled, and the question remains in the air.

Marital Agreements

In Williams v. Williams, a Texas case, the issue was whether the premarital agreement contemplated a community estate at all.  The agreement's stated purpose was "That the separate character of the properties of each will be preserved after the marriage from the standpoint of management, accounting, liabilities, ownership, and otherwise..." 

After the husband filed for divorce, the wife sought a declaratory judgment that salaries were not covered by the agreement and were community property.  The trial court concluded that the clear meaning of the agreement was that income from their personal efforts was that income from their personal efforts was to be their separate property after marriage.  Consequently, no community property was accumulated and no community estate existed.

On appeal, the wife claimed that the contract was ambiguous.  The appellate court agreed with the alternative argument that if the contract was unambiguous, it did not specifically address wages and salary.  Thus, the appellate court ruled in the wife's favor and held the wages and salary to be community property.

New Credit Card Laws

Beverly Blair Harzog reports that The Credit CARD Act was a step in the right direction, but it may not have been the solution that some people thought it was.  She indicates that we all have a little more consumer protections than we did before.  But as we've seen too often, when Washington tries to fix our problems, the legislation gets watered down to the point where the language is, well, wishy-washy at best.  

Many consumers think that the law protects them against rate hikes.  You are only protected during the first year of a new account, with limited exceptions.  You rate on the card can increase "significantly" on your future purchases as long as you are given 45 days notices although the CARD Act prohibits retroactive rate increases on existing balances.

Also, if you are more than 60 days late on a payment, the penalty rate kicks in.  A recent study showed the median penalty rate is 29.99%  In other words, if you fell behind two months on a card that had a $15,000 balance, the annual interest that you would be charged would be approximately $4,500!

There are now also added fees.  The card issuers have lost revenue due to the legislation, so it was predictable that added fees would be part of the "unintended consequences" that accompanies this kind of law.  There are annual fees, over-the-limit fees, and foreign transaction fees if you use the card abroad.

Many of these fees make the credit card bills unaffordable, so consumers seek debt relief and their options for debt settlement and bankruptcy.

Debt Consolidation

With interest rates at all time lows, it might make sense to consolidate some of your credit card debt or unsecured lines of credit into a new consolidated loan.  However, it is important to make sure that you understand the consequences of taking out certain types of debt consolidation loans.  For example, a home equity line of credit can be extremely dangerous.

When you take out a home equity line of credit to pay off your unsecured bills, it may sound like a good way to reduce the interest rates you are being charged on your credit card bills.  However, if you take out a home equity line of credit, then you have just put yourself into a position where if you become unable to pay off that HELOC for any reason...loss of job, reduction in income, death, or divorce then you will find yourself without a home after the foreclosure.

While a debt consolidation plan might work, a Chapter 7 bankruptcy would eliminate your unsecured debt and a Chapter 13 bankruptcy would eliminate all interest on the unsecured debt, if not discharge all or most of the unsecured debt.

Family Law Contracts

Family lawyers are increasingly faced with litigating family law contracts that have been drafted over the last twenty years.  The suits can involve divorce decrees, agreements incident to divorce, premarital and postmarital agreements, mediated settlement agreements, informal settlement agreements, alimony agreements, collaborative law agreements, and the like.

According to the famous Federal District Judge Learned Hand, contract interpretation should be as follows:  A contract has, strictly speaking, nothing to do with the personal, or individual, intent of the parties.  A contract is an obligation attached by the mere force of law to certain acts of the parties, usually words, which ordinarily accompany and represent a known intent.

Contract interpretation is an important issue in agreed divorces, and in high asset contested divorces.

Search & Seizure

During the execution of a search warrant for narcotics, officers observed two new bags of golf clubs with sales tags still attached and shirts with the logo of a local country club.  In order to ascertain whether or not the golf equipment could have been stolen merchandise, the officers called the country club.  Once they were informed that the property had been recently stolen, the officers seized the property.  The issue in the case is whether the necessity of the phone call to determine whether the property was stolen defeated the requirement that, in order to seize property in plain view, it must be "immediately apparent" that the property is evidence of crime.

This was before the Supreme Court in the Horton v. California case in 1990.

The Means Test

Debtors who file bankruptcy after October 2005 must undergo a Means Test analysis.  Essentially, that is a two part test.  The first half of the Means Test makes an inquiry into your "Current Monthly Income."  Current Monthly Income (CMI) is actually a term of art.  It is not necessarily what your current income is at the instant time.  CMI is the average of what your gross monthly income has been over the 6 months prior to the month in which you file the bankruptcy.

You then compare your CMI with what the IRS's guidelines indicate that most families of your size earn in the state in which you live.  Most debtors in Collin County do not pass the first part of the Means Test because most people make more around our area than other families do in Texas.

However, most of our clients pass the second part of the Means Test.  The second half of the Means Test compares your housing, utility, transportation and other necessary expenses to what the IRS's guidelines indicate are normal for a family of your size in the county in which you live.  Most of our clients pass the second half of the Means Test so that they are not required to pay any of their credit card debt in a Chapter 13 and most of the time they qualify for a Chapter 7

Gunshots Fired in McKinney

Gunshots rang out this morning near the McKinney Police Headquarters.  According to city spokeswoman Anna Folmsbee, "A suspect is dead."  "I have not been able to confirm if there are more [suspects]."  In the yahoo.com local news, an article indicates that there were no reports of anyone else injured in the shooting, which started about 9:30 a.m.

The article indicated that the McKinney campus of Collin College, a few blocks south of the station, was reportedly locked down.  Students and staff were warned by e-mail not to come to the school.

The e-mail said:  "Shots fired.  Campus on lockdown.  Cops on the scene.  Details to follow."

Police helicopters are in the air and appear to be searching for additional suspects.  Additional suspects could be charged with a number of different crimes such as Engaged in Organized Crime, Attempted Murder, Assault on a Public Servant, and Aggravated Assault with a Deadly Weapon.

Continuing Recession

Douglas McIntyre reports that a recent Wall Street Journal poll found that nearly two-thirds of Americans believe the economy has yet to hit bottom, a sharply higher percentage than the 53% who felt that way in January.  A growing and vocal minority of economists believes that there will be a double-dip recession primarily because of the intransigence of high unemployment and the rapidly faltering housing market.  

A double-dip recession would result in the price of housing continuing to fall, at least in the areas that have suffered the greatest reduction in home values.  

During the 1982 recession, the jobless rate was over 10% for over 20 consecutive months and reached 10.8% for two months.  During this period, the manufacturing base had not been destroyed.  The economy is arguably worse than it was in 1982.  

Consumer confidence hit an all-time low in February 2009 and the auto sales will probably soon drop again.  Annual car sales dropped almost 6 million dollars from 2005 to 2009.

The rise in the deficit and a rapid increase in the American national debt would cause concern among the capital markets investors who purchase U.S. Treasuries.

The effect on most of the financial services industry would be catastrophic, particularly at the regional and community bank level where a number of home and commercial real estate loans are held.  The FDIC would be forced to borrow money from the Treasury to cover bank closings.  The number of failed banks could reach the level of the savings and loan crisis which over 700 banks and mortgage lenders were shuttered.

Money Tips for the Economy

Kiplinger's Personal Finance Magazine recently posted an article that addressed the current recession and unemployment rate that is happening in the U.S.  The article stated that in this era of high unemployment, flat home prices and do-it-yourself retirement savings, some traditional rules for saving and investing are due for an overhaul.

Renting may beat buying.  Buying wins hands down when home prices are rising.  But when they're flat of failing, it makes sense only if you get a great deal, your monthly payment won't exceed rent on a comparable home by much, and you'll own the home long enough to recoup your costs for both buying and later selling your home.

Consider a Roth.  Although the traditional rule of tax planning is never to pay a tax bill today that you can put off until tomorrow, Roth IRAs and Roth 401(k) plans stand that rule on its head.  With a traditional IRA or work-based retirement plan, you get an upfront tax deduction, but every dime you withdraw in retirement is taxed at your ordinary income tax rate.  With a Roth, you forgo the upfront tax break, but all withdrawals--including decades of earnings--can be withdrawn tax-free.  To contribute to a Roth IRA, your income in 2010 cannot top $120,000 if you're single or $177,00 if your married.

Double Dip Recession

An article on MSNBC.COM by John Schloen indicates that the outlook for the U.S. economy just went from half-full to half-empty.

The latest economic data out this week confirmed a gloomier forecast issued by the Federal Reserve Tuesday after its regular rate-setting meeting.  That has renewed fears of a so-called "Double-Dip" recession that are weighing on investors, spooking consumers and slowing businesses from hiring.

Many economists argue that a recovery, slow but steady, is still intact.  But growth forecasts are falling, and the odds of another contraction are rising. 

The next couple of months or quarters will determine whether the economy double-dips or whether it actually picks up a little momentum," said Stuart Hoffman, chief economist at PNC financial.

After a surge in growth rate last year and in early 2010, the government estimated last month that gross domestic product grew at a 2.4 percent in the second quarter, down from 3.7 percent in the first three months of the year.  

But fresher data suggest the economy may have barely grown at all in the quarter, and early results from the current third quarter are not too encouraging.  As a result a midsummer stock market rally was abruptly halted this week and the stock market reversed course, dropping about 4 percent in just a few sessions.

Meanwhile the painfully weak job market shows no signs of improvement.  The economy has added a paltry 650,000 jobs this year and the official unemployment rate remains at a recessionary 9.5 percent.  A report Thursday showed that first-time claims for jobless benefits rose in the latest week to 484,000, the highest total since February.

Though consumers continue to pare down debt, they're still struggling to pay off the huge borrowing spree of the past decade.

There is little incentive for builders to build, especially because the flow of home foreclosures shows little sign of abating.   Banks have stepped up repossessions this year to clear out the backlog of bad loans, pushing the foreclosure rate higher for eight straight months and creating a huge backlog of unsold homes.

Foreclosure Rates Surge in July

According to an article from The Huffington Post, the number of U.S. homes lost to foreclosure surged in July, as lenders take back more properties from homeowners who have been in default for months on end. 

Lenders repossessed 92,858 properties last month, up 9 percent from June and an increase of 6 percent from July 2009.

Banks have stepped up repossessions this year to clear out the backlog of bad loans.  July makes the eighth month in a row that the pace of homes lost to foreclosure has increased on an annual basis.

Still, the number of homeowners who have fallen behind on their payments remains high, and these borrowers are being allowed to stay in their homes longer.  That's partly because lenders are reluctant to add to the glut of foreclosed homes on the market.  They also are swamped with an unprecedented number of defaulting properties and have been overwhelmed by the volume.  

The number of properties receiving an initial default notice--the first step in the foreclosure process--rose 1 percent last month, but was down 28 versus July 2009.

Economic woes, such as unemployment or reduced income, are now the main catalysts for foreclosures.  

5 Economic Statistics

According to a report found on yahoo.com, the following are some disturbing economic statistics:

1.  The number of Americans who are receiving food stamps rose to a new all-time record of 40.8;

2.  The U.S. economy lost 131,000 more jobs during the month of July, and the United States has lost 10.5 million jobs since 2007;

3.  Americans who are out of work are finding it incredibly difficult to get back into the workforce;

4.  The U.S. government keeps trying to pump up the economy with debt, and in the process things are getting wildly out of control.   According to a U.S. Treasury Department report to Congress, the U.S. national debt will top $13.6 trillion this year and climb to an estimated $19.6 trillion by 2015;

5.  Social Security will pay out more in benefits in 2010 than it receives in payroll taxes.  This was not supposed to happen until at least 2015.  In the years ahead, these new "Social Security deficits" are projected to be absolutely catastrophic.

Why are companies still not hiring?

Rick Newman reports that since late 2009, corporate profits have been surging, yet companies are hoarding cash instead of hiring more workers.  In the latest earnings period, three-quarters of all S&P 500 firms reported higher sales and profits, with the majority beating Wall Street's earnings estimates.  And since last summer, S&P earnings growth has been an astounding 55 percent, according to Bank of America Merrill Lynch.  That's the best performance, by far, in any 12-month period following a recession.

But a rebound in jobs is clearly not following the surge in profits.  As we all know, hiring remains painfully weak, with the unemployment rate stuck at 9.5 percent and Americans gloomy about the future.  The private sector is finally adding a few jobs, but government is shedding more.  With the economy slowing, that unhappy trend could intensify--and unemployment could drift back toward 10 percent by the end of the year.

There are a number of reasons for this phenomenon.  One, the earnings surge is misleading.  The numbers are so high because they are being compared to abysmal lows.  Secondly, the earnings do not always reflect the U.S. economy.  Half of all S7P 500 firm's earnings actually come from overseas.

Third, for many big firms, those big earnings gains will deflate when the comparisons get harder next year.  Next year will be tougher.

Finally, demand is weak and technology and foreign labor are cheaper than U.S. workers.  Many jobs are being outsourced overseas and many people are experiencing cuts in their hours and overtime.  All of these things lead people to have to seek out their options to survive.

Collin County Unemployment

An article by Danny Gallagher in the McKinney Courier-Gazette recently reported some bad news about the unemployment rate increase in June this year.  The article reported as follows:

It would seem that the U.S. Legislature picked the perfect time to reinstate those unemployment checks.

Unemployment rates for Collin County rose by almost one-half of a percentage point for the month of June from 7.5 to 7.9 percent, mirroring the same rate increases for 2009, according to data tabulated by the Texas Force Commission.

Collin County also had 8 percent unemployment in June of 2009, but by a much higher increase from May of 7.3, according to tabulated data.

The state, however, faired much better with their unemployment rate.  Texas' rate dropped to 8.2 percent for June, which is "well below the U.S. seasonally adjusted unemployment rate of 9.5 percent for the same month (last year)," the TWC said in a released statement.

'Texas employment has grown every month in 2010," TWC Chairman Tom Pauken said.  "Notably, Texas employers in good producing industries added jobs in the month of June, which included gains in manufacturing, construction and mining and logging."

Such a small decrease, however, does not paint a perfect economic picture for the state, TWC Commissioner Representing Labor Ronny Congleton said.

"While I am encouraged by the decrease in the Texas unemployment rate, times are tough for Texas workers and their families,"  Congleton said.  "Job seekers should turn to WorkInTexas.com and our workforce centers across Texas for re-employment and support services."

TWC officials also announced that unemployment benefits have been extended into November, thanks to recent federal legislation that allows "long-term claimants to continue receiving unemployment benefits."

The 150,000 unemployment claimants who exhausted their previous benefits to the last deadline can now file new claims under the new deadline.

"The TWC has been advising claimants to continue requesting payments, so they now can receive payments for weeks since the last expiration date," according to a released statement. 

Third World America

Arianna Huffington wrote a book about the disappearance of the middle class in America.  One comment from that book reads:

The vast majority of people who file for bankruptcy are middle-class folks who can't pay their bills because they've lost their jobs or been hit with high medical bills.  In fact, a 2009 study by researchers at Harvard and Ohio University show that health-care problems were the root cause of 62 percent of all personal bankruptcies in America in 2007.  

When the same researchers did this study across fives states in 2001, health-care problems caused only 50 percent of bankruptcy filings.  According to the American Bankruptcy Institute, America had 1.4 million personal bankruptcies in 2009, a 32 percent increase over the previous year.  Put another way:  Every thirty seconds, someone in this country files for bankruptcy in the way of a serious illness.

Negative Equity & Foreclosures

The number of homes that are underwater on their mortgages has remained disturbingly high in 2010.  Over 11 million mortgage loans are underwater and have negative equity.  That is nearly 1/4 of all the mortgages in the United States.

There is a direct correlation between a high number of negative equity mortgages and the rate of foreclosures.  When their are a lot of homes with negative equity, the foreclosure rates rise.  Millions of homes were lost to foreclosure in 2008 and 2009.   Before the recession hit in December of 2007, the foreclosure rates were much lower.  

Back before 2007, and the sub prime lending melt down, many unscrupulous lenders and borrowers were too quick to enter into mortgage agreements for amounts that people could not afford within their budget.  When the recession started and the rate of job loss spiked, many people could simply not keep up with their mortgage payments when one or both spouses lost their job.  The unemployment rate continues at a historical level of over 11 percent.  Many have been forced into bankruptcy in order to save or be saved from their home loans.

Timeshares

Timeshares are tempting.  You and your wife go to Florida, or Hawaii, or somewhere that you just absolutely fall in love with and decide you want to continue coming back to try to relive that magical trip.  There is a salesman there who describes to you how you can have a time share that should basically pay for itself and you can come back to this place, or any one of a number of sister properties for 2 or 3 weeks a year.  All you have to do is finance it for ten to fifteen thousand dollars and you will save money in the future after it has been rented out for the other 49 weeks of the year.

A lot of the time it does not work out as wonderfully as it originally sounded.  If you have been hurt due to the ongoing recession and realize that you need to shape up your finances then you can discharge the obligation on the timeshare in a bankruptcy. The timeshare should be dischargeable in most Chapter 7 and Chapter 13 bankruptcies.

Your unsecured non-priority (credit card and medical bills) should be dischargeable as well.  In Texas, you would be able to claim your home, cars for drivers in the family, and personal property that you need to  maintain your profession and life as exempt.

What do I do if I've been sued?

There are a number of reasons that you can be sued in civil court.  If you fail to pay your credit card bill, then often you are served with a lawsuit after about 4-6 months.  If you have a home that is sold at a foreclosure sale, then the bank typically sues you on the deficiency.  In other words, if you owe $200,000 on the mortgage, and it sells for $160,000 at the foreclosure sale, then the bank typically would sue you on the $40,000 deficiency.  The same thing occurs if you have a car repossessed and the dealership resells it at less than what you still owe.

If you are sued, then you need an attorney.  You have a very limited amount of time to file an answer, or you will suffer a default judgment.  Sometimes, a General Denial Answer is not adequate, and you need to file a Verified Denial.  The clerks cannot give you legal advice, so you need to consult with a lawyer.

Filing Chapter 7 bankruptcy or Chapter 13 bankruptcy will typically allow you to discharge the debt alleged in the lawsuit.

Chapter 7 Timeline

The timeline for how a Chapter 7 Bankruptcy proceeds is as follows:  Day 1 the petition is filed. Then, typically about 30-45 days after the bankruptcy petition is filed and the automatic stay provisions take effect, there is a 341 meeting.  It is called a First Meeting of Creditors in the Bankruptcy Code.  However, most of the time the creditors do not attend.

It is a meeting with the bankruptcy trustee who will review the schedules that have been filed.  If the trustee has no objections, then 30 days later is the deadline for the creditors to object to the exemptions.  The deadline to object to the discharge is 60 days after the date of the 341 meeting.  

Most of our clients receive their Discharge Order in the mail about 75 days after the date of the discharge.  One thing to note is that if an inheritance or windfall is received or if the debtor becomes entitled to the same within 180 days after the date of the discharge, then that must be disclosed to the Bankruptcy Trustee.

Slow Pace of Job Growth

Yahoo finance reports that there is "A terribly slow pace of job growth."  The report indicated that at 131,000 the headline payroll loss was worse than expected.  Also, the tally for May and June was revised down by nearly 100,000, further evidence that the U.S. economy cooled considerably after the 1st Quarter spurt.

Debt Consolidation

Debt consolidation programs are beneficial to some people who have quite a bit of credit card debt.  These programs are typically not able to eliminate the credit card interest rates like a bankruptcy can, but they are beneficial in some circumstances.

Debt consolidation is not the same thing as a consolidation loan.  It is where you consolidate all of your credit cards into a single payment so that you do not have to keep up with them all.  Debt consolidation is often not the best option for those who have a great deal of unsecured debt.  Many times, a Chapter 7 or Chapter 13 bankruptcy is the best alternative.  In most bankruptcies, the debtor pays back none or very little of the unsecured debt. That allows them to start saving for retirement or their children's education.

Hard Time Finding a Job

Consumers are spending less in this recession, and that is causing businesses to hit the brakes on hiring new employees.  Unfortunately, that is just another facilitator of the domino effect in this continuing recession. It is a "Catch 22" that unemployment is rapidly approaching double digits and seemingly the only way that employers will increase hiring is if consumers spend more.

It may take quite a bit of time to recover from this sluggish economy.  Many families who have a wage earner who has lost a job have been forced to deplete their savings or incur credit card debt to make ends meet.  Most who cannot afford to repay 401k loans end up with IRS income tax liability.  Those who have no other choice but to use their credit cards realize that they are being charged a large amount of interest.  Sometimes, either a debt settlement plan or filing bankruptcy are the only options.


Evolution of Miranda Rights

An article written in "Voice for the Defense" indicated that Justice Anthony Kennedy ruled that treating an ambiguous or equivocal act, omission, or statement as an invocation of Miranda rights "might add marginally to Miranda's goal of dispelling the compulsion inherent in custodial interrogation," but "as Miranda holds, full comprehension of the rights to remain silent and request an attorney are sufficient to dispel whatever coercion is inherent in the interrogation process."

A defendant in the Thompkins case did not say that he wanted to remain silent or that he did not want to talk with the police.  Had he made either of these simple, unambiguous statements, he would have invoked his "right to cut off questioning."  Here he did neither, so he did not invoke his right to remain silent.

Why file a Chapter 7 bankruptcy?

Chapter 7 is typically the Chapter we recommend if someone needs to file bankruptcy.  It is the quickest, the cheapest and the easiest to file if you are eligible.  The debtor needs to be current with the secured creditors that he/she wishes to keep.  In other words, if you want to keep your house and file a Chapter 7 rather than a Chapter 13 (which would help a wage earner get caught up on the arrears on the house) then you would need to get current.

Chapter 7 lasts 6 months, whereas Chapter 13 lasts a minimum of 36 and maximum of 60 months.   Chapter 7 is called a liquidation proceeding, a term that implies that people lose their property that they have worked hard to acquire if they file.  That simply is not true.  Under either Chapter 7 or Chapter 13 bankruptcy there are two lists of exemptions under the Texas Property Code and the Bankruptcy Code so that most of our clients lose none of their property.  Before the bankruptcy is filed we counsel our clients at length about the exemption schedules.

Credit Card Fees

For years credit card companies were raising interest rates for a number of reasons.  There was fine print on the agreement that few people read before signing the agreement which often authorized the credit card to raise its rates even if the cardholder only fell behind on another credit card...not even that particular card.

As a result, The Credit Card Accountability Responsibility and Disclosure Act of 2009 was passed by Congress and signed by President Obama.  According to a new article on yahoo.com, credit card companies are trying to skirt that law and are attempting to find new ways to recapture some of their losses they took as a result of the Act.

This may well result in the number of consumer bankruptcies in this country continuing to rise.

Crack/Cocaine

Possession of a Controlled Substance is a felony in Texas.  If you possess less than two ounces, then it is a State Jail Felony.  However, it can be enhanced for a number of reasons, including but not limited to possession in a Drug Free School Zone.

There are a number of different ways to get such a case dismissed or obtain an acquittal.  One, the state has to prove beyond a reasonable doubt at trial that the drugs were in your care, custody, and control.  But, before the case even gets to trial the state will have the burden of proving that the reason the police came into contact with the suspect was supported by probable cause.

Most of the time, if a Motion to Suppress is granted the entire Possession of Controlled Substance case will be dismissed.

If I don't have much credit card debt, is bankruptcy an option?

Bankruptcy is often your best option if you have a secured obligation that you can no longer afford, or if you have other unsecured debt even if you have no credit card debt.  In that situation, you can file a Chapter 7 bankruptcy if you qualify.  If you are several months behind on your house and you want to try to keep it, then you can file a Chapter 13 bankruptcy to try to keep it.

However, whether or not you are eligible to file both chapters is contingent on your passing the Means Test Analysis.  It is a test where you have to compare your gross income to what the IRS's guidelines indicate that most families of your size make in Texas.  Then, if you make more the second part of the Means Test compares your Local Housing, Transportation and Utility expenses to what the IRS's guidelines indicate is typical for the county in which you reside.

Why file Chapter 13 Bankruptcy?

There are a number of reasons that you would file a Chapter 13 Bankruptcy.  First, most people that are having financial problems have quite a bit of unsecured debt.  Unsecured debt is an obligation which does not have a lien against any property.

Secondly, a debtor who is being charged interest by the IRS on a past due tax obligation can file a Chapter 13 to eliminate the post petition interest and penalties.  Also, if someone is facing foreclosure, then a Chapter 13 can stop the foreclosure and help the debtor to get caught up on the arrears.  Chapter 13 can also prevent repossession.

Car Payments

In a Chapter 7 bankruptcy, the debtor has to continue making the regular monthly payments if he/she wishes to retain their interest in the vehicle.  If the individual who files the Chapter 7 no longer wishes to keep the car, then they can surrender their interest in the vehicle and the entire amount of debt will be discharged.  That is extremely beneficial if the debtor no longer wants the car.

A Chapter 13 bankruptcy can help with the car payments and interest as well.  If the car is relatively recently financed, then the interest rate and payment is usually reduced if the car is paid through the Chapter 13 Plan.  If the car was financed over 2.5 years prior to the Chapter 13 petition being filed, then the debtor is able to "cram down" the note on the vehicle.  That means that the debtor can pay the value of the vehicle rather than the amount of the debt through the Chapter 13 Plan.  The amount owed above what the car is worth is discharged, just like the credit card debt.  That almost always substantially reduces the monthly payment on the vehicle.

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