Good Things Come to Those Who Act

by Gene Sollows

A judge once wrote that bankruptcy is for the “honest, but unfortunate, debtor.” At Bailey & Galyen, our bankruptcy clients fit that description to a T. But sometimes, prospective clients wait too long to see us out of a sense of duty, guilt, pride or simply because they do not know their legal options. Our honest and well-meaning clients sometimes deprive themselves of important rights by trying to do the “right” thing.

Waiting can have serious consequences:

Foreclosure: Despite facing the loss of their most important asset, some homeowners will enter a state of denial about the foreclosure of their home due to widespread misinformation regarding loan modifications and informal loan workout procedures. When these homeowners come to us after a foreclosure, there is often little relief available. Foreclosure transfers legal title to real estate to the buyer at the foreclosure sale or the bank if there are no bidders. With rare exceptions, bankruptcy cannot restore legal title to a homeowner whose home was foreclosed.

If you receive any notice of an acceleration of your mortgage debt or of a foreclosure sale, call us immediately. Waiting can have disastrous consequences; every year we see several homeowners devastated because they waited too long and lost their home to foreclosure.

Repossession: Other consumers do the same with their vehicle loans, playing a cat-and-mouse game with their car creditors. Did you know that in Texas a vehicle can generally be repossessed without notice to you once the note is in default? Once the vehicle is repossessed, the lender may sell the vehicle in as little as seven days.

If you become aware of a default on a vehicle loan, call us immediately. Preventing a repossession is the best solution, but in many situations we can recover a repossessed vehicle as long as it has not yet been sold at auction (though often the vehicle is damaged or personal items are missing).

Lawsuit: In most Texas state courts, you have roughly 10 to 20 days to file an answer to a civil lawsuit. Some well-meaning consumers try to work out the case informally with the creditor’s attorney, not realizing that if you fail to answer, the creditor can get a default judgment. This judgment can then be filed in the records of the county where you own real property, clouding the legal title to the property. The judgment can also be collected on in a variety of ways, including levy by the sheriff and garnishment of bank accounts. While wages in Texas generally cannot be garnished, your bank account is fair game!

If you are served with a citation or other legal process from a creditor, call us immediately. We can usually stop creditor collection activity, but only if you take action.

As you can see, good things come to those who act. Don’t be the “honest, but unfortunate, debtor” who slept on his legal rights and lost his home, car or bank account due to wishful thinking, reliance on creditors’ honesty or pride.

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