Some questions about Texas Personal Debt Bankruptcy Law

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Q. This is in Texas. Someone I know filed for bankruptcy some time ago and it was discharged last fall by the court. In the bankruptcy proceedings, he apparently did not name as creditors at least one old buddy from whom he borrowed quote a bit of money on a personal basis. Some of the money was given by check, but some was cash. There were few or no records kept of the loans. Since he did not name the old buddy as a creditor, does that mean that those debts were not discharged by the bankruptcy proceeding and he can be required to pay them? Is it worth it for his old buddy to try to get paid?

A. There are three issues here: (1) Was the debt discharged in bankruptcy? (2) If not, how hard would it be to get a judgment? (3) If the old buddy gets a judgment, how hard would it be to collect it? I am a Texan, but I am NOT a lawyer. Therefore, I may well be wrong, but: (1) My understanding of bankruptcy law is that if the old buddy was not named as a creditor and if he had no actual knowledge of the bankruptcy, then the debt was not discharged. If a lawyer tells you something different, assume he/she is right and I am wrong. Bankruptcy law is Federal. (2) The Statute of Limitations for debt in Texas is four years. If the debt is less than four years old, then it is not barred by the Statute of Limitations. If the debt is less than $5000, the old buddy can sue in Small Claims Court in the County and Precinct in which the debtor resides. He won't need a lawyer and procedures are informal, but the burden of proof is on him to prove that the debt exists and is unpaid. In Texas, I believe it is legal to record a telephone conversation with permission of only one party. Therefore, one way of proving the debt is to record a telephone conversation with the debtor in which he admits owing the money. (3) If you succeed in obtaining a judgment, the Court will not collect it for you. The Court will not "require him to pay." Collecting a judgment in Texas is difficult because so many assets are exempt from attachment, such as the debtor's wages, home, car, most furniture, etc. If he owns real estate other than the house he lives in, your chances of eventually collecting are excellent; if he has money in a bank and you can find the bank and are willing to learn how to file a writ of garnishment, your chances of collecting are fairly good; otherwise, your chances are poor. If the debtor was recently discharged from bankruptcy, it is unlikely that he is sitting on a pile of assets. Bottom line: It is probably not worth it. If the debt is large, look in the telephone director under Attorney Referral Service. Many County Bar Associations run referral services which allow you to consult with an attorney for a minimal fee.

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