Results 1 to 2 of 2

Hybrid View

  1. #1
    Join Date
    Jun 2012
    Location
    TX
    Posts
    52

    Default Maximum Interest on a Judgment

    My question involves bankruptcy in the state of: TX

    In a Judgment, the Court awarded 6% interest on the award until paid by the other party. Of course a Abstract of Judgment was filed immediately after the award and of course several months later the other party filed for Bankruptcy protection.

    While this was over 4 years ago, the lawyer I hired after the Debtor couldn't submit an approvable Plan to the Trustee, with one of the issues of the Debtor wanting 60 months to pay the debt out but only qualifying for 24 months or something like that which meant that unless I made some type of agreement to allow the Debtor to pay it out over 60 months, he would either have to pay it out under a Plan for 24 months or his request for relief would be denied and the Sheriff's sale could go on and the Debtor had more than enough non-exempt properties to satisfy the entire debt in full and one lump sum rather than installments.

    I was and still am under the belief that in the case there is no written agreement prior to the Debtor's filing, then 5 % interest is the maximum amount that a Creditor can seek or accept from the Debtor on secured judgment liens. Despite notifying my attorney by phone and email NOT to agree or accept any agreement or compromise with the Debtor in regards to their offer the day before the dismissal hearing, which in part would have paid 6% interest but allowed the 60 month plan, my attorney accepted the agreement.

    The reason I mention this is due to the fact that the Principal has been paid, the remaining months being the sum of the Interest, the Debtor has stopped paying like clockwork. And now the Trustee has filed a motion to dismiss for Debtor failing to turn in his Tax filing for last year, the amount outstanding is around $5k and if the Debtor relief is dismissed prior to being discharged, then would it be wrong to conclude that their would still be a lien on the secured non-exempt properties in that amount owed at the time the case is dismissed? I can't see a debtor going that far to stop and still owe except he will file his tax with Trustee during the dismissal hearing before the Judge and make some motion for the Court to dismiss the balance since the Creditor charged 6% when 5% was the maximum and the Bankruptcy Court will properly tell the Creditor you got what you deserved on interest for overcharging him, NOTHING. And that is absolutely right if I am not wrong about the interest issue.

    But having seen it operated from both sides, that is a pretty slick machine the forefathers built, it is true and fair and like Benjamin Franklin said, neither a borrower nor lender be. My sentiments exactly, sow and reap. Non obstante verdicto, may equity and equality prosper unending.

  2. #2
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: Maximum Interest

    You appear to be alluding to XXX
    Quote Quoting 11 USC § 506 - Determination of secured status
    (a)
    (1) An allowed claim of a creditor secured by a lien on property in which the estate has an interest, or that is subject to setoff under section 553 of this title, is a secured claim to the extent of the value of such creditor’s interest in the estate’s interest in such property, or to the extent of the amount subject to setoff, as the case may be, and is an unsecured claim to the extent that the value of such creditor’s interest or the amount so subject to setoff is less than the amount of such allowed claim. Such value shall be determined in light of the purpose of the valuation and of the proposed disposition or use of such property, and in conjunction with any hearing on such disposition or use or on a plan affecting such creditor’s interest.

    (2) If the debtor is an individual in a case under chapter 7 or 13, such value with respect to personal property securing an allowed claim shall be determined based on the replacement value of such property as of the date of the filing of the petition without deduction for costs of sale or marketing. With respect to property acquired for personal, family, or household purposes, replacement value shall mean the price a retail merchant would charge for property of that kind considering the age and condition of the property at the time value is determined.

    (b) To the extent that an allowed secured claim is secured by property the value of which, after any recovery under subsection (c) of this section, is greater than the amount of such claim, there shall be allowed to the holder of such claim, interest on such claim, and any reasonable fees, costs, or charges provided for under the agreement or State statute under which such claim arose.

    (c) The trustee may recover from property securing an allowed secured claim the reasonable, necessary costs and expenses of preserving, or disposing of, such property to the extent of any benefit to the holder of such claim, including the payment of all ad valorem property taxes with respect to the property.

    (d) To the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void, unless—

    (1) such claim was disallowed only under section 502 (b)(5) or 502 (e) of this title; or

    (2) such claim is not an allowed secured claim due only to the failure of any entity to file a proof of such claim under section 501 of this title.
    Perhaps you are indirectly alluding to Tex Fin. Code § 304.003, as in recent years the judgment interest rate calculated under that statute has been 5%, but we have no way of verifying that to be the statute to which you're alluding or that the judgment was issued when the judgment interest rate was pegged at 5%. If the debtor wanted to dispute the interest, he should have done so in a timely manner. It seems safe to say that the court is not going to punish a creditor for receiving payments under a Chapter 13 Plan to which the debtor did not object, based upon the debtor's failure to abide by the plan.

    1. Sponsored Links
       

Similar Threads

  1. Business Finance: Maximum Interest Rate
    By Oimie in forum Business Law
    Replies: 4
    Last Post: 12-09-2012, 10:51 AM
  2. Replies: 2
    Last Post: 12-13-2008, 10:06 PM
  3. Maximum Interest Charged On Delinquent Homeowners Dues
    By Willard in forum Real Estate Ownership and Title
    Replies: 1
    Last Post: 05-03-2008, 11:57 AM
  4. Judgment and Interest
    By ajm in forum Civil Procedure
    Replies: 4
    Last Post: 07-29-2007, 10:00 AM
  5. Interest Rates: Maximum Interest Rate On Delinquent HOA Annual Assessments
    By pen555 in forum Debts and Collections
    Replies: 1
    Last Post: 10-12-2006, 03:36 PM
 
 
Sponsored Links

Legal Help, Information and Resources