Texas

 

 

TX FIN § 393.001

Chapter 393. Credit Services Organizations


§ 393.001. Definitions


In this chapter:

(1) "Consumer" means an individual who is solicited to purchase or who purchases the services of a credit services organization.

(2) "Consumer reporting agency" has the meaning assigned by Section 603(f), Fair Credit Reporting Act (15 U.S.C. Section 1681a(f)).

(3) "Credit services organization" means a person who provides, or represents that the person can or will provide, for the payment of valuable consideration any of the following services with respect to the extension of consumer credit by others:

(A) improving a consumer's credit history or rating;

(B) obtaining an extension of consumer credit for a consumer; or

(C) providing advice or assistance to a consumer with regard to Paragraph (A) or (B).

(4) "Extension of consumer credit" means the right to defer payment of debt offered or granted primarily for personal, family, or household purposes or to incur the debt and defer its payment.


§ 393.002. Persons Not Covered


(a) This chapter does not apply to:

(1) a person:

(A) authorized to make a loan or grant an extension of consumer credit under the laws of this state or the United States ; and

(B) subject to regulation and supervision by this state or the United States ;

(2) a lender approved by the United States secretary of housing and urban development for participation in a mortgage insurance program under the National Housing Act (12 U.S.C. Section 1701 et seq.);

(3) a bank or savings association the deposits or accounts of which are eligible to be insured by the Federal Deposit Insurance Corporation or a subsidiary of the bank or association;

(4) a credit union doing business in this state;

(5) a nonprofit organization exempt from taxation under Section 501(c)(3), Internal Revenue Code of 1986 (26 U.S.C. Section 501(c)(3));

(6) a real estate broker or salesperson licensed under Chapter 1101, Occupations Code, who is acting within the course and scope of that license;

(7) an individual licensed to practice law in this state who is acting within the course and scope of the individual's practice as an attorney;

(8) a broker-dealer registered with the Securities and Exchange Commission or the Commodity Futures Trading Commission acting within the course and scope of that regulation;

(9) a consumer reporting agency;

(10) a person whose primary business is making loans secured by liens on real property;

(11) a mortgage broker or loan officer licensed under Chapter 156, Finance Code, who is acting within the course and scope of that license; or

(12) an electronic return originator who:

(A) is an authorized Internal Revenue Service e-file provider; and

(B) makes, negotiates, arranges for, or transacts a loan that is based on a person's federal income tax refund on behalf of a bank, savings bank, savings and loan association, or credit union.


(b) In an action under this chapter, a person claiming an exemption under this section has the burden of proving the exemption.


§ 393.003. Waiver Void


A waiver of a provision of this chapter by a consumer is void.


[Sections 393.004 to 393.100 reserved for expansion]


[Sections 393.004 to 393.100 reserved for expansion]


Subchapter B. Registration and Disclosure Statements


§ 393.101. Registration Statement


(a) Before conducting business in this state, a credit services organization shall register with the secretary of state by filing a statement that:

(1) contains the name and address of:

(A) the organization; and

(B) each person who directly or indirectly owns or controls at least 10 percent of the outstanding shares of stock in the organization; and

(2) fully discloses any litigation or unresolved complaint relating to the operation of the organization filed with a governmental authority of this state or contains a notarized statement that there has been no litigation or unresolved complaint of that type.


(b) The organization shall keep a copy of the registration statement in its files.


(c) The secretary of state may not require an organization to provide information other than information contained in the registration statement.


(d) A registration certificate expires on the first anniversary of its date of issuance. A registered credit services organization may renew a registration certificate by filing a renewal application, in the form prescribed by the secretary of state, and paying the renewal fee.


§ 393.102. Update of Registration Statement


A credit services organization shall update information contained in the registration statement not later than the 90th day after the date on which the information changes.


§ 393.103. Inspection of Registration Statement


A credit services organization shall allow a consumer to inspect the registration statement on request.


§ 393.104. Filing Fee


The secretary of state may charge a credit services organization a reasonable fee to cover the cost of filing a registration statement or renewal application in an amount not to exceed $100.


§ 393.105. Disclosure Statement


Before executing a contract with a consumer or receiving valuable consideration from a consumer, a credit services organization shall provide the consumer with a document containing:

(1) a complete and detailed description of the services to be performed by the organization for the consumer and the total cost of those services;

(2) an explanation of the consumer's right to proceed against the surety bond or account obtained under Section 393.302;

(3) the name and address of the surety company that issued the surety bond or the name and address of the depository and the trustee and the account number of the surety account, as appropriate;

(4) a complete and accurate statement of the consumer's right to review information on the consumer maintained in a file by a consumer reporting agency, as provided by the Fair Credit Reporting Act (15 U.S.C. Section 1681 et seq.);

(5) a statement that information in the consumer's file is available for review:

(A) without charge on request made to the consumer reporting agency not later than the 30th day after the date on which the agency receives notice the consumer has been denied credit; and

(B) for a minimal charge at any other time;

(6) a complete and accurate statement of the consumer's right to dispute directly with a consumer reporting agency the completeness or accuracy of an item contained in the consumer's file maintained by the agency;

(7) a statement that accurate information cannot be permanently removed from the files of a consumer reporting agency;

(8) a complete and accurate statement explaining:

(A) when consumer information becomes obsolete; and

(B) that a consumer reporting agency is prevented from issuing a report containing obsolete information; and

(9) a complete and accurate statement of the availability of nonprofit credit counseling services.


§ 393.106. Copy of Disclosure Statement


A credit services organization shall keep in its files a copy of a document required under Section 393.105, signed by the consumer, acknowledging receipt, until the second anniversary of the date on which the organization provides the document.


[Sections 393.107 to 393.200 reserved for expansion]


[Sections 393.107 to 393.200 reserved for expansion]


Subchapter C. Contract for Services


§ 393.201. Form and Terms of Contract


(a) Each contract for the purchase of the services of a credit services organization by a consumer must be in writing, dated, and signed by the consumer.


(b) In addition to the notice required by Section 393.202, the contract must:

(1) contain the payment terms, including the total payments to be made by the consumer, whether to the organization or to another person;

(2) fully describe the services the organization is to perform for the consumer, including each guarantee and each promise of a full or partial refund and the estimated period for performing the services, not to exceed 180 days;

(3) contain the address of the organization's principal place of business; and

(4) contain the name and address of the organization's agent in this state authorized to receive service of process.


§ 393.202. Notice of Cancellation


(a) The contract must conspicuously state the following, in type that is boldfaced, capitalized, underlined, or otherwise distinguished from the surrounding written material and in immediate proximity to the space reserved for the consumer's signature: "You, the buyer, may cancel this contract at any time before midnight of the third day after the date of the transaction. See the attached notice of cancellation form for an explanation of this right."


(b) The contract must have attached two easily detachable copies of a cancellation notice. The notice must be in boldfaced type and in the following form:

You may cancel this contract, without any penalty or obligation, within three days after the date the contract is signed.

 

"Notice of Cancellation

 

If you cancel, any payment made by you under this contract will be returned within 10 days after the date of receipt by the seller of your cancellation notice.

To cancel this contract, mail or deliver a signed dated copy of this cancellation notice, or other written notice, to:


(name of seller) at (address of seller) (place of business) not later than midnight (date)


I hereby cancel this transaction.

(date)

 

(purchaser's signature)"



§ 393.203. Issuance of Contract and Other Documents


A credit services organization shall give to the consumer, when the document is signed, a copy of the completed contract and any other document the organization requires the consumer to sign.


§ 393.204. Breach of Contract


The breach by a credit services organization of a contract under this chapter, or of an obligation arising from a contract under this chapter, is a violation of this chapter.


[Sections 393.205 to 393.300 reserved for expansion]


[Sections 393.205 to 393.300 reserved for expansion]


Subchapter D. Prohibitions and Restrictions


§ 393.301. Representative


In this subchapter, a representative of a credit services organization includes:

(1) a salesperson, agent, or other representative of the organization; and

(2) an independent contractor who sells or attempts to sell the services of the organization.


§ 393.302. Charge or Receipt of Consideration Before Completion of Services


A credit services organization or a representative of the organization may charge or receive from a consumer valuable consideration before completely performing all the services the organization has agreed to perform for the consumer only if the organization has obtained a surety bond for each of its locations or established and maintained a surety account for each of its locations in accordance with Subchapter E [FN1].

[FN1] V.T.C.A., Finance Code § 393.401 et seq.



§ 393.303. Charge or Receipt of Consideration for Referral


A credit services organization or a representative of the organization may not charge or receive from a consumer valuable consideration solely for referring the consumer to a retail seller who will or may extend to the consumer credit that is substantially the same as that available to the public.


§ 393.304. False or Misleading Representation or Statement


A credit services organization or a representative of the organization may not:

(1) make or use a false or misleading representation in the offer or sale of the services of the organization, including:

(A) guaranteeing to "erase bad credit" or words to that effect unless the representation clearly discloses this can be done only if the credit history is inaccurate or obsolete; and

(B) guaranteeing an extension of consumer credit regardless of the person's credit history unless the representation clearly discloses the eligibility requirements for obtaining the extension; or

(2) make, or advise a consumer to make, a statement relating to a consumer's credit worthiness, credit standing, or credit capacity that the person knows, or should know by the exercise of reasonable care, to be false or misleading to a:

(A) consumer reporting agency; or

(B) person who has extended consumer credit to a consumer or to whom a consumer is applying for an extension of consumer credit.


§ 393.305. Fraudulent or Deceptive Conduct


A credit services organization or a representative of the organization may not directly or indirectly engage in a fraudulent or deceptive act, practice, or course of business relating to the offer or sale of the services of the organization.


§ 393.306. Advertising Services Without Filing Registration Statement


A credit services organization or a representative of the organization may not advertise the services of the organization if the organization has not filed a registration statement required by Subchapter B. [FN1]

[FN1] V.T.C.A., Finance Code § 393.101 et seq.



§ 393.307. Causing Waiver Prohibited


A credit services organization may not attempt to cause a consumer to waive a right under this chapter.


[Sections 393.308 to 393.400 reserved for expansion]


[Sections 393.308 to 393.400 reserved for expansion]


Subchapter E. Surety Bond; Surety Account


§ 393.401. Surety Bond


(a) The surety bond of a credit services organization must be issued by a surety company authorized to do business in this state.


(b) A copy of the bond shall be filed with the secretary of state.


§ 393.402. Surety Account


(a) The surety account of a credit services organization must be held in trust at a federally insured bank or savings association located in this state.


(b) The name of the depository and the trustee and the account number of the surety account must be filed with the secretary of state.


§ 393.403. Amount of Surety Bond or Account


The surety bond or account of a credit services organization must be in the amount of $10,000.

§ 393.404. Beneficiary of Surety Bond or Account


The surety bond or account of a credit services organization must be in favor of:

(1) this state for the benefit of a person damaged by a violation of this chapter; and

(2) a person damaged by a violation of this chapter.


§ 393.405. Claim Against Surety Bond or Account


(a) A person making a claim against a surety bond or account of a credit services organization for a violation of this chapter may file suit against:

(1) the organization; and

(2) the surety or trustee.


(b) A surety or trustee is liable only for actual damages, reasonable attorney's fees, and court costs awarded under Section 393.503(a).


(c) The aggregate liability of a surety or trustee for an organization's violation of this chapter may not exceed the amount of the surety bond or account.


§ 393.406. Term of Surety Bond or Account


The surety bond or account of a credit services organization must be maintained until the second anniversary of the date on which the organization ceases operations.


§ 393.407. Payment of Money in Surety Account to Credit Services Organization


(a) A depository may not pay money in a surety account to the credit services organization that established the account or a representative of the organization unless the organization or representative presents a statement issued by the secretary of state indicating that the requirement of Section 393.406 has been satisfied in relation to the account.


(b) The secretary of state may conduct an investigation and require information to be submitted as necessary to enforce this section.


[Sections 393.408 to 393.500 reserved for expansion]


[Sections 393.408 to 393.500 reserved for expansion]


Subchapter F. Criminal Penalties and Civil Remedies


§ 393.501. Criminal Penalty


(a) A person commits an offense if the person violates this chapter.


(b) An offense under this chapter is a Class B misdemeanor.


§ 393.502. Injunctive Relief


A district court on the application of the attorney general or a consumer may enjoin a violation of this chapter.


§ 393.503. Damages


(a) A consumer injured by a violation of this chapter is entitled to recover:

(1) actual damages in an amount not less than the amount the consumer paid the credit services organization;

(2) reasonable attorney's fees; and

(3) court costs.


(b) A consumer who prevails in an action under this section may also be awarded punitive damages.


§ 393.504. Deceptive Trade Practice


A violation of this chapter is a deceptive trade practice actionable under Subchapter E, Chapter 17, Business & Commerce Code. [FN1]

[FN1] V.T.C.A., Business and Commerce Code § 17.41 et seq.



§ 393.505. Statute of Limitations


An action under Section 393.503 or 393.504 must be brought not later than the fourth anniversary of the date on which the contract to which the action relates is executed.


Current through Chapters effective immediately through Ch. 89 of the 2007 Regular Session of the 80th Legislature
END OF DOCUMENT

Case Law

 

 

I identified one significant cases construing the Act. 


In re Zuniga, 332 B.R. 760 (Bkrtcy. S.D. Tex. , 2005).  An organization does not need to state it is a credit services organization for the requirements of the Act to apply.  A credit counseling firm was a "credit services organization," within the meaning of the Act where the firm's television commercials targeted consumers with debt problems and urged them to contact the firm for relief, the firm's website stated that it could provide educational materials and information on how to obtain assistance, and further represented that the firm could provide advice or assistance to “empower debtors [to] make an informed decision on how to manage, service or liquidate their debts,” and a review of the firm's educational materials showed that its services included obtaining credit and repairing credit.  The organization violated the requirements of the Act by failing to finalize a contract in writing with its customer, failing to make required disclosures, failing adequately to describe the services to be performed under the contract, and accepting payment before rendering services.  

 

 


In re Zuniga, 332 B.R. 760 (Bkrtcy. S.D. Tex. , 2005).

 

United States Bankruptcy Court,

S.D. Texas ,
Houston Division.

In re Martha Lidia ZUNIGA, Debtor.

No. 05-33416-H4-7.

Sept. 22, 2005.

Background: Chapter 7 trustee filed motion to show cause asking that court inquire into relationship among credit counseling firm, California law firm, and attorney hired as debtor's local counsel. United States Trustee (UST) filed response requesting that court impose sanctions and order these three entities to disgorge all fees received from debtor.

Holdings: The Bankruptcy Court, Jeff Bohm, J., held that:
(1) both California attorney and local counsel failed to disclose credit counseling firm's involvement in procuring and transferring debtor's $1,199.00 fee to California law firm, and they failed to accurately disclose that compensation, in violation of the Bankruptcy Code and rules;
(2) debtor's mailing list did not comply with the local bankruptcy rules;
(3) both attorneys violated the local federal rules by practicing in the Southern District of Texas without having been admitted to practice in the district;
(4) by filing the bankruptcy petition, both attorneys made an appearance before the court, and so were governed by the Texas Disciplinary Rules;
(5) under Texas law, California attorney and his firm engaged in the unauthorized practice of law;
(6) under Texas law, local counsel engaged in the unauthorized practice of law;
(7) neither attorney kept debtor reasonably informed about the status of her bankruptcy nor about the bankruptcy process, as required by the Texas Disciplinary Rules;
(8) the fee received by both attorneys was unreasonable;
(9) both attorneys violated the Texas Disciplinary Rule requiring candor toward the tribunal;
(10) both attorneys violated the Texas Disciplinary Rule prohibiting lawyers from making false or misleading communications concerning services;
(11) credit counseling firm engaged in the unauthorized practice of law;
(12) credit counseling firm violated the Credit Repair Organizations Act;
(13) as sanctions, local counsel would be ordered to disgorge the $500.00 fee paid to him by California counsel and debtor, and to pay the sum of $5,000.00 to the court; and
(14) as sanctions, California attorney and his firm would be ordered to disgorge the $699.00 fee paid to them by debtor, to pay debtor $136.00 for lost income and $40.00 for expenses, to pay trustee $2,022.94 for attorneys fees and expenses, and to pay the sum of $2,500.00 to the court.

Motion granted; requested relief granted.

West Headnotes


[1] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(B) Privileges, Disabilities, and Liabilities
       Key Symbol 45k32 Regulation of Professional Conduct, in General
         Key Symbol 45k32(5) k. Persons Subject to Regulations. Most Cited Cases

 Key Symbol 51 Bankruptcy KeyCite Notes
   Key Symbol 51IX Administration
     Key Symbol 51IX(A) In General
       Key Symbol 51k3029 Employment of Professional Persons or Debtor's Officers
         Key Symbol 51k3030 k. Attorneys. Most Cited Cases

Attorneys who practice before a bankruptcy court must not only concern themselves with the obligations set forth in the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure, but also with application of state ethical rules.

[2] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(B) Privileges, Disabilities, and Liabilities
       Key Symbol 45k32 Regulation of Professional Conduct, in General
         Key Symbol 45k32(2) k. Standards, Canons, or Codes of Conduct. Most Cited Cases

District court's local rules incorporated the disciplinary rules of the State of Texas, and these disciplinary rules governed the ethical standards of members of the bar.

[3] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(B) Privileges, Disabilities, and Liabilities
       Key Symbol 45k32 Regulation of Professional Conduct, in General
         Key Symbol 45k32(5) k. Persons Subject to Regulations. Most Cited Cases

 Key Symbol 51 Bankruptcy KeyCite Notes
   Key Symbol 51IX Administration
     Key Symbol 51IX(A) In General
       Key Symbol 51k3029 Employment of Professional Persons or Debtor's Officers
         Key Symbol 51k3030 k. Attorneys. Most Cited Cases

Conduct displayed by Chapter 7 debtor's out-of-state counsel and that attorney's law firm, as well as debtor's local counsel, was subject to the following: (1) Bankruptcy Code and bankruptcy rules, (2) Local Rules of the United States Bankruptcy Court for the Southern District of Texas, (3) Local Rules of the United States District Court for the Southern District of Texas, and (4) Texas Disciplinary Rules of Professional Conduct.

[4] KeyCite Notes

Key Symbol 51 Bankruptcy
   Key Symbol 51IX Administration
     Key Symbol 51IX(E) Compensation of Officers and Others
       Key Symbol 51IX(E)3 Attorneys
         Key Symbol 51k3179 k. Disclosure Requirements. Most Cited Cases

Any attorney representing a debtor in a Chapter 7 case is required to report all compensation paid or agreed to be paid for services rendered. 11 U.S.C.A. § 329; Fed.Rules Bankr.Proc.Rule 2016(b), 11 U.S.C.A.

[5] KeyCite Notes

Key Symbol 51 Bankruptcy
   Key Symbol 51IX Administration
     Key Symbol 51IX(E) Compensation of Officers and Others
       Key Symbol 51IX(E)3 Attorneys
         Key Symbol 51k3179 k. Disclosure Requirements. Most Cited Cases

Chapter 7 debtor's out-of-state and local counsel both violated the Bankruptcy Code and rules by failing to disclose credit counseling firm's involvement in procuring and transferring debtor's $1,199.00 fee to the out-of-state firm, and by failing to accurately disclose that compensation. 11 U.S.C.A. § 329; Fed.Rules Bankr.Proc.Rule 2016(b), 11 U.S.C.A.

[6] KeyCite Notes

Key Symbol 51 Bankruptcy
   Key Symbol 51III The Case
     Key Symbol 51III(F) Schedules and Statement of Affairs
       Key Symbol 51k2324 k. Creditors. Most Cited Cases

Chapter 7 debtor's mailing list, which failed to include debtor's spouse on the list of creditors, listed debtor and her attorneys near the end of the list, after the creditors, and listed debtor's attorneys before debtor, did not comply with the local bankruptcy rules. U.S.Bankr.Ct.Rules S.D.Tex., Rule 1002(b).

[7] KeyCite Notes

Key Symbol 51 Bankruptcy
   Key Symbol 51IX Administration
     Key Symbol 51IX(A) In General
       Key Symbol 51k3029 Employment of Professional Persons or Debtor's Officers
         Key Symbol 51k3030 k. Attorneys. Most Cited Cases

All of a debtor's counsel of record, and certainly local counsel, should be familiar with and adhere to the various local rules and procedures of the district.

[8] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(A) Admission to Practice
       Key Symbol 45k10 k. Admission of Practitioners in Different Jurisdiction. Most Cited Cases

Attorney wishing to practice before the Bankruptcy Court for the Southern District of Texas must apply for permission to practice before the district court and, hence, the bankruptcy court. U.S.Dist.Ct.Rules S.D.Tex., Rule 83.1.C.

[9] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(A) Admission to Practice
       Key Symbol 45k10 k. Admission of Practitioners in Different Jurisdiction. Most Cited Cases

There are two ways an attorney may gain admission to practice in the courts of the Southern District of Texas: (1) file a written application and obtain approval with the clerk of court issuing a Certificate of Admission, which allows an attorney to practice at all times in the Southern District of Texas, or (2) obtain permission from the judge before whom the case or adversary proceeding is pending, which allows an attorney to serve as attorney-in-charge, or as an attorney assisting the attorney-in-charge, in a specific case or adversary proceeding until its completion. U.S.Dist.Ct.Rules S.D.Tex., Rule 83.1.C.

[10] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(A) Admission to Practice
       Key Symbol 45k10 k. Admission of Practitioners in Different Jurisdiction. Most Cited Cases

Generally referred to as practicing “pro hac vice,” an un-admitted attorney may ask for leave of the adjudicating court to represent a client in a case on a one-time basis.

[11] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(A) Admission to Practice
       Key Symbol 45k10 k. Admission of Practitioners in Different Jurisdiction. Most Cited Cases

Chapter 7 debtor's out-of-state and local counsel both violated the local federal rules by practicing in the Southern District of Texas without having been admitted to practice in the district; although out-of-state counsel was licensed to practice law in the State of California, and local counsel currently held a probationary law license from the State of Texas, neither had ever applied for general admission to the Southern District of Texas, nor had either ever filed an application to practice pro hac vice in this particular Chapter 7 case. U.S.Dist.Ct.Rules S.D.Tex., Rule 83.1.C.

[12] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(C) Discipline
       Key Symbol 45k37 Grounds for Discipline
         Key Symbol 45k37.1 k. In General. Most Cited Cases

Violations of the Southern District of Texas Local Rules of Discipline serve as grounds for disciplinary action. U.S.Dist.Ct.Rules S.D.Tex., Rule 1.B, Appendix A.

[13] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(C) Discipline
       Key Symbol 45k36 Jurisdiction of Courts
         Key Symbol 45k36(2) k. Power of Judge at Chambers. Most Cited Cases

Disciplinary rules governing the conduct of attorneys in the Southern District of Texas do not limit the judges' inherent powers over lawyers who practice before them. U.S.Dist.Ct.Rules S.D.Tex., Rule 10, Appendix A.

[14] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(B) Privileges, Disabilities, and Liabilities
       Key Symbol 45k32 Regulation of Professional Conduct, in General
         Key Symbol 45k32(5) k. Persons Subject to Regulations. Most Cited Cases

Minimum standard of conduct for any attorney appearing before the United States Bankruptcy Court for the Southern District of Texas is set forth in the Texas Disciplinary Rules. U.S.Dist.Ct.Rules S.D.Tex., Rule 1.A, Appendix A.

[15] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(B) Privileges, Disabilities, and Liabilities
       Key Symbol 45k32 Regulation of Professional Conduct, in General
         Key Symbol 45k32(5) k. Persons Subject to Regulations. Most Cited Cases

By filing the bankruptcy petition, Chapter 7 debtor's out-of-state and local counsel both made an appearance before the United States Bankruptcy Court for the Southern District of Texas, and so were governed by the Texas Disciplinary Rules.

[16] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(A) Admission to Practice
       Key Symbol 45k11 Practitioners Not Admitted or Not Licensed
         Key Symbol 45k11(2) Acts Constituting Practice of Law in General
           Key Symbol 45k11(2.1) k. In General. Most Cited Cases

 Key Symbol 45 Attorney and Client KeyCite Notes
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(A) Admission to Practice
       Key Symbol 45k11 Practitioners Not Admitted or Not Licensed
         Key Symbol 45k11(2) Acts Constituting Practice of Law in General
           Key Symbol 45k11(3) k. Drafting or Preparation of Documents. Most Cited Cases

Under Texas law, Chapter 7 debtor's out-of-state counsel and his law firm engaged in the unauthorized practice of law where, after debtor's referral to the firm by a credit counseling service, firm counseled debtor on the telephone, mailed her forms containing the necessary information required for bankruptcy, which she completed and returned, selected debtor's exemptions, prepared debtor's bankruptcy petition, schedules, statement of financial affairs, and fee disclosure statement, and made the changes when the schedules needed amending, even though neither counsel nor any other attorney acting under his direction was a member of the State Bar of Texas, was admitted to appear regularly in the United States District Court for the Southern District of Texas, or had sought leave of the bankruptcy court to be admitted pro hac vice. V.T.C.A., Government Code §§ 81.051, 81.101(a), 81.102(a), 83.006.

[17] KeyCite Notes



Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(A) Admission to Practice
       Key Symbol 45k11 Practitioners Not Admitted or Not Licensed
         Key Symbol 45k11(2) Acts Constituting Practice of Law in General
           Key Symbol 45k11(2.1) k. In General. Most Cited Cases

 Key Symbol 45 Attorney and Client KeyCite Notes
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(A) Admission to Practice
       Key Symbol 45k11 Practitioners Not Admitted or Not Licensed
         Key Symbol 45k11(2) Acts Constituting Practice of Law in General
           Key Symbol 45k11(3) k. Drafting or Preparation of Documents. Most Cited Cases

Under Texas law, Chapter 7 debtor's local counsel engaged in the unauthorized practice of law where, after he was hired by debtor's out-of-state counsel, local counsel filed the bankruptcy petition prepared by out-of-state counsel, signed the petition as attorney of record, and appeared at the meeting of creditors as debtor's counsel, even though, despite his status as a probationary licensed member of the State Bar of Texas, attorney was neither admitted to the Southern District of Texas nor had sought permission of the bankruptcy court to appear pro hac vice. V.T.C.A., Government Code § 81.101(a, b); U.S.Dist.Ct.Rules, S.D.Tex., Rule 83.1K; V.T.C.A., Government Code Title 2, Subtitle G App. A-1, Disciplinary Procedure Rule 5.05.

[18] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(C) Discipline
       Key Symbol 45k37 Grounds for Discipline
         Key Symbol 45k44 Misconduct as to Client
           Key Symbol 45k44(1) k. In General. Most Cited Cases

Neither Chapter 7 debtor's out-of-state counsel nor her local counsel kept her reasonably informed of the status of her bankruptcy or about the bankruptcy process, as required by Texas Disciplinary Rules; out-of-state counsel did not explain why paperwork to begin bankruptcy process was not sent to debtor until two months after she paid his fee, out-of-state firm provided translator for debtor, who was not a native English speaker, but it never met with her face-to-face, instead counseling her by phone and mail, firm did not correctly fill out debtor's bankruptcy paperwork, debtor did not understand these documents when she signed them, local counsel was unable to keep debtor reasonably informed because he spoke only English, she spoke only Spanish, and he did not arrange for a translator to be physically present, and local counsel did not disclose that he could not legally represent her in bankruptcy court because he was not admitted in the Southern District of Texas. V.T.C.A., Government Code Title 2, Subtitle G App. A-1, Disciplinary Procedure Rule 1.03.

[19] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(C) Discipline
       Key Symbol 45k37 Grounds for Discipline
         Key Symbol 45k44 Misconduct as to Client
           Key Symbol 45k44(2) k. Misappropriation and Failure to Account. Most Cited Cases

Fee is “unconscionable,” within meaning of the Texas Disciplinary Rule prohibiting lawyers from collecting unconscionable fees, if it is unreasonable. V.T.C.A., Government Code Title 2, Subtitle G App. A-1, Disciplinary Procedure Rule 1.04.

[20] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(C) Discipline
       Key Symbol 45k37 Grounds for Discipline
         Key Symbol 45k44 Misconduct as to Client
           Key Symbol 45k44(2) k. Misappropriation and Failure to Account. Most Cited Cases

 Key Symbol 51 Bankruptcy KeyCite Notes
   Key Symbol 51IX Administration
     Key Symbol 51IX(E) Compensation of Officers and Others
       Key Symbol 51IX(E)3 Attorneys
         Key Symbol 51k3191 Amount
           Key Symbol 51k3192 k. In General. Most Cited Cases

 Key Symbol 51 Bankruptcy KeyCite Notes
   Key Symbol 51IX Administration
     Key Symbol 51IX(E) Compensation of Officers and Others
       Key Symbol 51IX(E)3 Attorneys
         Key Symbol 51k3191 Amount
           Key Symbol 51k3198 k. Skill or Experience; Novelty. Most Cited Cases

Fee received by Chapter 7 debtor's out-of-state counsel and her local counsel was unreasonable, and so violated the Texas Disciplinary Rule prohibiting lawyers from collecting unconscionable fees; out-of-state counsel, though admitted in the Central District of California and practicing bankruptcy there, had little, if any, experience practicing bankruptcy in the Southern District of Texas, as underscored by inaccuracies in debtor's petition, schedules, statement of financial affairs, and compensation disclosure, local counsel lacked bankruptcy experience and was woefully unfamiliar with the local rules, and so neither attorney had the skills requisite to perform the legal service properly. V.T.C.A., Government Code Title 2, Subtitle G App. A-1, Disciplinary Procedure Rule 1.04.

[21] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(C) Discipline
       Key Symbol 45k37 Grounds for Discipline
         Key Symbol 45k37.1 k. In General. Most Cited Cases

 Key Symbol 51 Bankruptcy KeyCite Notes
   Key Symbol 51IX Administration
     Key Symbol 51IX(E) Compensation of Officers and Others
       Key Symbol 51IX(E)3 Attorneys
         Key Symbol 51k3191 Amount
           Key Symbol 51k3192 k. In General. Most Cited Cases

Fee of $699.00 retained by Chapter 7 debtor's out-of-state counsel was disproportionate to the limited services the firm was to provide, and so violated the Texas Disciplinary Rule governing fee-splitting; referral agreement between out-of-state counsel and debtor's local counsel stated that, while local counsel would be responsible for preparing and filing the petition, schedules, and statement of financial affairs, as well as representing debtor at the creditors meeting, out-of-state counsel would only be providing limited services such as gathering the information necessary to prepare the petition, collecting creditor information, and budget and financial information, and yet out-of-state firm kept $699.00 of the $1,199.00 fee paid by debtor. V.T.C.A., Government Code Title 2, Subtitle G App. A-1, Disciplinary Procedure Rule 1.04(f).

[22] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45IV Compensation
     Key Symbol 45k151 k. Contracts for Division, and Apportionment. Most Cited Cases

Under Texas law, a “forwarding lawyer” refers a case to another attorney, receives a fee for such referral, and typically does not maintain involvement in the case.

[23] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45IV Compensation
     Key Symbol 45k151 k. Contracts for Division, and Apportionment. Most Cited Cases

Out-of-state law firm that represented Chapter 7 debtor was not a “forwarding attorney” under Texas law where the firm maintained involvement in the case by assisting debtor after her paperwork had been sent to her local counsel, amending the petition after the meeting of creditors, and giving advice regarding letters and notices that debtor received.

[24] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(C) Discipline
       Key Symbol 45k37 Grounds for Discipline
         Key Symbol 45k44 Misconduct as to Client
           Key Symbol 45k44(1) k. In General. Most Cited Cases

 Key Symbol 51 Bankruptcy KeyCite Notes
   Key Symbol 51IX Administration
     Key Symbol 51IX(E) Compensation of Officers and Others
       Key Symbol 51IX(E)3 Attorneys
         Key Symbol 51k3191 Amount
           Key Symbol 51k3200 k. Effect of Contract; Prior Compensation. Most Cited Cases

Fee-splitting agreement between Chapter 7 debtor's out-of-state counsel and her local counsel violated the Texas Disciplinary Rule governing such arrangements where the contract, which debtor signed, did not mention her local counsel by name, instead stating that out-of-state firm would “contact and use the services of local counsel,” it was only over the telephone that out-of-state firm told debtor who local counsel would be, and firm did not obtain the necessary written agreement. V.T.C.A., Government Code Title 2, Subtitle G App. A-1, Disciplinary Procedure Rule 1.04(f)(1)(iii).

[25] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(C) Discipline
       Key Symbol 45k37 Grounds for Discipline
         Key Symbol 45k42 k. Deception of Court or Obstruction of Administration of Justice.

Key Symbol 51 Bankruptcy KeyCite Notes
   Key Symbol 51IX Administration
     Key Symbol 51IX(E) Compensation of Officers and Others
       Key Symbol 51IX(E)3 Attorneys
         Key Symbol 51k3179 k. Disclosure Requirements. Most Cited Cases

Chapter 7 debtor's out-of-state counsel and her local counsel violated the Texas Disciplinary Rule requiring candor toward the tribunal by making false statements of material fact to the bankruptcy court; both attorneys failed to disclose credit counseling firm's initial involvement in the case, both attorneys prepared and filed defective schedules, statement of financial affairs (SOFA), and compensation disclosures, local counsel represented that debtor's $1,199.00 fee had not been paid as of a specified date when in fact it had been paid some six months earlier, local counsel submitted a form indicating that he was limiting his representation to the meeting of creditors when in fact he did not, local counsel never filed an amended SOFA, and local counsel failed to follow, or chose to ignore, the requirements for practicing in the Southern District of Texas. V.T.C.A., Government Code Title 2, Subtitle G App. A-1, Disciplinary Procedure Rule 3.03.

[26] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(B) Privileges, Disabilities, and Liabilities
       Key Symbol 45k32 Regulation of Professional Conduct, in General
         Key Symbol 45k32(14) k. Candor, and Disclosure to Opponent or Court. Most Cited Cases

Texas Disciplinary Rule requiring candor toward the tribunal applies even if attorney's actions can be characterized as omissions. V.T.C.A., Government Code Title 2, Subtitle G App. A-1, Disciplinary Procedure Rule 3.03.

[27] KeyCite Notes



Key Symbol 51 Bankruptcy
   Key Symbol 51II Courts; Proceedings in General
     Key Symbol 51II(B) Actions and Proceedings in General
       Key Symbol 51k2163 k. Evidence. Most Cited Cases

In proceeding to determine, inter alia, whether Chapter 7 debtor's local and out-of-state counsel had violated the Texas Disciplinary Rule prohibiting false or misleading communications about a lawyer's services, bankruptcy court would take judicial notice of the information available on attorneys' websites. V.T.C.A., Government Code Title 2, Subtitle G App. A-1, Disciplinary Procedure Rule 7.02.

[28] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(C) Discipline
       Key Symbol 45k37 Grounds for Discipline
         Key Symbol 45k37.1 k. In General. Most Cited Cases

Chapter 7 debtor's out-of-state counsel and her local counsel violated the Texas Disciplinary Rule prohibiting false or misleading communications about a lawyer's services; use of the plural “we” and “our” by local counsel's website to describe firm's services was confusing and misleading when local counsel was firm's only attorney, website's statement that the firm practiced in the area of bankruptcy could have misled a layperson into believing that local counsel himself was qualified to practice in that area, even though he was not admitted in the Southern District of Texas and so could not undertake any representation of any debtor in any bankruptcy court there, and out-of-state counsel's website, which stated that firm was a “National Network of Attorneys,” gave laypersons a false impression that firm was authorized to practice in a number of jurisdictions. V.T.C.A., Government Code Title 2, Subtitle G App. A-1, Disciplinary Procedure Rule 7.02.

[29] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45III Duties and Liabilities of Attorney to Client
     Key Symbol 45k106 k. Nature of Attorney's Duty. Most Cited Cases

Client's entitlement to competent and diligent representation is an affirmative requirement for attorneys practicing in Texas . V.T.C.A., Government Code Title 2, Subtitle G App. A-1, Disciplinary Procedure Rule 1.01.

[30] KeyCite Notes



Key Symbol 51 Bankruptcy
   Key Symbol 51I In General
     Key Symbol 51I(C) Jurisdiction
       Key Symbol 51k2041 Bankruptcy Jurisdiction
         Key Symbol 51k2041.10 k. Cases or Proceedings. Most Cited Cases

 Key Symbol 51 Bankruptcy KeyCite Notes
   Key Symbol 51I In General
     Key Symbol 51I(C) Jurisdiction
       Key Symbol 51k2043 Core, Non-Core, or Related Proceedings in General; Nexus
         Key Symbol 51k2043(2) k. Core or Non-Core Proceedings. Most Cited Cases

Bankruptcy court may hear and determine all cases and core proceedings under Title 11. 28 U.S.C.A. § 157(a, b).

[31] KeyCite Notes

Key Symbol 29T Antitrust and Trade Regulation
   Key Symbol 29TIII Statutory Unfair Trade Practices and Consumer Protection
     Key Symbol 29TIII(C) Particular Subjects and Regulations
       Key Symbol 29Tk218 k. Credit Repair and Counseling. Most Cited Cases
         (Formerly 92Hk6 Consumer Protection)

Credit services organization must register with the Texas Secretary of State before conducting business in that state. V.T.C.A., Finance Code § 393.101.

[32] KeyCite Notes

Key Symbol 29T Antitrust and Trade Regulation
   Key Symbol 29TIII Statutory Unfair Trade Practices and Consumer Protection
     Key Symbol 29TIII(C) Particular Subjects and Regulations
       Key Symbol 29Tk218 k. Credit Repair and Counseling. Most Cited Cases
         (Formerly 92Hk6 Consumer Protection)

Organization does not need to state it is a credit services organization for the Texas statute governing credit services organizations to apply. V.T.C.A., Finance Code § 393.001 et seq.

[33] KeyCite Notes

Key Symbol 29T Antitrust and Trade Regulation
   Key Symbol 29TIII Statutory Unfair Trade Practices and Consumer Protection
     Key Symbol 29TIII(C) Particular Subjects and Regulations
       Key Symbol 29Tk218 k. Credit Repair and Counseling. Most Cited Cases
         (Formerly 92Hk6 Consumer Protection)

Credit counseling firm was a “credit services organization,” within the meaning of the Texas statute governing such organizations, where firm's television commercials targeted consumers with debt problems and urged them to contact firm for relief from these woes, firm's website stated that it could provide educational materials and information on how to obtain assistance, and further represented that firm could provide advice or assistance to “empower debtors [to] make an informed decision on how to manage, service or liquidate their debts,” and review of firm's educational materials showed that its services included obtaining credit and repairing credit. V.T.C.A., Finance Code § 393.001 et seq.

[34] KeyCite Notes

Key Symbol 29T Antitrust and Trade Regulation
   Key Symbol 29TIII Statutory Unfair Trade Practices and Consumer Protection
     Key Symbol 29TIII(C) Particular Subjects and Regulations
       Key Symbol 29Tk218 k. Credit Repair and Counseling. Most Cited Cases
         (Formerly 92Hk6 Consumer Protection)

Non-profit organizations are exempt from the requirement that credit services organizations register to do business in the State of Texas . 26 U.S.C.A. § 501(c)(3); .

[35] KeyCite Notes

Key Symbol 29T Antitrust and Trade Regulation
   Key Symbol 29TIII Statutory Unfair Trade Practices and Consumer Protection
     Key Symbol 29TIII(C) Particular Subjects and Regulations
       Key Symbol 29Tk218 k. Credit Repair and Counseling. Most Cited Cases
         (Formerly 92Hk6 Consumer Protection)

Credit counseling firm did not provide debtor with the disclosure statement required by the Texas statute governing credit services organizations; firm did not provide debtor with a written, dated contract but, instead, confirmed everything via telephone, firm only provided debtor with a document after she had “begun” its program, and this document did not describe the services to be performed or the cost of those services, but was simply a welcome letter. V.T.C.A., Finance Code § 393.105(1).

[36] KeyCite Notes

Key Symbol 29T Antitrust and Trade Regulation
   Key Symbol 29TIII Statutory Unfair Trade Practices and Consumer Protection
     Key Symbol 29TIII(C) Particular Subjects and Regulations
       Key Symbol 29Tk218 k. Credit Repair and Counseling. Most Cited Cases
         (Formerly 92Hk6 Consumer Protection)

Under Texas law, a credit services organization generally may not receive valuable consideration prior to completing its services. V.T.C.A., Finance Code § 393.302.

[37] KeyCite Notes

Key Symbol 29T Antitrust and Trade Regulation
   Key Symbol 29TIII Statutory Unfair Trade Practices and Consumer Protection
     Key Symbol 29TIII(C) Particular Subjects and Regulations
       Key Symbol 29Tk218 k. Credit Repair and Counseling. Most Cited Cases
         (Formerly 92Hk6 Consumer Protection)

Under Texas law, a credit services organization may charge a consumer prior to completing its services if it has obtained a surety bond; obtaining a surety bond is a condition precedent. V.T.C.A., Finance Code § 393.302.

[38] KeyCite Notes

Key Symbol 29T Antitrust and Trade Regulation
   Key Symbol 29TIII Statutory Unfair Trade Practices and Consumer Protection
     Key Symbol 29TIII(C) Particular Subjects and Regulations
       Key Symbol 29Tk218 k. Credit Repair and Counseling. Most Cited Cases
         (Formerly 92Hk6 Consumer Protection)

Under Texas law, credit counseling firm that referred Chapter 7 debtor to bankruptcy counsel engaged in the unauthorized practice of law where firm's welcome letter to debtor included a pamphlet regarding bankruptcy, this pamphlet, among other things, explained what bankruptcy is, the differences between Chapter 7 and Chapter 13, the differences between secured and unsecured debt, and what can be exempted, firm prepared this pamphlet, which did not contain a disclosure that an attorney prepared or assisted in its preparation, and firm's employee filled out a worksheet on debtor when she first called firm, checking the box next to “bankruptcy” and, beside that, writing “#7” in the margin.

[39] KeyCite Notes

Key Symbol 29T Antitrust and Trade Regulation
   Key Symbol 29TIII Statutory Unfair Trade Practices and Consumer Protection
     Key Symbol 29TIII(C) Particular Subjects and Regulations
       Key Symbol 29Tk218 k. Credit Repair and Counseling. Most Cited Cases
         (Formerly 92Hk6 Consumer Protection)

Credit counseling firm that referred Chapter 7 debtor to bankruptcy counsel violated the Credit Repair Organizations Act by charging or receiving money from debtor before its services were rendered, failing to send the required disclosures to debtor, notifying debtor that she could cancel contract within three days of entering into the agreement when in fact the cancellation period was three days from the date contract was signed, and entering into agreement with debtor over the telephone rather than by written contract. Consumer Credit Protection Act, § 402, 15 U.S.C.A. § 1679.

[40] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(C) Discipline
       Key Symbol 45k36 Jurisdiction of Courts
         Key Symbol 45k36(2) k. Power of Judge at Chambers. Most Cited Cases

 Key Symbol 51 Bankruptcy KeyCite Notes
   Key Symbol 51II Courts; Proceedings in General
     Key Symbol 51II(C) Costs and Fees
       Key Symbol 51k2182 Grounds and Circumstances
         Key Symbol 51k2187 k. Frivolity or Bad Faith; Sanctions. Most Cited Cases

Attorney practicing before a Texas bankruptcy court may be sanctioned pursuant to Federal Rule of Civil Procedure 11 and Bankruptcy Rule 9011, as well as for violations of the Texas Disciplinary Rules of Professional Conduct. Fed.Rules Bankr.Proc.Rule 9011, 11 U.S.C.A.; Fed.Rules Civ.Proc.Rule 11, 28 U.S.C.A.

[41] KeyCite Notes

Key Symbol 51 Bankruptcy
   Key Symbol 51II Courts; Proceedings in General
     Key Symbol 51II(C) Costs and Fees
       Key Symbol 51k2182 Grounds and Circumstances
         Key Symbol 51k2187 k. Frivolity or Bad Faith; Sanctions. Most Cited Cases

Sanctions under Rule 11 are mandatory. Fed.Rules Civ.Proc.Rule 11, 28 U.S.C.A.

[42] KeyCite Notes

Key Symbol 51 Bankruptcy
   Key Symbol 51II Courts; Proceedings in General
     Key Symbol 51II(C) Costs and Fees
       Key Symbol 51k2182 Grounds and Circumstances
         Key Symbol 51k2187 k. Frivolity or Bad Faith; Sanctions. Most Cited Cases

Judge has inherent power to sanction a party appearing before him or her.

[43] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(C) Discipline
       Key Symbol 45k36 Jurisdiction of Courts
         Key Symbol 45k36(2) k. Power of Judge at Chambers. Most Cited Cases

 Key Symbol 51 Bankruptcy KeyCite Notes
   Key Symbol 51II Courts; Proceedings in General
     Key Symbol 51II(C) Costs and Fees
       Key Symbol 51k2182 Grounds and Circumstances
         Key Symbol 51k2187 k. Frivolity or Bad Faith; Sanctions. Most Cited Cases

Attorney may be sanctioned by a trial court for conduct occurring outside the courtroom.

[44] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(C) Discipline
       Key Symbol 45k59.1 Punishment; Disposition
         Key Symbol 45k59.4 k. Discretion. Most Cited Cases
           (Formerly 45k58)

 Key Symbol 51 Bankruptcy KeyCite Notes
   Key Symbol 51II Courts; Proceedings in General
     Key Symbol 51II(C) Costs and Fees
       Key Symbol 51k2182 Grounds and Circumstances
         Key Symbol 51k2187 k. Frivolity or Bad Faith; Sanctions. Most Cited Cases

Bankruptcy courts have broad leeway in forming an appropriate sanction for unethical behavior.

[45] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(A) Admission to Practice
       Key Symbol 45k11 Practitioners Not Admitted or Not Licensed
         Key Symbol 45k11(13) k. Investigations, Contempts, and Prosecutions. Most Cited Cases

 Key Symbol 45 Attorney and Client KeyCite Notes
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(C) Discipline
       Key Symbol 45k59.1 Punishment; Disposition
         Key Symbol 45k59.15 k. Other Disposition. Most Cited Cases
           (Formerly 45k58)

 Key Symbol 45 Attorney and Client KeyCite Notes
   Key Symbol 45IV Compensation
     Key Symbol 45k153 k. Deductions and Forfeitures. Most Cited Cases

 Key Symbol 51 Bankruptcy KeyCite Notes
   Key Symbol 51II Courts; Proceedings in General
     Key Symbol 51II(C) Costs and Fees
       Key Symbol 51k2182 Grounds and Circumstances
         Key Symbol 51k2187 k. Frivolity or Bad Faith; Sanctions. Most Cited Cases

As sanctions, Chapter 7 debtor's local counsel would be ordered to disgorge the $500.00 fee paid to him by debtor's out-of-state counsel and debtor, and to pay the sum of $5,000.00 to the bankruptcy court; counsel's conduct and behavior in the case had been “unprofessional in almost every way imaginable,” as he had, inter alia, filed defective documents, failed to file amended documents, violated several of the Texas Disciplinary Rules, and engaged in the unauthorized practice of law, in particular by practicing law in the bankruptcy court when he knew that his probationary status prohibited him from doing so. Fed.Rules Bankr.Proc.Rule 9011, 11 U.S.C.A.; Fed.Rules Civ.Proc.Rule 11, 28 U.S.C.A.; V.T.C.A., Government Code § 81.101(a, b); U.S.Dist.Ct.Rules S.D.Tex., Rule 83.1K; V.T.C.A., Government Code Title 2, Subtitle G App. A-1, Disciplinary Procedure Rule 5.05.

[46] KeyCite Notes

Key Symbol 45 Attorney and Client
   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(A) Admission to Practice
       Key Symbol 45k11 Practitioners Not Admitted or Not Licensed
         Key Symbol 45k11(13) k. Investigations, Contempts, and Prosecutions. Most Cited Cases

 Key Symbol 45 Attorney and Client KeyCite Notes


   Key Symbol 45I The Office of Attorney
     Key Symbol 45I(C) Discipline
       Key Symbol 45k59.1 Punishment; Disposition
         Key Symbol 45k59.15 k. Other Disposition. Most Cited Cases
           (Formerly 45k58)

 Key Symbol 45 Attorney and Client KeyCite Notes
   Key Symbol 45IV Compensation
     Key Symbol 45k153 k. Deductions and Forfeitures. Most Cited Cases

 Key Symbol 51 Bankruptcy KeyCite Notes
   Key Symbol 51II Courts; Proceedings in General
     Key Symbol 51II(C) Costs and Fees
       Key Symbol 51k2182 Grounds and Circumstances
         Key Symbol 51k2187 k. Frivolity or Bad Faith; Sanctions. Most Cited Cases

As sanctions, Chapter 7 debtor's out-of-state counsel and his law firm would be ordered to disgorge the $699.00 fee paid to them by debtor, to pay debtor $136.00 for lost income and $40.00 for expenses, to pay trustee $2,022.94 for attorneys fees and expenses, and to pay the sum of $2,500.00 to the court; counsel's conduct was irresponsible and indicated a lack of prudence and judgment, in that counsel misrepresented to the bankruptcy court that credit counseling firm that referred debtor to counsel was a non-profit organization when in fact it was not, counsel/law firm selected for debtor the less favorable Texas exemption rather than the federal exemption, and counsel/firm falsely represented to the public their ability to practice law in the Southern District of Texas and, worse, actually engaged in the unauthorized practice of law there. Fed.Rules Bankr.Proc.Rule 9011, 11 U.S.C.A.; Fed.Rules Civ.Proc.Rule 11, 28 U.S.C.A.; V.T.C.A., Government Code Title 2, Subtitle G App. A-1, Disciplinary Procedure Rule 5.05.

*767

(Cite as: 332 B.R. 760, *767)

Dion A. Craig, Houston , TX , for Debtor.

MEMORANDUM OPINION ON CHAPTER 7 TRUSTEE'S MOTION TO SHOW CAUSE AND UNITED STATES TRUSTEE'S REQUEST FOR ENTRY OF ORDER DISGORGING FEES AND OTHER SANCTIONS

 

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