“Can you lose your house if you file bankruptcy in Texas?” is a common concern for many homeowners facing this challenge. Those facing bankruptcy are likely also facing the possibility of foreclosure, which occurs when you're behind on your mortgage payments. Bankruptcy, however, may be an opportunity to keep your home and avoid foreclosure. A skilled Dallas bankruptcy lawyer can help you and your family remain under the roof you love.
Foreclosure is the legal process wherein the bank or mortgage company seizes your home in order to satisfy the delinquent debt on your loan. When a notification for the intent to foreclose is sent to you in the mail, you have 20 days upon receiving this notice to resolve this matter. If you’re able to pay the past due amount, your loan will be reinstated. However, this is not a feasible option for many individuals and families.
Another way to respond to a foreclosure warning is to file for bankruptcy, typically a Chapter 13 bankruptcy. If you don’t respond at all to the notice of the intent to foreclose, the lender will send a second letter asserting that the full loan amount is due and the sale of your house is scheduled in order to cover the balance. When you file for Chapter 13 bankruptcy, there’s an automatic protection placed on your home that prevents your lender from selling the property.
Chapter 13 bankruptcy is a legal option that allows you to develop a repayment plan for your owed debts over an extended period. This form of bankruptcy is different from filing for Chapter 7 bankruptcy, in which you can dismiss eligible debts and liquidate some of your assets. Chapter 13 is appealing to many people for this reason, as you can often keep most of your possessions in addition to having an automatic pause on your home’s sale.
If you qualify for Chapter 13 bankruptcy, your repayment plan can last between three to five years. The specifics of the plan will depend on your creditors and how much you owe them. To be eligible for Chapter 13 bankruptcy, you must have a regular, steady source of income to make monthly mortgage repayments. Your income can include work wages, retirement provisions, and any Social Security or disability benefits.
Within a Chapter 13 bankruptcy, a trustee is appointed to your case by the United States Trustee’s Office. The bankruptcy trustee investigates your finances, ensures that your repayment plan is fair, and receives your monthly installments to pay your debts according to the plan, among other duties. The trustee withholds 10 percent of each payment as a fee and sends the rest to your lender and any additional creditors.
Exploring your unique circumstances can help determine your qualifications for bankruptcy. Speaking with an attorney can help you move forward and find the debt relief you need while keeping your home.
A: Whether you may lose your house can depend on the type of bankruptcy, how much debt you’ve incurred, and other factors. If you’re facing a potential foreclosure on your home, consult with a knowledgeable bankruptcy lawyer about your unique circumstances. If you’re eligible for Chapter 13 bankruptcy, this will generally protect your house from being sold by the mortgage lender. You’re less likely to keep your home within Chapter 7 bankruptcy, although you can retain what equity remains.
A: In Texas, when filing for Chapter 13 bankruptcy, an "automatic stay" is enacted that prohibits the bank or mortgage lender from foreclosing or selling your home to settle the payments you owe. Instead, you pay back the delinquent payments on your home mortgage loan over a period of years, allowing you to retain your house and other personal property while slowly paying off your mortgage. This is preferable for many individuals who don’t want to liquidate their assets.
A: Chapter 13 bankruptcy primarily utilizes a repayment plan to resolve your debts, while Chapter 7 bankruptcy entails the protection and liquidation of certain assets and eliminating qualifying debts. Both forms of bankruptcy can help protect your assets, including your homestead. Although Chapter 7 bankruptcy has certain limitations, you may only be able to keep the equity of your home as opposed to the remaining in the house.
A: To know whether you qualify for a Chapter 13 bankruptcy filing, the ideal way to find out is by discussing your situation with a qualified and experienced bankruptcy attorney. To be determined as eligible for Chapter 13 bankruptcy, you must have a stable source of income that’s sufficient enough to make monthly installments toward repaying your mortgage. If you've previously filed for bankruptcy, this may affect your ability to file or pose a waiting period before you can.
A: Filing for bankruptcy will be noted on your credit report, potentially affecting your credit score. However, a completed Chapter 13 bankruptcy is usually removed faster than a Chapter 7 bankruptcy.
Chapter 13 bankruptcy appears on one's credit report for seven years, starting from the initial filing date. This means if your Chapter 13 bankruptcy is completed after five years, it will only remain on your credit report for another two years. An attorney can help you understand the impacts of bankruptcy.
Facing a foreclosure on your house and other debt can be incredibly stressful. The prospect of bankruptcy can also be confusing and overwhelming for many individuals. However, if you are faced with the reality of losing your home, it is important to explore all your available options. No matter what reason you have for filing bankruptcy, the legal team at Steele Law Firm, PLLC, can help you through it. Contact us today.
