Can Bankruptcy Stop Foreclosure in Texas?

If you are behind on your mortgage and facing foreclosure in Texas, bankruptcy may provide options for stopping a pending foreclosure and catching up on missed payments.

Bankruptcy May Stop a Pending Foreclosure

Falling behind on a mortgage can become overwhelming quickly, particularly in Texas, where the foreclosure process can move relatively fast.

Filing bankruptcy generally triggers a federal protection known as the automatic stay. The automatic stay stops most collection activity and can stop a pending foreclosure, subject to certain exceptions and limitations.

Timing matters. If you are facing foreclosure, it is important to consider your options before the foreclosure sale occurs.

How Can Chapter 13 Help Save a Home?

Chapter 13 is frequently used by homeowners who have fallen behind on their mortgage but have enough income to resume their regular mortgage payments.

A Chapter 13 plan may allow you to catch up on past-due mortgage payments over a period of three to five years rather than paying the entire arrearage immediately.

For example, a homeowner who is several months behind may be able to:

• Stop a pending foreclosure through the automatic stay

• Resume making regular mortgage payments

• Include the past-due mortgage amount in the Chapter 13 plan

• Pay the arrearage over time

• Address other debts that are making the mortgage difficult to afford

Whether a Chapter 13 plan is feasible depends on your income, expenses, mortgage arrears and other debts.

What About Chapter 7?

Chapter 7 also generally triggers the automatic stay when the case is filed. However, Chapter 7 ordinarily does not provide the same mechanism as Chapter 13 for catching up on substantial past-due mortgage payments over several years.

Chapter 7 may still be helpful in some situations. Eliminating other qualifying debts, for example, may make it easier to afford your mortgage going forward.

But if your primary goal is to stop foreclosure and keep your home while catching up on missed payments, Chapter 13 is often the bankruptcy chapter that needs to be evaluated.

Does Filing Bankruptcy Guarantee I Can Keep My House?

No. Bankruptcy is not a guarantee that every homeowner can keep a home.

Your ability to retain the property can depend on your income, mortgage balance, equity, arrears, other debts and whether you can make the payments required after filing.

The automatic stay also has exceptions, and its duration or availability can be affected by circumstances such as previous bankruptcy cases.

That is why a foreclosure situation should be evaluated individually.

Don't Wait Until the Foreclosure Sale

The closer you get to the foreclosure sale, the fewer opportunities there may be to evaluate alternatives and prepare a bankruptcy case properly.

If you have received foreclosure notices or know that a sale has been scheduled, consider getting legal advice promptly.

If you are facing foreclosure in Conroe, Montgomery County or the surrounding Southeast Texas area, schedule a free consultation. I can review your mortgage situation and explain whether Chapter 13 or another bankruptcy option may help.