Can Bankruptcy Help Me Avoid Foreclosure in Texas?

 Posted on October 23, 2024 in Bankruptcy

Bankruptcy is a legal option that debtors sometimes choose when they are overwhelmed with debt. It can provide relief when it comes to credit card debt, student loan debt, and outstanding payments from other unsecured loans. But how does bankruptcy work when it comes to mortgages? Can bankruptcy help avoid foreclosure by a lender who cannot collect mortgage debt?

This article will discuss how bankruptcy can help avoid foreclosure. For more details or help filing bankruptcy, contact an experienced Texas bankruptcy attorney who can guide you through the process.

How Can I Avoid Foreclosure During the Bankruptcy Process?

A Chapter 7 bankruptcy case may take up to six months to close. A Chapter 13 case may take up to four months until a repayment plan is finalized and up to five years until debts are paid off. During these periods, the bankruptcy filer is protected from creditors by a provision in the U.S. Bankruptcy Code called the automatic stay. This law takes effect immediately upon the filing of a bankruptcy petition and prevents creditors from taking certain actions, such as:

• Garnishing the borrower’s wages to pay back a debt
• Contacting the borrower to collect money owed
• Shutting off the borrower’s utility services for overdue charges
• Evicting the borrower for unpaid rent if eviction proceedings were not already initiated
• Filing legal complaints against the borrower to collect debt

The automatic stay also protects a borrower against foreclosure while the bankruptcy case is ongoing. During this time, a lender who tries to foreclose on the borrower’s home may violate the U.S. Bankruptcy Code and can be exposed to legal action by the borrower.

How Can Bankruptcy Help Me Avoid Foreclosure?

The automatic stay only offers temporary protection against foreclosure during the bankruptcy proceedings. Once the case is closed, the automatic stay ceases to be in effect. At that point, your protection against foreclosure depends on which chapter of bankruptcy you filed:

• Chapter 7: If your debts were discharged through Chapter 7, then there is little protection against foreclosure. Your mortgage debt may have been discharged, but the lender may still reclaim the property.
• Chapter 13: Chapter 13 helps avoid foreclosure by requiring the borrower to continue making mortgage payments over the next few years. In this type of bankruptcy, the debtor follows a monthly repayment plan that can stretch up to five years, during which time the borrower pays off the mortgage or other debt. As long as the borrower is making timely payments, he or she can avoid foreclosure.

Contact a Parker County, TX Foreclosure Defense Lawyer

Bankruptcy can give borrowers a fresh start. How it helps them avoid foreclosure, however, is a more complicated matter. Contact a Wise County, TX bankruptcy attorney for details on how filing for bankruptcy can help you prevent foreclosure. At Acker Warren P.C., we are committed to guiding our clients personally through each step of the bankruptcy process with care and professionalism. Schedule a free consultation by calling 817-752-9033 today.