Can Filing for Bankruptcy Stop Home Foreclosure/Eviction?
Nov. 23, 2022
Defaulting on loan payments is a breach of a mortgage agreement. In the state of Texas, the lender or servicer may be eligible to foreclose your home if you default on your mortgage payments for over 120 days. Fortunately, filing for bankruptcy can help delay the foreclosure process and afford you more time to evaluate your options. An experienced Texas bankruptcy attorney can enlighten you about how bankruptcy can delay or stop the lender from repossessing your property legally through foreclosure.
Attorney Gwendolyn E. Hunt has the diligence and expertise to advise and guide clients in complex legal matters involving bankruptcy and home foreclosure. As your legal team, Attorney Gwendolyn E. Hunt can evaluate your circumstances, inform you about the Texas foreclosure/eviction process, and determine the right bankruptcy chapter for you. The firm is proud to serve clients across DeSoto, Dallas, and Fort Worth, Texas.
Reasons for Foreclosure
A foreclosure is a legal action which involves seizing, repossessing, or forcing the sale of a home or property – by the lender, financial institution, bank, or company. Foreclosure or eviction may be required when the borrower is unable to repay the home loan or meet their repayment obligation.
Furthermore, foreclosure allows the lender or financial institution to obtain ownership of the property. Here are some common reasons for foreclosure:
Failure to make agreed loan payments
Credit card debts
Failure to pay property taxes
Failure to pay property insurance
Multiple unpaid bills
Critical illness and huge medical bills
Death of the borrower
If you're facing the possibility of losing your home to foreclosure, you need to reach out to an experienced attorney immediately. Your lawyer can enlighten you about the Texas foreclosure process and explore your options to delay or stop it.
The Foreclosure Process in Texas
Furthermore, if you default on your home loan or mortgage payments in Texas, the lender or servicer may foreclose your home using a judicial or nonjudicial method.
In the judicial method, the lender will file a petition requesting a court order to allow a foreclosure sale. You will be served with a notice and required to respond with a written answer. To defend the foreclosure lawsuit, you must provide substantial evidence. The court will review the available evidence and issue a judgment. Depending on the outcome of the case, the lender may be able to foreclose or sell your property at an auction.
In the nonjudicial method, the lender will be required to complete the out-of-court processes as described in the state laws. This includes sending a breach letter or notice, reinstating the loan, and selling the house at an auction. For the most part, the nonjudicial foreclosure method is often cheaper and quicker.
How Filing for Bankruptcy Affects Foreclosure/Eviction
When you file for bankruptcy, the court will issue an "automatic stay" order. This is a federal court injunction that halts all debt collection activities by creditors — including foreclosure actions already filed by the mortgage lenders. Hence, this will help delay or stop the foreclosure or eviction and give you more time to consider your options.
Chapter 13 Bankruptcy and Home Foreclosure
In Texas, Chapter 13 bankruptcy is available to regular income earners who are overburdened with debts, including home loans. Through Chapter 13, the borrower may be able to propose a structured repayment plan – between 3 and 5 years – to repay their home loans using their future income. In addition, filing for Chapter 13 bankruptcy will activate the automatic stay, which will help stop the foreclosure.
In some situations, you may be able to reduce your home mortgage debt by stripping off junior liens, second mortgages, and home equity lines. However, you will only be eligible for Chapter 13 if you earn sufficient income to pay off both your past-due and current mortgage payments. At the end of the repayment plan, the rest of the unsecured debts will be discharged.
Take the Right Steps with an Attorney
The thought of losing your Texas home to foreclosure or eviction can be extremely unsettling. Fortunately, filing for bankruptcy is among the promising options to stop or delay the home foreclosure. A seasoned bankruptcy attorney can determine your eligibility for bankruptcy and help determine the best course of action.
Hunt Law Firm is committed to providing knowledgeable legal guidance to clients in bankruptcy and foreclosure-related matters. As your legal counsel, Attorney Gwendolyn E. Hunt can analyze your financial situation and explore your available legal options to prevent foreclosure. Also, Attorney Gwendolyn E. Hunt will reach out to your lender on your behalf and help you negotiate a feasible payment plan that will enable you to pay back your home loan and retain your property.
Dealing with foreclosure or eviction without experienced guidance is never advisable. Contact Hunt Law Firm today to arrange a consultation with an experienced foreclosure prevention lawyer. Attorney Gwendolyn E. Hunt also helps clients with issues regarding wage garnishments and repossessions. The firm is proud to serve clients across DeSoto, Dallas, and Fort Worth, Texas.