Filing for Bankruptcy to Stop Foreclosure on Your Home

 Posted on April 24, 2024 in Foreclosure

If you are facing foreclosure on your home in Texas, you may be wondering if filing for bankruptcy can help you keep your property. The answer is yes, but the effectiveness of this strategy depends on your specific circumstances and the type of bankruptcy you file. A Texas lawyer can help you determine how this option can stop foreclosure and what you need to know before making a decision.

The Automatic Stay

Filing for bankruptcy triggers an immediate automatic stay. This legal measure temporarily stops all collection activities against you, such as foreclosure processes. It provides a period of relief to restructure your finances and formulate a plan to manage your debts.

Chapter 7 Bankruptcy and Foreclosure

Chapter 7 bankruptcy, also known as liquidation bankruptcy, can temporarily stop foreclosure. However, it does not eliminate your mortgage debt or provide a long-term solution for keeping your home. Once the bankruptcy case is closed, the lender can resume foreclosure proceedings if you are still behind on payments.

Chapter 7 bankruptcy may be a good option if you have significant unsecured debts, such as credit card balances or medical bills, preventing you from making mortgage payments. By discharging these debts, you may be able to free up funds to catch up on your mortgage.

Chapter 13 Bankruptcy and Foreclosure

Chapter 13 bankruptcy, also called reorganization bankruptcy, can be a more effective tool for stopping foreclosure and keeping your home. Under a Chapter 13 plan, you can restructure your debts and catch up on missed mortgage payments over a three to five-year period.

To qualify for Chapter 13 bankruptcy, you must have a regular income and sufficient funds to make your current mortgage payments plus an additional amount to address the arrears. If you complete the repayment plan, you can emerge from bankruptcy on your mortgage and with your home still in your possession.

Contact a New Braunfels, TX Bankruptcy Lawyer

Filing for bankruptcy can be an effective way to stop foreclosure on your home, but it is not a decision to be made lightly. By understanding the differences between potential options and working with a San Antonio, TX bankruptcy attorney, you can make an informed choice about how to proceed. Chance is currently a Director of the San Antonio Bankruptcy Bar Association, so you can be reassured you have someone knowledgeable in your corner. Call Law Offices of Chance M. McGhee at 210-342-3400 to start with a free consultation.