If You’re Facing Foreclosure, You Need Immediate Legal Guidance and Advice.
The pressure of a pending foreclosure sale date is one of the scariest and most horrific financial situations you and your family can face. Additionally, if you reside in Houston, you are aware that the Texas foreclosure process moves quickly; therefore, time is not on your side.
Unlike many other states, Texas primarily uses a non-judicial foreclosure process. This streamlined procedure allows a lender to sell your home on the first Tuesday of the month, often with very little time for you to react once you receive the required and official legal notices.
Almost all experienced Houston bankruptcy attorneys frequently hear the same urgent question from people just like you: Can filing for Chapter 13 bankruptcy stop a foreclosure on my Texas home?
The short, but powerful answer is that filing a Chapter 13 petition creates an immediate, government-mandated shield that, in almost all cases, stops the sale of your family home. This critical protection provides you with the time and a court-approved structure to save your home and restructure your finances.
What Is the Legal Power of the Automatic Stay?
When you and your passionate attorney file for Chapter 13 bankruptcy, the court instantly issues an order known as the automatic stay. This is a powerful legal injunction that legally commands most creditors to stop all collection activities immediately. This includes everything from phone calls and letters to wage garnishments and, most importantly for homeowners, any pending foreclosure sales of your home.
The automatic stay is the legal mechanism your lawyer will use that physically halts a scheduled auction. Even if your home sale is set for the courthouse steps tomorrow, filing for Chapter 13 today will almost always stop it.
This immediate halt is the critical and stress-relieving first step in protecting your property. It also provides you with the crucial breathing room you need to stabilize your finances and craft a viable, doable, and strategic repayment plan.
What Is the Usual Texas Foreclosure Timeline When Filing Chapter 13 Bankruptcy?
Unfortunately, Texas law makes the foreclosure process swift, but there are specific legal rules that must be followed.
For example, a lender must first send you a Notice of Default and Intent to Accelerate, giving you (at least) 20 days to catch up on your missed payments, or “cure the default”(Tex. Prop. Code § 51.002(d). If you do not cure the default, the lender then must send a Notice of Sale at least 21 days before the actual auction date. These sales happen reliably on the first Tuesday of every month (Tex. Prop. Code § 51.002(b).
So, this entire process can take as little as 41 days; time is essential. Filing for Chapter 13 allows you to step off and interrupt this accelerated timeline. The automatic stay puts the foreclosure on hold, allowing your bankruptcy case to take precedence over the lender’s actions.
Will The Chapter 13 Plan Allow Me to Repay My Arrears Over Time?
The automatic stay buys time; it does not automatically eliminate your past-due mortgage payments. The true benefit of Chapter 13 is that it offers a way to pay back your missed mortgage payments, known as arrears, over an extended time period. This is what makes Chapter 13, commonly, the most effective legal tool for saving your home.
Chapter 13 is commonly known as a “reorganization” bankruptcy, often referred to as a wage earner’s plan. It requires you to create a court-approved repayment plan that lasts between three and five years.
This plan accomplishes two primary things related to your mortgage:
- It Works to Cure the Arrears: The total amount you are behind on your mortgage, plus any associated fees, gets added into your monthly Chapter 13 plan payment. You then pay this past-due balance over the three to five-year life of the plan. This is a much more realistic option than having to pay a large lump sum all at once.
- It’s Vital to Maintain Current Payments: While in the plan, you must also resume making your regular, future monthly mortgage payments as they come due.
You will make a single monthly payment to a court-appointed Chapter 13 Trustee, who then distributes the funds to your mortgage company and other creditors. If you continue to make your Chapter 13 plan payments, the automatic stay remains in effect, and your home remains safe from foreclosure.
Texas Homestead Exemption and Its Value for Home Protection
Texas’s generous homestead exemption laws further strengthen the ability to keep your home through Chapter 13. Your attorney will explain that Texas offers one of the strongest homestead protections in the country.
Your primary residence, or homestead, is protected by an unlimited dollar amount of equity, provided the property does not exceed ten acres in a city or 100 (depending on family size) acres in a rural area (Tex. Prop. Code § 41.002(a).
This is a critical distinction, especially for Houston homeowners with substantial equity in their property. It ensures that the Chapter 13 process focuses on reorganizing your mortgage debt, rather than selling your family home to pay other creditors.
What Could Happen if I Miss a Payment on My Repayment Plan?
Maintaining your plan payments is essential. If you fall behind on your Chapter 13 payments, your mortgage company can file a Motion for Relief from the Automatic Stay with the bankruptcy court. This motion will request that the court permit the resumption of their foreclosure process.
If the court grants this motion, the automatic stay will be lifted, and the lender will be able to send new foreclosure notices.
This is why it’s absolutely mandatory to have an experienced attorney guiding you through this tricky and challenging legal process.
As an experienced and passionate bankruptcy attorney, I work diligently with clients to create realistic, sound, and sustainable repayment plans and take prompt action if a motion to lift the stay is filed. I will always tenaciously fight to ensure the court hears your side and truly understands your efforts to save your family home.
Can Filing for Chapter 13 Help Me Beyond Foreclosure?
Chapter 13 bankruptcy offers far more than just a path to save your house. It is a comprehensive debt reorganization tool designed to help you regain your financial footing and that of your family.
Chapter 13 bankruptcy can also:
- Handle Other Debts: The plan enables you to manage or discharge other unsecured debts, including credit card bills, medical bills, and personal loans. Consolidating all of these payments into a single, manageable monthly payment through a Chapter 13 Trustee frees up income to ensure your mortgage is paid.
- Prevent Other Types of Collections: The automatic stay also stops wage garnishments, car repossessions, and collection lawsuits, providing relief across your financial life.
- Strip Second Mortgages: In specific, and limited circumstances, you can eliminate a second mortgage or home equity line of credit if the value of your home is less than the balance of your first mortgage. This process is known as “lien stripping” and can significantly reduce your overall total debt burden.
If You’re Facing the Foreclosure Clock Alone, Never Try To Manage It Alone.
The moment you receive a Notice of Default on your Houston home, the clock starts ticking quickly toward that first Tuesday of the month sale date. Delaying action only reduces your options.
Passionate and experienced bankruptcy attorney Karen Kisch has over 20 years of experience helping clients with consumer law, bankruptcy, and foreclosure defense. She possesses a profound understanding of the intricacies of federal bankruptcy law and its interplay with the relevant provisions of the Texas Property Code. Her empathetic and steadfast commitment is to provide helpful, caring counsel while tenaciously fighting for her clients’ rights to keep their homes and secure a fresh start.
If you and your family are facing this devastating process, the Kisch Law Firm, PLLC, is your reliable partner in resolving financial and legal challenges throughout Texas. If you are struggling to make payments and worry about losing your home, don’t hesitate to reach out for guidance as soon as possible.
The firm offers free consultations and can handle your entire case virtually, with no office visit required, if that suits you and your family better.Contact attorney Karen Kirsch’s office today at (844) 417 -6343 to schedule a free case evaluation. She will diligently and empathetically help you move forward with confidence and achieve the peace of mind you and your family deserve.
