At Toronjo & Prosser Law, we work with homeowners in the Dallas-Fort Worth area to prevent foreclosures through the bankruptcy process. If you have defaulted on your mortgage or are facing a foreclosure action, filing for bankruptcy can help you keep your house. Filing bankruptcy to stop a foreclosure can be very complicated, which makes it crucial to have the informed representation we provide.
When you consult with us, we will review your financial picture to determine whether Chapter 7 or Chapter 13 bankruptcy is the right option for you. Our bankruptcy attorneys understand that many homeowners face financial troubles through no fault of their own: a job loss, a medical emergency, divorce, unexpected expenses. Regardless of your circumstances, we will stand by you every step of the way and help you navigate the legal system.
Well-versed in the U.S. Bankruptcy Code and the Texas exemptions, we have a well-earned reputation as experienced bankruptcy attorneys that can handle all types of bankruptcy cases, easy or hard. Because we understand your financial challenges, we offer free consultations and flexible payment plans. Above all, we will work to protect your home from bankruptcy and help you get a fresh start financially.
What is foreclosure?
Foreclosure is a court-supervised legal proceeding in which a bank or lender seeks to sell a home (the collateral) to satisfy their debt (the mortgage). In Texas, there are two types of foreclosure — judicial foreclosure and nonjudicial foreclosure.
A judicial foreclosure begins when the lender files a lawsuit seeking a court order for a foreclosure sale. Generally, a mortgage loan must be 120 days delinquent before a foreclosure action can start. Nonetheless, missing a single payment is considered a default under the terms of most loan documents.
Non-judicial foreclosure is the most common form of foreclosure in the state. Deeds of trust typically contain a “power of sale clause” which allows the lender to foreclose on the home without going to court. A non-judicial foreclosure can only be used for purchased money mortgages and refinances; delinquent home equity loans and property taxes require a judge’s approval.
If you are facing a foreclosure, do not hesitate to seek out the options that are available to you. We can file bankruptcies quickly and right before the foreclosure sale is scheduled, so the sooner you contact Toronjo & Prosser Law for help, the sooner we can get started on your case. Having successfully handled thousands of personal bankruptcies, we have the skills and experience to protect your home from foreclosure.
How Can Bankruptcy Stop Home Foreclosure in Texas?
In a Chapter 7 or Chapter 13 bankruptcy, the court issues an order known as an automatic stay. This order prohibits creditors from taking any action to collect from you and will at least temporarily stop foreclosure activities. Whether you are able to keep your home largely depends on the type of bankruptcy you file, and whether or not you’re able to reorganize your finances in a way that catches up the missed payments over time (the arrears), while continuing to make the regular monthly payments each month after the case is filed.
Chapter 7 Bankruptcy and Foreclosure
This form of bankruptcy allows you to eliminate most of your unsecured and secured debt. However, it is a liquidation bankruptcy, so in some instances, the chapter 7 trustee can sell your non-exempt property to pay off as much debt as possible. Under Texas law, a home that is your primary residence is typically exempt from being sold to pay off unsecured debt (a vacation home is not exempt and could, therefore, be subject to sale).
Although the stay may give you some time to catch up on the overdue payments, a Chapter 7 filing does not have a process to do this, unlike the Chapter 13 reorganization bankruptcy. Therefore, if you catch up on the overdue payments, the bank can move to lift the stay and proceed with foreclosure. The lender can also move to sell the home after the bankruptcy is discharged. Unless you can borrow the money from family or friends to pay the overdue payments, it is likely that you will still lose your home.
Chapter 13 Bankruptcy and Foreclosure
Chapter 13 is a type of reorganization bankruptcy that allows you to pay off your debts, including defaulted mortgage payments, through a court-approved payment plan. Repayment plans can last anywhere from 3 to 5 years, and the monthly payment amount is based largely on the types of debts you owe and your disposable income. Debtors using chapter 13 to keep their home will also need to stay current on all of their regularly scheduled monthly mortgage payments each month after the case is filed.
In addition, if your home is “underwater” (the value of the home is less than what you owe), Chapter 13 can “stripof” (i.e. remove) second and third mortgages on the house, and, depending on your disposable income, those mortgages may or may not be repaid through the repayment plan.
For the repayment plan to be approved, however, you must have enough income to continue paying the existing monthly payment while also sticking to the payment plan. If you don’t make the current mortgage payments, the lender can ask the court to lift the stay and proceed with the foreclosure. Bankruptcy and foreclosure can greatly impact your credit report, so it is crucial to have a skilled bankruptcy attorney in your corner.
Contact Our Experienced Texas Bankruptcy-Foreclosure Attorneys
If your bank is foreclosing on your home, don’t delay. Call Toronjo & Prosser Law. We will work closely with you to determine whether personal bankruptcy can help you save your house. Our legal team has handled thousands of Chapter 7 and Chapter 13 bankruptcies and we know our way around the courtroom. When you become our client, you increase the likelihood of protecting your home from foreclosure. Please contact our office today for a free consultation with one of our bankruptcy attorneys.