While Chapter 7 bankruptcy cannot save your home from foreclosure, it does give you many options which help you financially. Why can’t Chapter 7 bankruptcy stop a foreclosure? What’s the best way to save your Texas home? If you lose it, will you still owe money? First, let’s go over the advantages.
Advantages of Chapter 7
You can almost always save money by filing Chapter 7. This occurs because you can stay in the home during and some time after the bankruptcy. By law, all collections against you stop once you file bankruptcy. You can quite often stay in the home several months after, paying nothing on the mortgage. You can also cancel the debts you owe on the home, including any second mortgages. So you can stay in the home for some months and pay nothing, and then discharge the debt. For Texas home owners, this may not be enough.
Why Can’t You Save Your Home?
Technically, you cannot cancel a foreclosure by filing Chapter 7. You can discharge some of the debt, but not the debt on the lien of the house. The lien cannot be discharged. This may sound unfair. You can be completely free of the debt, but you lose your home. You do have other options.
Other Options
You can do many other things to stop a foreclosure and its effects. You may be able to sell the home on a short sale. You can also file for Chapter 13 bankruptcy, perhaps the best way to save your Texas home. Chapter 7 is not for everyone. You quite often lose property. You sometimes lose other assets. But if you can discharge thousands in debt, it can still be beneficial.
More on Chapter 13
How does Chapter 13 bankruptcy save your home? Chapter 13 makes it so you can pay on some or all your debts over a more manageable period. Though foreclosures are far less common in Texas than other states, many home owners use Chapter 13 to avoid the problem. There is some fine print: you have to file before papers are entered to foreclose your home. If the foreclosure process is ongoing, you cannot just decide to file. You need to file Chapter 13 before the foreclosure papers are in; the best time is when you know you won’t be able to make payments in full.
How to Get Help
You need an experienced Texas bankruptcy lawyer any time you fear foreclosure and want to file bankruptcy. A lawyer can explain your best options. You may not be able to pay with Chapter 13, but can buy enough time to get into a new residence with Chapter 7. A good lawyer can quite often save you far more money than he or she charges when it comes to discharging debts and saving assets.
