According to DallasTexasRealEstate.com, the Texas Homestead Exemption does three things: it protects you from increasing property taxes, stops creditors from forcing a sale in many situations, and gives protections to a spouse if the homeowner passes away.
What does the Texas Homestead Exemption mean to you?
The Texas Homestead Exemption is one of the most useful laws governing state properties ever. It has a long history, having been used for centuries to some extent. The main benefit of the law is not in saving property taxes, but in protecting your home from creditors. It cannot protect your property in certain situations, namely with mortgage holders, note holders, and the government. If you fall behind on the mortgage, you may have trouble protecting it. If you fail to pay taxes, the government has options on the property.
How Bankruptcy Helps
On the other hand, a bankruptcy may be exactly what you need. Bankruptcy provides more protections. The main benefit before you even file bankruptcy is that creditors have no legal right take your home unless they are the lender. If you owe a $100,000 hospital bill, the hospital cannot just decide to take the home. If you miss a year’s worth of mortgage payments, that is another story. A Chapter 13 bankruptcy – before you fall behind on your mortgage – gives you the opportunity to start making manageable payments on the home and keep it. You have legal protection when you file bankruptcy, namely with the “automatic stay,” which halts all collections against you for several months. If you can successfully file prior to the foreclosure process beginning, you have a good chance of saving the home.
When is Chapter 7 better? Chapter 7 bankruptcy discharges your debts, while Chapter 13 adjusts the payments of debts. You always pay something with Chapter 13. Chapter 7 is better when you have other debts you simply cannot afford, unsecured debts like credit card bills. You stand to lose the home if you file Chapter 7 bankruptcy and stop making payments. Chapter 13 is better if you want to keep the home. You do have options, so discuss them with your lawyer.
Should you sell?
You have other options for eliminating this debt. If you want to avoid bankruptcy or simply know you cannot keep the home, you might get lucky and sell it for full value. Or you can use a short sale to pay back what you owe, selling the house for less than it’s value but being free of the debt.
Who can help?
If you’re confused about some of these laws, that’s more than understandable. We get confused by them ourselves. Filing bankruptcy or going through foreclosure requires legal guidance. You need an experienced Texas bankruptcy attorney to explain all the laws, help protect your property and assets, and save money on debts.
