You have a right to keep your home, but there is some fine print. What many confuse is the fact that Texas bankruptcy and foreclosure are each unique from all other states. All states have different bankruptcy and foreclosure laws, but you can use Texas laws to your advantage. The most important law to understand is the Texas Homestead Exemption. You should also understand how Chapter 7 and Chapter 13 bankruptcy filings can protect your home. This blog guide will help.
The Homestead Exemption
The Texas Homestead Exemption is a unique law in that you can protect your home from most creditors no matter how much you make or how much you owe. The law is fairly complex, but in practical terms it means creditors cannot take your home if you owe money. The home lender can take the home if you stop making payments, but if you owe credit card debt, medical debt, or other forms of debt, the law protects these creditors from using your home to pay back the debt. So if you owe $25,000 in credit card debt, the credit card company can use legal means to get the money, but they cannot take your home. If you owed $50,000 in medical bills because you lack coverage, the story is the same – your home cannot be used to pay back the bill. In other states, laws are less helpful. But in Texas, if you owe some unsecured debts, these cannot be used to take your home.
Chapter 7 Bankruptcy Option
Chapter 7 bankruptcy is also unique to Texas, but mainly in eligibility rules. Find out the current median income in Texas when you are considering filing bankruptcy. If you make more, there is a good chance you are not eligible. On the other hand, if you make less than average, or recently had a decrease in income, it’s likely you can file. And you can use a Chapter 7 bankruptcy to discharge debts outside your secured assets. So you could continue to pay on your home and car, affirming the debts, but discharge a large credit or medical bill. This can be quite helpful, but can also get quite technical. You should definitely hire an experienced Texas bankruptcy attorney if you’re considering this option.
The Chapter 13 Bankruptcy Option
Chapter 13 bankruptcy can often be more effective in protecting your home than Chapter 7 bankruptcy. You may make too much money. You may want help in paying back your secured debts, such as your home and car. In these situations, a Chapter 13 repayment plan allows you to pay back debts over 3-5 years. If you file correctly, you can avoid a foreclosure, along with buying yourself time to pay on other debts.
If you are trying to avoid foreclosure, don’t overreact. Instead, you should take action. You should consult with an experienced Texas bankruptcy attorney. You should find out ways to save money, property, and assets. Once you understand your options, you can avoid a foreclosure.