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Home Foreclosure

The home is the center of family life.  The home is the most important asset of many Americans.  Losing one’s home involves significant financial loss and emotional loss.

Texas provides many protections for homeowners.  A Texas homestead cannot be seized by most creditors.  Generally, a homestead can only be reached to pay debts for taxes and for liens voluntarily incurred when purchasing or improving the home.

However, protection of Texas homesteads is not complete.  The State of Texas allows non-judicial foreclosure by mortgage lenders.  Under a typical Texas mortgage a lender can post the home for foreclosure without first obtaining a court order if lender determines that the homeowner is in default on the mortgage. 

Real property mortgage foreclosures are posted for foreclosure at the courthouse in the county where the property is located.  Foreclosures in Texas take place on the first Tuesday of each month. Foreclosure postings must be made 21 days before the foreclosure date.   At the foreclosure sale the mortgage company can bid on the property.  Third parties can also bid on the property.  Often, the mortgage company “credit-bids” an amount for the property.  The amount bid by the mortgage company is credited to the amount owed by the homeowner.  At the conclusion of bidding, title to the property is passed to the buyer and the former homeowner is forced to move out of the home.

Stopping a foreclosure:
Chapter 13 of the United States Bankruptcy Code allows a homeowner to stop a foreclosure and to submit a plan of reorganization to cure the mortgage default.  Under a Chapter 13, the homeowner makes regular mortgage payments to a Chapter 13 Trustee plus additional payments to get caught up.  Chapter 13 reorganizations generally involve a 5-year plan period.


Important considerations:
In order to stop a foreclosure, it is important that the Chapter 13 reorganization be filed before the foreclosure date.

Note that a Chapter 13 plan generally does not reduce the amount of the mortgage payment.   However, a Chapter 13 plan often includes comprehensive reorganization of debts, including payment of substantially less unsecured debt.  Depending on the facts of each situation, a Chapter 13 plan can often achieve a reorganization that works for the debtor.

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