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Avoiding foreclosure with Chapter 13 bankruptcy

Your home is likely far more than a piece of real estate to you. You may have spent years or decades molding it into your dream home, raised your kids there and created countless memories.

The Dallas-Fort Worth area has seen decreased numbers of foreclosed homes since 2018. However, Texas homeowners facing the prospect of foreclosure may feel overwhelmed at their options to save their home. While you may attempt every alternative to bankruptcy, those struggling to manage an insurmountable debt load may benefit from considering filing for bankruptcy.

Immediately halting the foreclosure process

When you file for bankruptcy, the bankruptcy court issues an automatic stay. This provision immediately prevents creditors or lenders from harassing you about your debts. It also puts a halt to collections efforts, including the foreclosure process.

This provision is not a long-term solution to keeping your house. However, it can provide you the breathing room you need to stop the immediate sale of your house and develop a workable repayment plan that could allow you to keep your home.

Creating a three- to five-year repayment plan

Chapter 13 bankruptcy can be ideal for Texans with:

  • A steady income. Chapter 13 allows you to create a repayment plan. Those with regular income can benefit from the ability to restructure their debts.
  • Assets to protect. Chapter 13 bankruptcy can protect significant assets like your home, car, jewelry or other expensive possessions and more.
  • Up-to-date tax filings. Texans considering filing for Chapter 13 bankruptcy must be current on all tax returns within at least the previous four years.
  • No recent bankruptcy history. You must not have filed for Chapter 13 within the past two years or for a bankruptcy petition within the past 180 days.

One of the most distinguishing factors of Chapter 13 bankruptcy is the repayment plan it allows individuals to create. Extending over a three- to five-year period, this plan allows you to pay restructured unsecured debts.

Keep in mind that filing for bankruptcy will not release you of your obligation to pay monthly mortgage payments. However, by diligently repaying past-due mortgage payments and staying current with regular payments, you could emerge from your repayment plan with your home safe from the threat of foreclosure.

Filing for bankruptcy can be nerve-wracking. However, for many, Chapter 13 bankruptcy can provide options for you to retain one of your most significant assets, your home.

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