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How Can I Stop a Foreclosure Immediately?

Stop a foreclosure

The thought of foreclosure is enough to terrify any homeowner, but it's important to remember that if you're facing foreclosure it's not an immediate outcome. You can get out of foreclosure, save your home, and avoid uprooting your family and finding a new place to live. In this blog, we discuss the process of a foreclosure and how to save your home and avoid foreclosure by filing Chapter 13 bankruptcy. We also explain how it's possible for an emergency bankruptcy filing to stop a foreclosure sale right up to the last minute.


I'm Behind on my Mortgage, When Will the Lender Initiate a Foreclosure?

It's natural to start worrying when you fall behind on your monthly mortgage payment. The further behind you get, the more worried you become. You know you're at risk of foreclosure, but when will it happen?


You must be 120 days behind on your mortgage before your lender can initiate foreclosure proceedings. Once the mortgage lender initiates the process things move pretty quickly, at least here in Texas. In fact, the average foreclosure time in Texas is the shortest in the nation, coming in right around 159 days.  


What Happens in a Foreclosure in Texas?

Every state has its own foreclosure laws and procedures, and Texas is no exception. Unlike many other states, lenders don't have to begin a legal process and take you to court for foreclose on your home. This is called a non-judicial foreclosure, and it's the option that many lenders will choose because it's cheaper and faster than hiring lawyers and going through the courts. However, Texas law requires lenders to have a court order to foreclose if you have a home equity loan, making these situations a quasi-judicial foreclosure.


The Process of a Foreclosure

The foreclosure process can be complex, but understanding the steps involved can help you navigate through it. Here is an overview of the foreclosure process:

  • Notice of Default: Once your 120 days behind on your mortgage your lender will send you a notice of default. By law, the notice is required to give you 20 days to cure the missed payments. If you have a VA or FHA loan the lender is required to give you more time to cure the missed payments.

  • Notice of Sale: If you're unable to cure the missed payments, the lender can send you notice of the notice of sale on the twenty-first day after sending you the notice of default (unless you have a VA or FHA loan, in which case they'll have to wait a bit longer). The notice of sale must be sent to every borrower, and it's also required to be posted on at the courthouse in the county where the property is located and filed with the county clerk. The notice should clearly state the date, time, and location of the sale, and it is also required to include certain disclosures for active duty servicemembers.

  • Foreclosure Sale: Foreclosure sales typically occur on the first Tuesday of the month at the county courthouse between 10:00 a.m. and 4:00 p.m. If your home is sold for more than the amount necessary to pay off all of the liens on your property, then you're entitled to receive the surplus funds. However, if your home is sold for less than the amount owed on the mortgage, the lender can file a lawsuit against you to obtain a deficiency judgement for the remaining balance.


Can I File Bankruptcy to Stop a Foreclosure?

Bankruptcy can stop a foreclosure sale

Filing bankruptcy immediately halts the foreclosure process and provides you with a path to get back on track with your mortgage and save your home from foreclosure. A Chapter 13 bankruptcy allows you to reorganize your debts and repay the amount your behind on your mortgage, allowing you to improve your financial situation and set the stage for a secure financial future. When you file bankruptcy to avoid foreclosure, you're not forced to refinance or do a loan modification, you can avoid a short sale, and it remains an option even after loss mitigation is no longer available.


Emergency Bankruptcy Filing to Get Out of Foreclosure

If your foreclosure sale is scheduled and right around the corner, an emergency bankruptcy filing may be the best option for stopping the sale and saving your home. Filing an emergency bankruptcy will stop a foreclosure sale from happening, even if the bankruptcy is filed on the morning the sale is scheduled to occur.


So what is an emergency bankruptcy filing?


Bankruptcy requires a lot of tedious work to accurately complete the lengthy bankruptcy petition that ranges between 70 to 120 pages on average. An emergency filing is a specific process where you complete only a "bare-bones" petition that consists of only the first eight pages and doesn't include many details aside from some basic biographical information.


Filing the bare-bones petition invokes the automatic stay, which in-turn prevents the foreclosure sale from taking place.


However, this grace period is temporary and will end in about two weeks unless you complete the rest of the bankruptcy petition and Chapter 13 repayment plan and file it with the court. If you fail to file these required documents in time then your bankruptcy will be dismissed, the automatic stay will be lifted, and the foreclosure process can resume. Additionally, if decide to file bankruptcy again within a year after your bankruptcy is dismissed, then the automatic stay will be limited to 30 days unless the court signs an order extending the stay.


Chapter 13 Bankruptcy to Avoid Foreclosure

Chapter 13 bankruptcy to avoid foreclosure

Chapter 13 bankruptcy is a good option to get out of foreclosure and save your home. Your missed mortgage payments will be included as part of a repayment plan that you'll make regular monthly payments toward over the next three to five years. This makes catching up on your mortgage much more realistic without changing any terms in your current mortgage, such as your interest rate or monthly payment. Consulting with an Austin bankruptcy lawyer is important if you're considering Chapter 13 bankruptcy to avoid foreclosure.


Is it ever too late to stop foreclosure?

You have right up to the morning of the sale to save your home from foreclosure. However, if the sale has already taken place then it's unfortunately too late. This is specific to Texas and other states that don't provide for a redemption period after the foreclosure sale.


Chapter 7 Bankruptcy and Foreclosure

While Chapter 7 bankruptcy does not directly stop foreclosure, the automatic stay still goes into effect immediately and will prevent an imminent sale. Be aware that if you file a Chapter 7 specifically to delay the sale, your success is going to be short lived because the lender will file a motion for relief from stay requesting the court lift the stay to allow them to proceed with the sale. This request will almost certainly be granted since you're behind on the mortgage and Chapter 7 doesn't provide a mechanism for catching up on your mortgage like a Chapter 13 bankruptcy.


Conclusion

If you've experienced financial hardship and are facing foreclosure, one of the most important things you can do is find the best way to get out of foreclosure and save your home. Filing for bankruptcy provides you with a legal solution and the opportunity to of keeping your home. Chapter 13 bankruptcy allows you to repay your missed mortgage payments over three to five years, and if the foreclosure sale is right around the corner you can file an emergency bankruptcy to prevent the sale. Every situation is unique, and consulting with an Austin bankruptcy attorney is essential to determine the best course of action for your specific circumstances. Don't wait until it's too late - take steps now to stop the foreclosure and protect your home.


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