How to Protect Your Texas Home During Bankruptcy
Filing for bankruptcy is often viewed as a last resort, but it can be the smartest financial decision if you’re drowning in debt. If you’re worried about losing your home in the process, you’re not alone. Many Texans face this same concern. Fortunately, there are strategies and protections, both federal and state-specific, to help you keep your house while resolving your financial challenges.
What Happens to Your Home During Bankruptcy in Texas?
When you file for bankruptcy, your financial situation and assets come under review. Whether you can keep your home largely depends on factors like the type of bankruptcy you file (Chapter 7 vs. Chapter 13), your equity in the property, and Texas’s homestead exemption laws.
Understanding the Texas Homestead Exemption
Texas is known for its generous homestead exemption laws. Under these laws, your primary residence is protected from creditors during bankruptcy, provided it meets certain criteria.
Any property used as your primary residence, including a house, condominium, or manufactured home, can qualify. In Texas, there is no dollar limit on the homestead exemption for properties located on 10 acres or fewer in urban areas or 100 acres (200 for families) in rural areas.
How Chapter 7 Bankruptcy Affects Your Home
Chapter 7 bankruptcy is often called a “liquidation bankruptcy” because non-exempt assets are sold to repay creditors. However, in Texas, the homestead exemption can shield your home if your equity falls within the exemption limits and you continue making mortgage payments if your house has a secured debt. If your equity exceeds the exemption, the bankruptcy trustee may sell your home, but you’ll receive the exempt amount as a payout.
How Chapter 13 Bankruptcy Affects Your Home
Chapter 13 bankruptcy allows you to create a repayment plan for your debts, which often includes past-due mortgage payments. This is an excellent option for homeowners because it can stop foreclosure through the automatic stay, give you time (usually 3–5 years) to catch up on missed payments, and keep your home as long as you stick to the repayment plan.
FAQs About Bankruptcy and Home Protection in Texas
Can filing for bankruptcy stop foreclosure in Texas?
Yes, the automatic stay that comes with bankruptcy filing halts foreclosure proceedings immediately, giving you time to reorganize or resolve debts.
What if I’m behind on mortgage payments?
Chapter 13 bankruptcy can help you catch up on missed payments over time, often preventing foreclosure.
Can I protect a second home or investment property?
The homestead exemption only applies to your primary residence. Other properties are considered non-exempt and may be subject to sale under Chapter 7 bankruptcy.
Why Bankruptcy Could Be the Best Way to Protect Your Home
While bankruptcy may seem daunting, it provides a structured way to address overwhelming debt and protect your home. Key benefits include immediate relief through the automatic stay, debt restructuring under Chapter 13 to keep your home while repaying debts, and a fresh start with Chapter 7 while preserving your primary residence if it qualifies under exemptions.
How Kisch Consumer Law Can Help Safeguard Your Home
At Kisch Consumer Law’s Texas Bankruptcy Services, we understand how important your home is. Our team specializes in Texas bankruptcy cases, providing personalized strategies to protect your property while resolving your financial challenges.
We’ll help you navigate Texas homestead exemptions and ensure maximum protection for your assets, create a plan that works for you whether you choose Chapter 7 or Chapter 13, and offer compassionate service to help you achieve financial stability without losing what matters most.
Steps to Protect Your Home During Bankruptcy
Consult a bankruptcy attorney to determine the best course of action based on your unique situation. Familiarize yourself with Texas’s homestead exemption laws to know what’s protected. Stay current on payments if possible to avoid complications. File the right bankruptcy chapter that aligns with your goals.
Your Home Can Be Saved
Bankruptcy doesn’t have to mean losing your home. In fact, with Texas’s robust homestead exemptions and the right legal guidance, bankruptcy can be a tool to secure your financial future while keeping your house.
At Kisch Consumer Law, we specialize in helping Texans navigate the bankruptcy process. Let us help you craft a strategy to protect your home and start fresh.
Don’t let debt take control of your life. Learn more about homestead protections in Texas and reach out today to schedule a consultation. Take the first step toward financial freedom.