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Texas bankruptcy lawyerIf you own a home, you are one of the millions of Americans who are lucky enough to have achieved the American Dream. The scary part is, you can have that dream taken away from you if you fall on hard times. Foreclosure is a very real thing that happens to households every day. Fortunately, you have a few options that you can choose from if you find it difficult to make payments on your home. The options available to you will depend on whether your financial distress is temporary or more permanent. If you are just temporarily having issues paying your mortgage, you can look at options such as a renegotiated repayment plan or forbearance. If your financial distress is more permanent, you can consider bankruptcy as an option to help you.

Automatic Stays and Bankruptcies

When you file for bankruptcy, all creditors, collection agencies, government entities and other people you may owe money to must cease to contact you about your debts. This is what is called an “automatic stay” and it can prevent the bank from taking action against you if you have an outstanding balance on your mortgage. The automatic stay begins the moment you file the paperwork for bankruptcy and prevents the bank from trying to start the foreclosure process on your home or if the process has already been started, the automatic stay prevents the process from moving any further. The length of the automatic stay depends on the type of bankruptcy you choose to file but lasts as long as the bankruptcy lasts.

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Filing a Chapter 7 bankruptcy case stops a foreclosure and buys some time to either arrange to keep the home or move in a peaceful way.

Chapter 7 “Straight Bankruptcy” vs. Chapter 13 “Adjustment of Debts”

Speaking very generally, Chapter 7 buys you some time with your home while Chapter 13 buys you much more time.

So the questions are: how much more time to do you need and will Chapter 7 buy you enough?

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Here’s an example of how Chapter 13 can allow you to hold onto your home but then change your mind about it later.

Our last blog post introduced the option of saving your home through Chapter 13, while keeping open the possibility of surrendering the home later if your circumstances change.

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As you decide whether to use the powerful tools of Chapter 13 to hold onto your home, it helps to know that you can later change your mind.

Our last blog post was about surrendering your vehicle in a Chapter 13 “adjustment of debts” case. One major advantage we discussed is being able to change your initial decision about keeping your vehicle if circumstances change.

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Either Chapter 7 or 13 will stop a foreclosure, even if your lender unintentionally or purposely proceeds with the foreclosure sale.

Here’s a one-sentence summary of today’s blog post:

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