Can Bankruptcy Stop Foreclosure?

In Texas, it is comparatively easy to foreclose on properties, and the process is swift—the entire foreclosure may take only three months, so those in danger are cautioned to seek advice from a Houston foreclosure lawyer as soon as possible.

What Happens During Foreclosure?

Most foreclosures happen out of court, as most mortgages include a “power of sale” clause that allows foreclosure without filing a lawsuit. Before the process begins, the lender sends a notice to the borrower giving at least 20 days to pay the late amount on the loan; if this is not satisfied, the lender begins the actual foreclosure procedure. The borrower is sent a second notice stating that the loan has now been “accelerated”—the full loan amount must be paid—and a sale of the property is scheduled.

When there is no power of sale clause, the lender files suit against the borrower; if the lender wins, the court grants permission to foreclose on the property, and the property is scheduled for public sale.

How is Foreclosed Property Sold?

Unlike other states, Texas does not require a lender to publish a notice of sale in the newspaper. The borrower is informed through the mail 21 days before the sale by a letter sent to the last known address. The lender files foreclosure with the country clerk 21 days before the sale, and a notice of the sale is posted at the doors of the county courthouse.

Foreclosure sales occur on the steps of the courthouse, on the first Tuesday of the month, between 10 am. and 4 pm., and they take place regardless of holidays. This is a public auction, with the property sold to the highest bidder and paid for in cash. In other states, borrowers may have a “right of redemption”—a period of time after foreclosure in which to buy the property back at its auctioned price—but this is not an option in Texas.

Following the sale, ownership of the property is transferred free of all junior liens but still subject to senior liens. If the sale amount is more than the amount owed to the lender, surplus money is used to pay the junior liens.

Can Bankruptcy Save my Home?

Houston foreclosure laws allow for Chapter 7 and Chapter 13 relief, and bankruptcy can make all the difference, but again, time is critical—property owners facing foreclosure need to contact a Houston foreclosure lawyer immediately.