Options available to ordinary homeowners in financial difficulties always seem limited. We read headlines in the news that this corporation or that company has filed for bankruptcy protection. Can personal bankruptcy protect you, too? Not only can a Texas Chapter 13 bankruptcy protect you, it can also save you from losing your home. 

Secured Debt

A mortgage is a type of secured debt. You borrowed money from a lender to buy your home, using that very home as collateral. If you fail to repay the debt, the lender collects the collateral. This is a foreclosure or repossession; you lose your house. 

Unsecured debt comes from bank cards, gasoline credit cards, and personal loans. You offered your creditors nothing in return for borrowing their money, which is why you always pay more for unsecured debt than for secured debt. Mortgages have much lower interest rates than unsecured debts. Still, even with mortgages with low interest rates, homeowners can fall behind on payments. That starts the slippery slope into … gulp … homelessness. 

Homeless

Nobody chooses homelessness. Yet a homeowner can become homeless astonishingly fast. You overextend, you suffer a financial setback, you try to help other family members. Suddenly you are months behind on mortgage payments and fending off creditors. 

Many Texas families become homeless due to circumstances far larger than themselves and beyond their control:

• Job loss
• The effects of COVID-19
• Financially supporting other family members
• Cutbacks in employment hours, salary, or benefits
• Unforeseen medical expenses
• Personal loss (death of a breadwinner, a house fire, a burglary)

Foreclosure looms. With foreclosure comes homelessness. Call it moving in with relatives, sleeping on a friend's couch, or returning to your parents' house; you are homeless. 

Could you do anything to save your home, to keep your family intact, to avoid being homeless? Yes. You can file for Chapter 13 bankruptcy. 

Save the House

Chapter 13 bankruptcy restructures existing debts; it does not make them magically disappear, despite what people may think. You honor your debts. You just get more time to repay them. You keep your dignity, preserve some income to live on, and hold onto your house. 

Chapter 13 bankruptcy protects you from your creditors. You agree to terms that restructure your debt, stretching payments out over a longer time with smaller amounts due at each payment cycle. 

Your old debt is not forgiven; it is rolled into the new payment plan. You clean up all your missed payments, make current payments, and in a few years (typically three to five years) you erase the secured debt under the Chapter 13 bankruptcy agreement. 

As long as you live up to the agreement, your creditors cannot seize your home, harass you, or demand early payment. You have the full protection of a perfectly legal court order. 

Firm Foundation

Any filing for bankruptcy is, in a way, like building a house. You start with a firm foundation and build up from there, in specific steps, following a plan: 

• Work with an experienced bankruptcy attorney to arrange for credit counseling
• Have your bankruptcy attorney file a petition with the bankruptcy court in your jurisdiction
• Provide full disclosure of all your assets and liabilities, hiding nothing and inflating nothing
• Share information about your actual, current income and real expenses
• Provide several years of filed tax returns and other relevant financial data
• Prepare a repayment plan
• Make steady, regular and predictable payments without fail

After you fulfill your debt repayment, you must also complete financial management training. The credit counseling and financial management training are very small prices to pay for holding onto your home, keeping creditors from harassing you, and clearing up years of debt. 

Filing Chapter 13 bankruptcy offers you many protections, but the process cannot start until you connect with a trusted, experienced bankruptcy lawyer. Contact us at The Page Law Firm today. You may also call (214) 618-2101 to schedule a complimentary consultation. Our Frisco, Texas firm serves Collin County, Denton County, Carrollton, Celina, The Colony, Flower Mound, Lewisville, Little Elm, McKinney, Plano, and Prosper.