Facing Foreclosure in Texas? Here’s What You Need to Know

Foreclosure can be a daunting prospect for any homeowner. In Texas, the process primarily follows a nonjudicial route, meaning a lender can often foreclose without filing a lawsuit, as long as certain legal guidelines are met. This streamlined procedure can catch many borrowers off guard, giving them less time to save their home compared to states that have lengthy judicial processes.

Still, Texans benefit from some significant legal protections, most notably the state’s robust homestead exemption. If you’re concerned about foreclosure, it’s helpful to understand how the process works, the key timelines, and how you might use bankruptcy as a powerful tool to halt or even avoid losing your property. Below, we’ll dive into these issues and outline what you can do if you’re at risk of foreclosure in the Lone Star State.

Understanding the Texas Foreclosure Process

Most foreclosures in Texas are conducted through a nonjudicial process governed by Texas Property Code § 51.002 and related statutes. Once you default on your mortgage (often by missing one or more payments), the lender typically issues a notice giving you at least 20 days to cure the default. If you don’t catch up, you’ll receive a Notice of Sale at least 21 days before the scheduled foreclosure sale. These notices are usually sent by certified mail and may also be posted at the courthouse and filed with the county clerk.

The foreclosure sale usually occurs on the first Tuesday of the month, a longstanding Texas tradition. Because the clock starts ticking quickly, homeowners may only have around 41 days (sometimes less) between receiving the first notice and the actual sale. This compressed timeline underscores the importance of exploring your options right away if you fear your lender is moving toward foreclosure.

How the Homestead Exemption Helps

Texas is famous for having one of the most generous homestead exemptions in the country. Under the Texas Constitution, Article XVI, you can often protect an unlimited amount of equity in your primary residence, subject to acreage requirements (up to 10 acres in an urban area, or up to 100 acres—200 for families—in a rural setting). This exemption means that even if you have substantial home equity, a creditor other than your mortgage holder can’t force you to sell simply to collect on unsecured debts.

However, the homestead exemption doesn’t eliminate your mortgage obligation. If you’re behind on payments to the lender who holds your deed of trust (or mortgage), the exemption won’t stop that lender from foreclosing. It does, however, make Texas an attractive place to live for those concerned about potential lawsuits from other creditors.

Using Bankruptcy to Stop Foreclosure

One of the most immediate ways to halt a foreclosure sale in Texas is to file for Chapter 7 or Chapter 13 bankruptcy. Upon filing, the automatic stay goes into effect under Title 11 of the U.S. Code. This stay prevents most creditors, including your mortgage company, from continuing or initiating collection actions until the bankruptcy case is resolved or the stay is lifted.

Chapter 7 may give you temporary breathing room by pausing the foreclosure. In some cases, discharging unsecured debts (like credit cards or medical bills) can free up cash to catch up on your mortgage. However, if you remain delinquent, the lender can eventually seek court permission to move forward with the foreclosure.

Chapter 13 can be more effective if you want to keep your home. Under a court-approved repayment plan spanning three to five years, you may repay mortgage arrears in installments while also covering other debts. As long as you maintain your regular mortgage payment and stick to the plan, the lender cannot proceed with the foreclosure.

Additional Options to Consider

Aside from bankruptcy, some homeowners pursue a loan modification, seeking to lower their monthly mortgage payment or extend the loan term. Others opt for a short sale if the property is underwater. In certain cases, a deed in lieu of foreclosure may be a viable last resort to avoid the negative publicity of a foreclosure, although that option may carry tax and credit implications. Every situation is unique, so it’s wise to collaborate with professionals—such as a foreclosure attorney or housing counselor—to determine the best strategy for your specific financial circumstances.

References

1. Texas Property Code § 51.002. (n.d.). Retrieved from: https://statutes.capitol.texas.gov/Docs/PR/htm/PR.51.htm

2. Title 11 of the U.S. Code (Bankruptcy Code). (n.d.). Retrieved from: https://uscode.house.gov/browse/prelim@title11

3. Texas Constitution, Article XVI. (n.d.). Retrieved from: https://statutes.capitol.texas.gov

Disclaimer: This article is intended for educational purposes only and does not constitute legal advice. Every foreclosure case is unique, and laws are subject to change. For advice specific to your situation, consult a licensed attorney in Texas.