I'm having a number of consumers come in that have been foreclosed upon, saying that they did not receive notice of the foreclosure. The one that came in today from Katy, Texas had quite a bit of equity in the property, and a 3rd party bought the property at the January 1st foreclosure sale. Yes, you heard me right, foreclosure sales in Texas occur on the "1st Tuesday" of a given month, whether it is January 1st or July 4th.

Don't let the sale take place without your knowledge. Lenders in Texas are supposed to send you two certified letters before foreclosing on your home, but recently there is a rash of people telling me that they did not receive them. The law says the mortgage servicers have to send them, by certified mail, not that you have to receive them.

So stay in touch with your mortgage servicer (your mortgage company) and ask them if there is a "sale date" yet. If you know when the sale date is, and you want to keep your house, one option that you have is to file Chapter 13 bankruptcy before the sale takes place, and cure the delinquent payments over a 3-5 year period of time. Of course you have to have a source of regular income, and otherwise qualify for Chapter 13.

If you want to surrender the property, beware of one thing. Recently, I have seen some mortgage servicers bid less than the amount owed on the loans, so that there is a "deficiency" or a balance due. If this happens, you could not only lose your house, but find yourself getting calls from a debt collector, or even getting sued, for the rest of the mortgage remaining due after the house was sold. You may want to consider filing a Chapter 7 bankruptcy for that reason, particularly if you have other debts that can be discharged or cancelled by the Chapter 7.

In addition, if you file the Chapter 7 before the foreclosure sale, the "automatic" stay that goes into effect upon the filing of any bankruptcy will prohibit the mortgage company's attorneys from going forward with the foreclosure sale, at least until they get permission to do so from the Bankruptcy Court, which can take one or two months or longer. Then they have to "post" the property for foreclosure again, which can take another month or more. Meanwhile, you can continue to live in the house rent-free.

J Thomas Black
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Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization
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