Foreclosure is a legal proceeding whereby the creditor (mortgage company, taxing authority) is attempting to take the title of your real estate in order to pay a debt (ie mortgage, taxes) which you currently owe. For most people, this generally means their homestead. In Texas, the foreclosure sales take place the first Tuesday of each month between 10:00am to 4:00pm.

If your home or other property is up for foreclosure then the sale may be stopped by filing a Bankruptcy petition. The payments you are behind on can be paid off under a Chapter 13 plan. You would make future regular payments to your mortgage company, without having to make up the back payments all at once. Even if you decide to surrender your property, you probably would require Bankruptcy protection from the tax and legal consequences from a foreclosure sale.

If you do not stop the foreclosure then you should be aware the Internal Revenue Service requires mortgage holders to report all foreclosures on Form 1099, which is a miscellaneous income report. You may be required to report income from forgiveness of debt even though you receive nothing for it! In addition, if the property sells for less then its loan payoff, the mortgage holder may then seek a deficiency judgement against you. A judgement can stay on the record for 10 years and can be renewed for another 10 years.

Congress has passed laws designed to allow you to meet your financial obligations under a payment plan. Your creditors are automatically stopped from foreclosing on your home. The key is to stop the sale. Once that is accomplished then you can either: (1.) surrender the property in full satisfaction of the debt (ie in either a 7 or 13; (2.) repay the missing payments through the monthly Chapter 13 plan and by the end of the plan you will be completely current; or (3.) stop the foreclosure, sell the property on the market, and then either complete the Chapter 13 or convert to Chapter 7. These options and more are generally available and can be reviewed with an appointment at our office.

The safest way to double your money is to fold it over and put it in your pocket.

 - Kin Hubbard