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Homestead Protection, SBA Loan Recovery, and Bankruptcy Implications in Dallas

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Location: Dallas  |  Law type: Bankruptcy law attorneys

My father has an SBA loan that went unpaid starting about 3 years ago. We have not hear a word from the bank for 3 years, suddenly a PI shows up at their house wanting him to accept paperwork.


My question is this, is the homestead protected from a civil suit? I believe it is, if my parents decide to sell their homestead and purchase a new one will those assets be protected? I am under the assumption that the bank is trying to now sue to regain some of the outstanding debt. Also, if we assume homestead and its assets are protected is there any need for him to file bankruptcy, and if he did would it prevent further legal action to repay the SBA loan.

Legal Solution

The response provided below is specific to Bankruptcy law attorneys in the jurisdiction of Dallas. If the response is inadequate, please submit a detailed inquiry.

Homestead Protection, SBA Loan Recovery, and Bankruptcy Implications in Dallas

Analyzing the Situation:

From the context provided, it seems your primary concerns revolve around the protection of the homestead from civil suits, particularly in the context of an unpaid Small Business Administration (SBA) loan. The sudden appearance of a private investigator (PI) has evidently heightened concerns. Homestead protections vary from state to state, and in Texas, there are specific provisions that guard homeowners against certain kinds of creditors.

Relevant Legal Provisions:

  • Texas Homestead Law: This law provides significant protections for homeowners. The law protects a primary residence from forced sale by most creditors.
  • Texas Bankruptcy Exemptions: In the event of bankruptcy, Texas allows for either federal exemptions or state exemptions. Homestead protection is included in the state exemptions.

Homepage for detailed regulations: Texas Government Website

Potential Solutions:

  1. Homestead Protection: In Texas, the homestead is generally protected from most types of creditors, including unsecured debts like the SBA loan. However, there are some exceptions such as taxes, mortgage liens, or mechanics liens.

  2. Selling and Purchasing a New Homestead: If your parents decide to sell their homestead and purchase a new one, the proceeds from the sale might be exempt for a certain period, typically six months, but it’s crucial to reinvest these funds into a new homestead within this period to maintain the exemption.

  3. Bankruptcy Option: If your father decides to file for bankruptcy, it may discharge the SBA loan debt, thus preventing further legal action. Filing for bankruptcy can stop most collection actions. However, there are different types of bankruptcy, and specific advice would be needed based on the complete financial situation.

  4. Legal Advice and Defense: It is crucial to consult with a bankruptcy law attorney to discuss the specific details. They can guide on how best to handle the situation, whether bankruptcy is the right option, and how to protect the homestead and other assets.

Average Cost of Legal Services in Dallas:

Service Average Price (USD)
Initial Consultation with Bankruptcy Attorney $250 - $500
Chapter 7 Bankruptcy Filing $1,200 - $2,500
Chapter 13 Bankruptcy Filing $2,500 - $4,500
Property Assessment for Homestead Protection $400 - $800
Debt Settlement Negotiation $800 - $2,000

Note: These prices are estimations and might vary depending on the complexity of the case and the reputation of the attorney. It's also essential to note that some attorneys might offer contingency fee arrangements or payment plans.

Clarifying the Situation:

While the information provided offers a general understanding, knowing more specific details about the case would enable more tailored advice. If you are unsure of the next steps, it might be beneficial to find the right lawyer to navigate the complexities of your situation.

Further Questions to Consider:

  1. Has there been any written communication or notice from the bank about the unpaid loan?
  2. Are there any other significant debts that your father has, apart from the SBA loan?
  3. Are your parents considering bankruptcy due to other financial pressures, or solely because of this SBA loan?

Frequently Asked Questions:

What is the difference between Chapter 7 and Chapter 13 bankruptcy?

Chapter 7 bankruptcy is a liquidation bankruptcy where most of your unsecured debts are discharged. In contrast, Chapter 13 bankruptcy is a reorganization bankruptcy where you set up a repayment plan to pay off your debts over a 3-5 year period.

Can creditors take my personal property if I default on an SBA loan?

In general, personal property is exempt from seizure by unsecured creditors in Texas. However, if the loan was secured by collateral, the lender might have rights to that collateral.

How long does a bankruptcy filing stay on my credit report?

A Chapter 7 bankruptcy can remain on your credit report for up to 10 years, while a Chapter 13 bankruptcy stays for up to 7 years.

Can I keep my home if I file for bankruptcy in Texas?

Yes, Texas has a generous homestead exemption. As long as you are current on your mortgage and the equity in your home doesn't exceed the exemption limit, you can keep your home.

If my home is protected by the homestead exemption, can I still lose it?

Yes, there are exceptions to the homestead protection. For example, you can still lose your home if you default on a mortgage, fail to pay property taxes, or if there's a lien placed on your property by a mechanic or builder for unpaid services.


This content is for informational purposes only and does not establish an attorney-client relationship. It's always recommended to consult with a local attorney about your specific situation.

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Legal question "Homestead Protection, SBA Loan Recovery, and Bankruptcy Implications in Dallas" has been changed 3 months ago. Demonstrate your legal skills and willingness to help and answer right now! Issue is related to the location of Dallas & area of law: Bankruptcy law attorneys.
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Would you like to find an experienced bankruptcy lawyer near me (you) quickly and for a good price? Generally, bankruptcy law can provide a timeline (arrangement) for the repayment of non-dischargeable personal (corporate) debts. The ability to repay secured debts is valid for both Individuals as well as organizations (governmental and private). Bankruptcy comes in five varieties where each offering different options "settling" with debts.

  1. Chapter 7: Cancelation of unsecured debts (credit cards and personal loans). Bankruptcy law in the United States has changed dramatically in 2005. Liquidation of personal debts under a Chapter 7 is the most common form of debt relief. Most of chapter 7 cases are classified as "no asset".
  2. Chapter 9: Reorganization of municipalities and related local entities sheet (not for Individuals and Corporations). A chapter 9 of bankruptcy law in U.S is very special. It is a form of debt reorganization (not disposal). Remember, it is only avaliable to Municipalities
  3. Chapter 11: This chapter Provides a lot of options to reorganize debt. There are options such as "debt cancellation", repaying some debts for Individuals, etc ...
  4. Chapter 12: Restructuring of debts for Family Farmers is done according to this chapter.
  5. Chapter 13: repayment of some debts over a period of three to five years + reduction on secured debts and their elimination.

Is it better to file for a bankruptcy under Chapter 11, Chapter 12 or Chapter 13? It depends on your case. Your first step should be finding and hiring the best and most affordable bankruptcy attorney near you. Bankruptcy proceedings in the United States are (should be) supervised by District and Bankruptcy Courts governed by the bankruptcy rules (promulgated by the Supreme Court -

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