What happens to the balance of my loan after a foreclosure?

In the state of Texas, if a person defaults on their loan, a lender may initiate a foreclosure. During a foreclosure, a lender can take possession of the property in question and sell it in order to collect any remaining debt owed. Once the property is sold, the lender uses the proceeds to pay off the outstanding debt. If there is any remaining balance, it is the responsibility of the homeowner to pay it off in full or make arrangements with the lender. Even if the proceeds from the sale of the property are insufficient to cover the entire debt, the remaining balance will still be due. The borrower may be able to negotiate with the lender in order to reach an agreement to pay off the remaining balance in full or make payment arrangements. However, if the borrower is unable to reach an agreement, they may be subject to additional legal action. This could include wage garnishment, seizure of other assets, or even a judgment from the court. If the remaining balance is not paid, the lender may report it to the credit bureaus, which can severely damage the borrower’s credit score. This is why it is important for borrowers to take action and work with their lender when facing foreclosure.

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What happens to the balance of my loan after a foreclosure?

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