Thank you for the additional information.
You currently make too much money for bankruptcy. Median income for household of 4 in Texas to be eligible for Chapter 7 is $65,477.00. If you were to file for Chapter 13, which is not recommended because of your high income, you have to be on a 5-year plan and you must use all your disposable income to fund a Chapter 13 plan.
If the deed-in-lieu is not going through and the house is ready to foreclose, just let the house foreclose. Most likely, the lender would not come after you for the deficiency after the foreclosure. If the mortgage company does go after you for the deficiency judgment, do not ignore the lawsuit. File an answer to the complaint and ask the Court to determine the fair market value of the foreclosed property. If the Court determines that the fair market value of the property is greater than the foreclosure sale price, then you would be entitled to the difference. See Texas Property Code Section 51.003. You can obtain an answer form from the Clerk's office.
In any event, your 12-cres would be considered your homestead and it would be exempt from seizure. See Texas Property Code Sections 41.001 and 41.002:
What most often happens is that the bank would forgive the deficiency after the foreclosure and issue a 1099-C to you. This debt forgiveness is income that must be reported on your tax return using IRS Form 982. However, in light of the Mortgage Forgiveness Debt Relief Act of 2007 that went into effect on December 2007 the forgiven debt amount will not be treated as taxable event if the forgiven debt was for a primary home. If part of the forgiven debt doesn't qualify for exclusion from income under this provision such as forgiven debt on a second home or an investment property, it may qualify under the "insolvency" exclusion. Normally, a taxpayer is not required to include forgiven debts in income to the extent that the taxpayer is insolvent. A taxpayer is insolvent when his or her total liabilities exceed his or her total assets.
Kindly note that Mortgage Forgiveness Debt Relief Act of 2007 only applies to debts forgiven in 2007 through 2012.
Mortgage Forgiveness Debt Relief Act:
Forms 982 and 1099-C: