A Chapter 13 bankruptcy filing may pause foreclosure in qualifying circumstances and allow a homeowner to catch up on mortgage arrears through a court-approved repayment plan. Learn how Chapter 13 works, the automatic stay, and the factors that can affect the outcome. Bankruptcy does not guarantee a homeowner will permanently keep the property.
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Educational Information Only: Dream Legal Solutions is not a law firm and does not provide bankruptcy representation or legal advice. The information below is general and educational. Bankruptcy law and its outcomes vary by individual circumstances, jurisdiction, and the court's review.
Chapter 13 is a "reorganization" bankruptcy for individuals with regular income. Unlike Chapter 7 (which liquidates assets), Chapter 13 allows you to keep your property — including your home — while catching up on past-due payments through a court-approved 3-5 year repayment plan. For homeowners facing foreclosure, Chapter 13's most powerful feature is the automatic stay, which immediately halts all collection actions — including the foreclosure sale.
A bankruptcy filing may trigger an automatic stay in qualifying circumstances — an injunction that generally takes effect when a bankruptcy petition is filed and can pause collection activity, including foreclosure proceedings. However, bankruptcy does not guarantee that a homeowner will permanently keep the property. The stay may be lifted if the lender files a successful Motion for Relief from Stay, and outcomes depend on the individual case and the court. Consult a licensed attorney in your state for advice about your situation.
Automatic stay takes effect immediately. The foreclosure stops. You continue making your regular ongoing mortgage payments.
Your plan spreads the mortgage arrears over 3-5 years. You make one monthly payment to the Chapter 13 trustee, who distributes to creditors including your mortgage servicer.
Once the court approves (confirms) your plan, you make payments for 3-5 years. At the end, your arrears are cured and the foreclosure is resolved.
After completing all plan payments, remaining dischargeable debt is eliminated. Your mortgage is current and you keep your home.
Get a free consultation to determine if Chapter 13 is the right strategy for your situation.
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