If you fall behind on your mortgage payments due to overwhelming debt, your lender may initiate foreclosure. However, you may be able to stay in your home by filing for bankruptcy.

Chapter 13 bankruptcy allows you to repay your creditors over a certain period of time, and filing for bankruptcy under this plan may stop foreclosure proceedings.

Requirements for chapter 13

The United States Court System calls chapter 13 bankruptcy a wage earner’s plan. To be eligible, you must have a steady income that allows you to make bankruptcy payments as well as cover your monthly living expenses. In most cases, a bankruptcy court will develop a plan that allows you to repay your creditors within three years. During this period, creditors may not initiate or continue collection efforts, which means you may be able to save your home from foreclosure.

Repaying debt under chapter 13

Filing for chapter 13 may give you protection from foreclosure, even if a lender has already initiated the process. The bankruptcy repayment plan should help you recover from mortgage delinquency. During the chapter 13 protection term, you may have to make your standard mortgage payments along with the bankruptcy payments. If you fail to make your required mortgage and bankruptcy payments, it may eventually lead to foreclosure. Because bankruptcy allows you to extend the repayment term of most secured debts, you may have an easier time covering all your monthly bills.

When you are in a chapter 13 repayment plan, you do not make your payments directly to your mortgage lender or any of your other creditors. Instead, you make payments to an impartial trustee, and this agent then distributes money to your creditors under the terms of your bankruptcy repayment plan.