Falling behind on mortgage payments creates stress that’s hard to ignore, especially when your home is at risk. Will I lose my house if I file Chapter 13 bankruptcy? This is one of the most common questions individuals ask to prevent foreclosure. The answer depends on how the bankruptcy process is managed and whether the legal protections available through Chapter 13 are used correctly.
At Sadek Bankruptcy Law Offices, our experienced PA and NJ bankruptcy lawyers have helped individuals and families throughout Pennsylvania and New Jersey protect their homes and recover financial stability. With more than 15 years of experience, we focus on assisting clients to use Chapter 13 bankruptcy to stop foreclosure, restructure debt, and stay in their homes through a court-approved repayment plan.
If you’re considering filing for bankruptcy, do not wait until your lender takes action. Call (215) 545-0008 in Pennsylvania or (856) 890-9003 in New Jersey to speak with a bankruptcy attorney, or contact us online to schedule your free consultation.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy, also known as a wage earner’s plan, allows individuals with regular income to repay past due payments and manage debt through a structured payment plan. Chapter 13 lets you retain property while resolving obligations such as credit card balances, medical bills, and mortgage arrearages. This is different from Chapter 7, which is a form of liquidation bankruptcy that requires selling nonexempt assets to repay creditors.
When filing for bankruptcy under Chapter 13, the debtor proposes a plan, typically three to five years long, outlining how creditors will be repaid. This plan must comply with federal law and is reviewed by the bankruptcy court. Once approved, a bankruptcy trustee is assigned to oversee the case and distribute funds to secured debts, unsecured creditors, and other liabilities according to the terms of the repayment schedule.
The process, administered through the United States Courts, offers flexibility for those who want to protect exempt assets and work toward financial stability. A skilled Chapter 13 lawyer can help determine eligibility, prepare the repayment plan, and clarify what portion of debt may be reduced or discharged.
Chapter 13 benefits individuals who do not qualify for Chapter 7 or have nonexempt equity they wish to protect. It also serves those who have fallen behind on mortgages, auto loans, or taxes and need time to get current while avoiding asset liquidation.
Can I Keep My House in Chapter 13 Bankruptcy?
Yes, in most cases, you can keep your house when you file for Chapter 13 bankruptcy. One of the core protections built into Chapter 13 is the automatic stay, which takes effect immediately after filing. This stops all foreclosure proceedings, wage garnishments, and collection actions, giving you time to reorganize your debt and catch up on missed mortgage payments through a structured repayment plan.
Your home is likely your most valuable asset, and Chapter 13 is specifically designed to protect assets like this while helping you regain financial stability. Instead of forcing a sale, the bankruptcy court allows you to make up any past due payments over time, as long as you keep up with your regular mortgage payments after the filing date. This differs significantly from liquidation bankruptcy, where nonexempt property may be sold to pay off creditors.
To succeed under Chapter 13, you must be able to show the court that your income is sufficient to meet your monthly mortgage payments, support your household, and make required payments to the bankruptcy trustee for distribution to other creditors. Missing payments or failing to follow the plan could give your lender the right to ask the bankruptcy judge for permission to proceed with foreclosure.
To keep your home in Chapter 13, you must show the court that you have enough income to cover your monthly mortgage payments, household expenses, and the required payments to the bankruptcy trustee. If you file bankruptcy but fall behind on your plan or mortgage, your lender may ask the bankruptcy judge to resume foreclosure. A clear, realistic repayment plan improves your chance of success and helps protect your most valuable asset.
How Long Can I Stay in my Home After Filing Chapter 13?
You may stay in your home indefinitely if you follow the repayment terms. Chapter 13 bankruptcy protects your home immediately after filing by stopping any foreclosure activity. You then use the repayment plan to address mortgage arrearages, missed payments, and other debts.
Once the plan is completed, and you’re caught up, you remain the homeowner with no foreclosure threat related to the included debt. If you fall behind during the plan, the lender may request permission to resume foreclosure.
How to Keep Your Home In Chapter 13 Bankruptcy
One of the main goals of Chapter 13 bankruptcy is to help homeowners protect their property while working toward financial recovery. To keep your home, you’ll need a realistic and court-approved repayment plan that prioritizes your mortgage and fits within your budget.
At Sadek Bankruptcy Law Offices, an experienced Chapter 13 bankruptcy lawyer will guide you through every step of the process. This includes identifying your total mortgage debt, primary loan balance, and secured debts tied to your home. We help you calculate home equity accurately using available tools and, if necessary, a professional appraisal. This step is essential for applying the correct homestead exemption and protecting as much of your property as possible.
Once we determine how much equity your home has accrued, we develop a tailored plan that allows you to repay creditors, address past-due payments, and stay current on monthly mortgage payments. The plan must comply with bankruptcy court requirements and show you can meet all financial obligations without falling behind again.
Keeping your home also depends on selecting the right strategies. These may include repaying arrears over time, requesting a mortgage modification, reducing certain debt balances, removing junior liens like a second mortgage, or stopping a foreclosure. Your attorney will help you determine options based on your situation and goals.
A well-prepared plan, backed by legal guidance, gives you the best chance at keeping your house and avoiding future collection actions. Let our team help you protect your most valuable asset and move forward with confidence.
Repay Your Mortgage Arrears
If you have past due mortgage payments, Chapter 13 lets you include that delinquent amount in your court-approved repayment plan, spreading it out over three to five years. You won’t need to pay the full arrears upfront to avoid foreclosure.
Instead, you’ll make consistent monthly payments that cover both your ongoing secured debts and the overdue portion of your mortgage. This structure allows you to stabilize your finances while staying in your home.
Make Your Mortgage More Affordable
A well-structured repayment plan under Chapter 13 can help you keep your house while making your monthly obligations more manageable. By adjusting your household budget, reducing unnecessary spending, and prioritizing your mortgage payments, you can meet the terms of both your repayment plan and your lender’s requirements. Staying current on monthly mortgage payments is key to maintaining homeownership throughout the bankruptcy process.
Mortgage modifications may also be available during Chapter 13 bankruptcy. A modification can reduce your interest rate, extend the loan term, or lower your monthly payments, making it easier to stay on track. These adjustments are especially helpful when catching up on past-due mortgage payments or avoiding missed payments in the future.
Our team can assist with the loan modification process and help ensure that any revised terms support your long-term financial goals and align with the structure of your Chapter 13 repayment plan.
Request a Cram Down on Certain Debts
Chapter 13 allows you to cram down certain debts by reducing the balance owed to reflect the property’s current market value. Although cram downs do not apply to your primary mortgage, they can lower the amount owed on a second mortgage, vehicle loan, or investment property. This option can make your overall debt load more manageable within a structured repayment plan.
If you’re asking, “What is a mortgage cram down?” it refers to the process of reducing the secured debt portion to the fair market value of the asset. The remaining balance is treated as unsecured debt, which may be partially discharged through the plan. A professional appraisal is often used to support the valuation. A mortgage cram-down can reduce total payments and improve your long-term financial stability under Chapter 13 bankruptcy.
Remove a Second or Third Mortgage
If your home’s current market value is less than the balance of your primary mortgage, Chapter 13 bankruptcy may allow you to eliminate junior liens through lien stripping. This includes a second mortgage or even a third mortgage, depending on the value of your home and the outstanding debt.
Through lien stripping, these additional mortgages are reclassified as unsecured loans. Because unsecured debt is treated differently in a Chapter 13 repayment plan, you may not be required to pay the full amount owed. Sometimes, these debts are reduced significantly or discharged entirely, which can help lower your monthly obligations and improve your path to financial stability.
Contest a Foreclosure
If a lender files a motion to lift the automatic stay, our attorneys respond quickly in bankruptcy court. We present evidence that your repayment plan is feasible, that you’re making regular mortgage payments, and that your home is properly insured and current on property taxes. These details matter, as lenders often use gaps in coverage or unpaid taxes to argue that their interest in the property is at risk.
In some cases, we also challenge a lender’s foreclosure action by showing that your Chapter 13 bankruptcy was filed in good faith, with a clear plan to repay past due payments. By working closely with the bankruptcy trustee and using available bankruptcy exemptions, we strengthen your case and improve your chances of stopping the mortgage foreclosure.
How to Lose Your Home In Chapter 13 Bankruptcy
While Chapter 13 bankruptcy is designed to help you keep your house, it is still possible to lose your home if the repayment plan is not followed. Missing mortgage payments, falling behind on plan payments, or failing to pay required trustee fees or attorney fees can cause your lender to ask the bankruptcy court for permission to continue foreclosure proceedings.
Other risks include underestimating sales costs, incorrectly calculating home equity, or failing to apply the proper homestead exemption, whether using federal exemptions or state-specific exemption rules. Misclassifying nonexempt equity may increase what you must repay and affect your ability to stay in your home. These mistakes can lead to dismissal of your case or loss of property.
Working with a knowledgeable bankruptcy lawyer is key to avoiding these pitfalls. With proper legal guidance and consistent payments, most filers complete their bankruptcy case without losing their most valuable asset, their home.
Chapter 13 Homeowner FAQs
How Does Chapter 13 Bankruptcy Affect Foreclosures?
A Chapter 13 bankruptcy filing immediately halts foreclosure activity through the automatic stay. Lenders must go through the bankruptcy judge to continue any foreclosure process. You can catch up on overdue payments through your repayment plan during this time.
Can I Sell My Home while in Chapter 13?
Yes, but it must be approved by the bankruptcy court. Any sale proceeds must be reported, and the court will review how the money will be used to pay creditors, including whether the home had non-exempt equity.
How Does the Chapter 13 Homestead Exemption Work?
The homestead exemption shields a certain amount of home equity from your creditors. You may use the federal homestead exemption or your state’s exemption system, whichever offers better protection. We’ll calculate your exempt equity and apply the appropriate bankruptcy exemption to help keep your house.
Struggling with your Mortgage? Contact Sadek Bankruptcy Law Offices Today for a Free Consultation
When your home is at risk, time is everything. Don’t wait until foreclosure proceedings begin or until a lender takes further action. At Sadek Bankruptcy Law Offices, we help clients take back control with legal tools designed to protect their homes, including Chapter 13 bankruptcy, debt relief, reaffirmation agreements, credit counseling, and exploring whether a debt management plan may be appropriate before filing for bankruptcy.
We’ve represented individuals and families across PA and NJ in bankruptcy proceedings involving home equity, retirement funds, medical bills, unsecured loans, and more. Our attorneys take the time to educate clients on bankruptcy basics so they understand their rights, obligations, and the full range of available options. We proudly provide affordable, compassionate, and results-driven legal representation, prioritizing long-term financial stability.
Call (215) 545-0008 in Pennsylvania or (856) 890-9003 in New Jersey, or contact us online to speak with a bankruptcy attorney who understands what’s at stake and is ready to help you keep your house.