Chapter 13 Bankruptcy Foreclosure

The inability to pay off the amounts outstanding can see many seeking relief under the Chapter 13 bankruptcy program. The primary step under Chapter 13 involves the individual placing a petition before the federal bankruptcy court for remedial solution.

When a petition is filed, it automatically results in an automatic stay that places a stop to all the foreclosure proceedings against the property of the debtor. This is one of the reasons that many file for Chapter 13 bankruptcy with the sole intention of saving their home property from foreclosure. The debtor submits a repayment plan to the court to repay the outstanding dues to the creditors that gels with his income. As a preliminary measure, the debtor has to prove the presence of a continuous and regular income that can be set aside for the repayment procedure from which he is permitted to make adjustments to the cost of essential expenses to reach into the amount that can be spent for settlement. When this plan meets with the approval of the federal bankruptcy court, the debtor can bring the older dues over an extended period of time as approved by the court.

According to the terms of Chapter 13, the debtor is to transfer every month the agreed sum of money to the trustee for the distribution of the same to the various creditors at the rate agreed upon. But, failure on the part of the debtor in making these monthly installments will lead to the dismissal of Chapter 13, which places a halt to the automatic stay on the home property. The dismissal of Chapter 13 by the court can reinitiate the foreclosure proceedings on the property. This rule is also applicable when the debtor fails to inform the court on any modifications in his expenses or income through a modified repayment plan, resulting in the dismissal of Chapter 13. The debtor also loses his home when he fails to make regular mortgage repayments after the Chapter 13 filing. So, it is safer to be aware of the foreclosure related norms under Chapter 13 before resorting to it to save your residential property.