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The defining characteristic of a Chapter 13 proceeding is the ability to keep all of your valuable property, exempt or not, even if you are behind on payments.
In a chapter 13 case, a debtor files a plan showing how the debtor will pay off a portion (not the entirety) of the debtor’s past due and current debts over a period of three (3) to five (5) years. Outstanding balances over and above the repayment plan amount are discharged.
Chapter 13 and The Foreclosure Process
Chapter 13 can allow you to keep your home by:
- Forcing lenders to work with you under a Court
supervised repayment plan (36-60 months)
- Eliminating (stripping) junior liens from your
real property (your mortgages) under certain circumstances
Put simply, you can catch up past delinquent mortgage
payments over a 36-60 month period.
By filing for bankruptcy protection, you stop the non-judicial foreclosure proceeding [See 11 U.S.C. § 362(a)]. Secured debts (your mortgages) must still be repaid in full.
Chapter 13 is the debt repayment chapter for individuals with regular income whose debts do not exceed $1,347,550 ($336,900 in unsecured debts and $1,010,650 in secured debts), including individuals who operate businesses as sole proprietorships. It is not available to corporations or partnerships. Chapter 13 generally permits individuals to keep their property by repaying creditors out of their future income. Each chapter 13 debtor proposes a repayment plan which must be approved by the court. The amounts set forth in the plan must be paid to the chapter 13 trustee who distributes the funds for a percentage fee. Many debts that cannot be discharged can still be paid over time in a chapter 13 plan. After completion of payments under the plan, chapter 13 debtors receive a discharge of most debts.
Even if you do not file for bankruptcy, you may be able to delay foreclosure.
In California, a non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined on this site.
Use the 'Contact Us' feature for Attorney Assisted Short Sales, Loan Modification, and Foreclosure.
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