How Chapter 13 Bankruptcy Can Stop Foreclosure and Help You Keep Your Home in Alabama

Missing mortgage payments can quickly spiral into foreclosure, especially when lenders move fast to reclaim the property. But if you’re an Alabama homeowner facing this pressure, you have legal tools available to fight back. Chapter 13 bankruptcy is a powerful form of debt relief designed specifically to help people catch up on overdue mortgage payments while protecting their homes from foreclosure.

Unlike Chapter 7, which liquidates non-exempt assets, Chapter 13 allows you to restructure debts under court supervision. It gives you the breathing room you need to stop the foreclosure process and get current on your mortgage over time.

1. The Automatic Stay Stops Foreclosure Immediately
Once your Chapter 13 case is filed, the court issues an automatic stay that freezes all foreclosure activity. This means mortgage lenders must immediately stop any pending sheriff’s sale or foreclosure action, even if the sale is scheduled for the next day. It gives you the time to create a repayment strategy under court protection.

2. Repay Mortgage Arrears Over Three to Five Years
Chapter 13 allows you to repay your past-due mortgage payments gradually over the life of your bankruptcy plan—typically three to five years. You resume regular monthly mortgage payments while making additional payments toward the arrears through a structured, court-approved plan.

3. Stay in Your Home Throughout the Process
You don’t have to surrender your home during the bankruptcy. As long as you follow the repayment plan and continue making current mortgage payments, you retain full ownership and stay in the property. This protection is one of the most appealing aspects of Chapter 13 for homeowners.

4. Potential to Eliminate Second Mortgages or Liens
In some cases, Chapter 13 allows you to strip away a second mortgage or home equity line of credit if the value of your home is less than the balance on your first mortgage. If approved, the court treats the second mortgage as unsecured debt, which may be partially or fully discharged.

5. Manage All Debts in One Plan
Chapter 13 consolidates your debts into a single monthly payment. This includes mortgage arrears, car payments, credit cards, medical bills, and personal loans. It simplifies your finances and prioritizes home retention within a legally binding repayment structure.

6. Gain Court Protection and Creditor Accountability
Once your repayment plan is confirmed, creditors must comply with its terms. The bankruptcy court oversees the entire process, and you work with a trustee who ensures fair treatment. This structure holds creditors accountable and removes the uncertainty of dealing with them on your own.

7. Build Toward a Long-Term Financial Solution
Chapter 13 gives you more than just temporary relief. By the end of the plan, your mortgage arrears are resolved, your unsecured debts may be discharged, and you’ve had years of consistent budgeting. You emerge with a stable home, cleaner credit, and a path forward.

If you are considering bankruptcy, we can provide the support you need to help you navigate the process. Contact us by calling 205-875-8197 or by using the contact form below. We look forward to helping you!

Article written by Ron Senyor, Law Clerk