Can bankruptcy stop a foreclosure?

What happens to a foreclosure when you file?

The automatic stay arises when the petition is filed and needs no action by a judge. It covers attempts to enforce liens, and a foreclosure is one of the actions it stops.4 5 1

The stay has limits. A lender can ask the court for relief from the stay, and the court grants it for cause, including when the lender's interest in the property is not adequately protected.5

Repeat filings weaken it. If you had one case dismissed in the past year, the stay in a new case generally ends after 30 days unless the court extends it. If two or more cases were dismissed in the past year, the stay generally does not start at all.5

How does Chapter 13 help you keep a home?

Chapter 13 can help people save a home from foreclosure. A plan may cure a mortgage default within a reasonable time while the regular payments continue during the case.2 3

The catching up happens inside the plan, which usually lasts three to five years. Payments to a home mortgage lender may follow the original loan schedule, which may be longer than the plan, as long as the missed payments are made up during the plan.2

The plan cannot rewrite the mortgage itself. A Chapter 13 plan may change the rights of secured creditors, but not the rights of a lender whose claim is secured only by your principal residence.3

The protection ends in these situations.

• The mortgage company completes the foreclosure sale under state law before you file. The home can still be lost.2 3
• You do not make the regular mortgage payments that come due after filing. Those payments must be made on time during the plan.2 3
• You fail to make the payments due under the confirmed plan. The court may then dismiss the case or convert it to Chapter 7.2

How does catching up through Chapter 13 work, step by step?

1. Get credit counseling from an approved agency within the 180 days before filing.4 6
2. File the Chapter 13 petition. Filing stops the foreclosure proceeding, but a default on the home can be cured only until the home is sold at a foreclosure sale.2 3
3. File the repayment plan with the petition or within 14 days after, unless the court grants an extension.2
4. Start plan payments to the trustee within 30 days after filing, and keep making the regular mortgage payments as they come due.2 7 3
5. No later than 45 days after the meeting of creditors, the judge holds a confirmation hearing and decides whether the plan is feasible.2

The court fees for Chapter 13 are a $235 filing fee plus a $78 administrative fee, $313 in total (administrative fee effective December 1, 2023).8 9 2

What does Chapter 7 do for a mortgage?

The automatic stay applies in Chapter 7 too, so a foreclosure pauses while the stay lasts. What Chapter 7 lacks is a way to catch up. The FTC says that unless you have an acceptable plan to catch up under Chapter 13, bankruptcy usually does not let you keep property when a creditor has a lien on it.1 10

A Chapter 7 discharge can release you from personal liability for the mortgage debt, but it does not remove the lien. A valid lien stays in place after the case, and the lender may enforce it to recover the property.11 4

Whether a trustee could sell a home in Chapter 7 depends on the exemptions that apply to you. The federal homestead exemption is $31,575 for cases filed on or after April 1, 2025. Depending on state law you may be limited to state exemptions, so ask a lawyer which list applies to you.4 12 13

What about second mortgages and home equity lines?

A second mortgage or home equity line is also a lien on the home, and the same starting point applies: a discharge does not remove a lien.4

In bankruptcy, a lender's claim is secured only up to the value of the property that backs it. What that means for a junior mortgage in a Chapter 13 plan is covered in our guide to second mortgages and HELOCs, and it is a question to take to a lawyer.14

What help is there outside bankruptcy?

Bankruptcy is not the only route. The CFPB lists these options for homeowners who cannot pay their mortgage: refinancing, a loan modification, a repayment plan, forbearance, a short sale, or a deed-in-lieu of foreclosure.15

HUD-approved housing counseling agencies provide foreclosure prevention counseling for free, and the CFPB's Find a Counselor tool lists agencies by area. The HOPE Hotline, (888) 995-HOPE (4673), connects homeowners with HUD-approved housing counseling agencies and is open 24 hours a day, 7 days a week.16 17 18

Nobody has to pay for help avoiding foreclosure. The CFPB's warning signs of a foreclosure relief scam are being asked to pay upfront, a promise that your mortgage terms will definitely be changed, and instructions to send payments to anyone other than your mortgage company.15