Chapter 13 Bankruptcy is often used to stop foreclosure one one’s home. Assuming your were eligible for Chapter 13, you would need to file your bankruptcy petition before the sale date of your property by the lender, i.e. the date of the foreclosure sale.
With your bankruptcy petition, you propose a plan to repay the amount you fell behind on the mortgage. Basically, you force a loan modification upon the lender. Bankruptcy law does not let you discharge a debt and keep the property that secures the debt. The filing of a Chapter 13 bankruptcy stops ALL collection activity though something called the automatic stay. The automatic stay remains in effect during the life of the case unless the court orders otherwise.
Under a typical plan, you make monthly payments to a court appointed bankruptcy trustee for generally three to five years. The amount of your monthly payment is determined by several factors such as the amount of debt you have, your ability to repay and the extent that you have assets. The bankruptcy trustee distributes the money to your creditors.
To be eligible to file a Chapter 13, you need (1) stable and regular income; (2) disposable income, from which to make monthly plan payments, determined from the excess moneys after paying for basic human needs; (3) secured debt—e.g., home and car loans— that does not exceed $1,081,400; and (4) unsecured debt—e.g., credit card debt, medical and legal bills, student loans—that does not exceed $360,475.
While in bankruptcy, in addition to the plan payment, one is responsible for making regular mortgage payments, car loan payments, food, utilities and other basic needs expenses.