Chapter 13 Bankruptcy in Alabama: How a Repayment Plan Can Help You Save Your Home
For many Alabama homeowners who have fallen behind on mortgage payments, Chapter 13 bankruptcy offers a realistic path to keep the house while catching up on arrears. Unlike liquidation, Chapter 13 is a court-supervised repayment plan that typically lasts three to five years and is designed for individuals with regular income. The case imposes court oversight, a trustee, and monthly plan payments tied to your budget. With careful planning and legal guidance from a bankruptcy attorney in Mobile & Selma, AL, the process can stabilize your finances and protect your home.
How Chapter 13 Can Help You Save Your Home
The most powerful immediate protection is the “automatic stay,” a federal injunction that takes effect the moment your cases filed and pauses most collection activity, including a scheduled foreclosure sale. This stay does not require a separate court order and gives you a breathing spell to propose a plan and address delinquent mortgage payments over time. Creditors may ask the court to lift the stay for “cause,” so timely plan payments and current mortgage payments matter from day one.
Chapter 13 is uniquely structured to cure mortgage arrears while you resume normal monthly payments going forward. The Bankruptcy Code expressly allows a plan to “cure and maintain” long-term debts, such as a home loan, so you can pay past-due amounts over the plan term and keep paying your regular mortgage outside the plan. This mechanism operates even though home lenders enjoy substantial anti-modification protections when a loan is secured only by your principal residence. In practice, the cure-and-maintain pathway can stop foreclosure pressure and give you time to catch up in an orderly way.
Your plan must be feasible and confirmable by the court. Among other requirements, a confirmed plan protects secured creditors’ liens and ensures they receive the value the law requires, while still allowing you to spread out arrears. Courts will examine income, expenses, and plan structure to ensure you can make payments reliably over the plan’s duration. Falling behind on plan payments (or new mortgage payments) can prompt motions to dismiss, motions for relief from stay, or plan modifications – dismissal generally ends the stay and allows foreclosure to resume.
There are additional safeguards and limits that homeowners should understand. Chapter 13 includes a co-debtor stay that can temporarily protect a consumer co-signer on qualifying consumer debts, which can ease pressure on a household while the plan cures arrears. However, repeat filings can curtail or terminate the automatic stay unless you meet specific statutory conditions, so filing promptly and managing the case carefully is critical. These nuances underscore why experienced guidance from a bankruptcy lawyer in Mobile & Selma, AL can be decisive in a foreclosure context.
Finally, Chapter 13 is not merely a pause button – it is a structured commitment to financial recovery. Over three to five years, you will make regular plan payments to a trustee, maintain ongoing mortgage payments, and address other debts as the Code requires. Done properly, homeowners emerge current on their mortgages, with unsecured debts addressed under the plan and long-term homeownership preserved. If your mortgage servicer asserts that you have not completed the cure, courts often require a formal accounting at the end of the plan, which helps provide clarity and closure.
Wrapping Up
Chapter 13 offers Alabama homeowners a concrete, court-approved way to halt foreclosure, cure arrears over time, and safeguard long-term ownership, provided the plan is feasible and rigorously followed. If you are weighing this option, a bankruptcy attorney in Mobile & Selma, AL can evaluate timelines, payment structures, and risks before a sale date approaches.
Loris Bankruptcy Law Firm provides you with a clear understanding of whether Chapter 13 is appropriate for your situation and how a repayment plan could help you keep your home. Contact us today to schedule a consultation.