Yes, filing Chapter 13 bankruptcy stops a foreclosure in Florida right away through the automatic stay, as long as you file before the foreclosure sale. Chapter 13 then lets you repay missed mortgage payments over a three- to five-year plan while keeping your home. Our Chapter 13 bankruptcy paperwork service in Ocala prepares your petition and plan forms, and our bankruptcy services page covers every option.
How the Automatic Stay Stops a Foreclosure
The moment a bankruptcy case is filed, a federal court order called the automatic stay goes into effect. It stops most collection actions, including foreclosure lawsuits, foreclosure sales, wage garnishments and collection calls. Your lender cannot move forward with the foreclosure unless the bankruptcy court lifts the stay.
The stay is limited for repeat filers. If you had a bankruptcy case dismissed within the past year, the stay may last only 30 days unless the court extends it. If you had two or more cases dismissed in the past year, the stay may not start at all without a court order.
How Chapter 13 Helps You Catch Up on Your Mortgage
Chapter 13 does more than pause a foreclosure. Your repayment plan spreads the missed mortgage payments, called arrears, across the life of the plan. While you repay the arrears, you must also keep making your regular monthly mortgage payments. If you stay current on both, you can keep your home when the plan ends.
A Chapter 13 plan can also help with:
- Past-due car payments, to help prevent repossession
- Back taxes owed to the IRS
- Past-due alimony or child support
- Unsecured debts, which are often paid only in part
When Should You File Chapter 13 Before a Foreclosure Sale?
File before the sale date set by the court. Florida uses judicial foreclosure, which means the lender must file a lawsuit and get a final judgment before the clerk holds a sale. Once the sale is complete, it is much harder to save the home. Filing early gives you more time to gather documents and complete credit counseling.
Chapter 13 vs. Chapter 7 for Homeowners
Question | Chapter 13 | Chapter 7 |
Stops a foreclosure sale? | Yes, while the case is open | Yes, but usually only for a short time |
Catches up missed payments? | Yes, through the plan | No |
Typical length | Three to five years | A few months |
Income limits | Must have regular income | Must pass the means test |
Homeowners who are current on their mortgage and qualify under the means test may prefer Chapter 7 bankruptcy. Read who qualifies for Chapter 7 to compare.
Who Is a Good Candidate for Chapter 13?
Chapter 13 often works well for people who:
- Have regular income from a job, business, pension or Social Security
- Are behind on a mortgage or car loan but can afford ongoing payments
- Earn too much to qualify for Chapter 7
- Filed Chapter 7 recently and are not yet eligible to file it again
- Own property they want to protect
How Long Does Chapter 13 Last?
A Chapter 13 plan lasts three years if your income is below the Florida median for your household size, and five years if it is above the median. You make one monthly payment to the Chapter 13 trustee, who pays your creditors.
Steps to File Chapter 13 in Ocala
- Complete a credit counseling course with an approved provider.
- Gather your mortgage statements, foreclosure papers, pay stubs and tax returns.
- Prepare the petition, schedules, statement of financial affairs and Chapter 13 plan.
- File with the U.S. Bankruptcy Court, Middle District of Florida, Jacksonville Division, which handles Marion County cases.
- Begin plan payments, usually within 30 days of filing.
- Attend the 341 meeting of creditors and the confirmation hearing.
- Finish your plan and a debtor education course to receive your discharge.
Should You Work With a Lawyer for Chapter 13?
Chapter 13 plans involve more decisions than Chapter 7, and the trustee or lender may object to your plan. Many people facing foreclosure work with a bankruptcy attorney. A petition preparer can type your forms but cannot advise you on your plan. Our guide to a bankruptcy petition preparer vs. attorney explains what each can do.
Get Help With Chapter 13 Paperwork in Ocala
Court Source, Inc. has prepared bankruptcy paperwork for Marion County residents since 2017. We type your Chapter 13 forms from the information you provide, and we offer free attorney referrals to licensed Florida bankruptcy lawyers. Contact our Ocala office as soon as you receive foreclosure papers.
This article is general information and is not legal advice.
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