• Filing for Chapter 13 bankruptcy is a legal process in which a debtor is absolved of all liability for his outstanding debts. Chapter 13 bankruptcy differs from other types of bankruptcy because the debtor can usually elect to keep any property he owns. Other forms of bankruptcy require debtors to liquidate all of their assets.
  
  

How Can I Keep My House and File for Bankruptcy?

• Through Chapter 13 bankruptcy, a debtor can elect to keep her house and other owned property. During the bankruptcy proceedings, the bankruptcy court will approve a repayment plan. This plan, if paid on time, will satisfy all debts owed and the debtor will be completely absolved of any other remaining debt. Bankruptcy repayment plans are interest-free but vary in terms of duration and amount to be paid. Bankruptcy repayment plans usually begin 30 to 45 days after the debtor files for bankruptcy.
  
  

Can Chapter 13 Bankruptcy Prevent Foreclosure?

• Filing for Chapter 13 bankruptcy can prevent foreclosure in some instances. Through the Chapter 13 bankruptcy repayment plans, late fees and unpaid mortgage payments can be paid back over time as part of the repayment plan. However, to be eligible for this option, the debtor must have a regular source of income and be able to pay his current mortgage payment plus the amount owed under the bankruptcy repayment plan.
  
  

How Does Filing for Bankruptcy Prevent Foreclosure

• Once a debtor files for Chapter 13 bankruptcy, the bankruptcy court automatically grants an "automatic stay" that temporarily halts any foreclosure proceedings against the property by creditors. Once the bankruptcy court has authorized a repayment plan, one of two things can happen. The creditors must accept the plan; that is, foreclosure proceedings end and the debtor is required to pay her mortgage and the repayment plan, or foreclosure continues. If the debtor is unable to pay the mortgage and cover the cost of the bankruptcy repayment plan, her creditors can continue foreclosure proceedings and foreclose on the property.