Chapter 13 Bankruptcy: How It Can Save Your Home

Introduction

For Maryland homeowners facing foreclosure or struggling with manageable but overwhelming debt, Chapter 13 bankruptcy can provide a lifeline. Unlike Chapter 7, which often involves liquidating assets, Chapter 13 allows you to repay debts over time while keeping your property. Understanding how this repayment plan works can help you protect your home and regain financial stability.

What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is often referred to as a “wage earner’s plan.” It allows individuals or couples with regular income to restructure their debts under court supervision. Debts are repaid in monthly installments, typically over three to five years, based on your income and living expenses.

How Chapter 13 Protects Your Home

One of the most significant benefits of Chapter 13 is the automatic stay. Once you file, foreclosure proceedings, repossessions, and creditor lawsuits are halted. This gives you time to catch up on missed mortgage payments through your repayment plan, helping you avoid losing your home.

Who Qualifies for Chapter 13?

• Must have a regular source of income.

• Total secured and unsecured debts must fall within federal limits.

• Can include those who don’t qualify for Chapter 7 due to the means test

The Chapter 13 Process

1. Credit Counseling: Complete a court-approved course within 180 days before filing.

2. Filing the Petition: Submit detailed financial information to the court.

3. Repayment Plan: Work with your attorney to propose a feasible monthly plan.

4. Trustee Oversight: A trustee reviews and approves your plan, ensuring fair treatment of creditors.

5. Discharge: After completing the repayment plan, remaining eligible debts may be discharged.

Benefits of Chapter 13

• Protects your home from foreclosure.

• Stops repossession and wage garnishment.

• Allows you to repay debts without liquidating assets.

• Can consolidate debts into one manageable monthly payment.

Common Misconceptions

•  “Chapter 13 takes too long.” – While the plan lasts 3–5 years, it provides a structured way to regain control of your finances.

• “I can’t keep my house.” – Chapter 13 is specifically designed to help homeowners catch up on mortgage payments.

• “I won’t be able to get credit again.” – Responsible post-bankruptcy behavior can rebuild your credit.

Conclusion

Chapter 13 bankruptcy offers a strategic solution for Maryland residents wanting to save their homes and manage debts responsibly. With professional guidance, it can provide both protection and a clear path to financial recovery.

Take the first step today. Contact Middleton Legal for a free consultation to determine if Chapter 13 is the right option for your situation.