If you own a home and you are thinking about filing Chapter 13 Bankruptcy, you may worry about losing your house. This fear is common because your home is often your biggest asset and the place you feel safest. The truth is that Chapter 13 often helps you keep your home if you follow specific rules and meet your payment responsibilities. 

Many homeowners file Chapter 13 because it gives them time to catch up on missed payments and stop foreclosure. In this article you will learn how Chapter 13 works, the requirements for keeping your home, what risks you must be aware of, and how to protect your house throughout the process.

How Chapter 13 Bankruptcy Works

Chapter 13 Bankruptcy helps you reorganize your debts into a structured payment plan. You pay these debts over three to five years. You must have steady income because the court expects consistent payments throughout the plan. 

When you file, you immediately get protection through something called the automatic stay. The stay stops creditors from collecting on debts or continuing foreclosure. This gives you room to breathe while you sort out your finances.

During the repayment plan, you pay a trustee who then pays your creditors. Your plan must include secured debts, such as mortgages and car loans. You continue making your regular monthly mortgage payments while also paying arrears through the plan. If you stay current, you strengthen your chance of keeping your home long term.

Does Filing Chapter 13 Mean You Will Lose Your Home

Filing Chapter 13 does not automatically cause you to lose your house. In many cases, it helps you save your home. Homeowners often use Chapter 13 to stop foreclosure and catch up on missed mortgage payments over several years. 

You must meet specific requirements, but the law gives you a clear path to keep your house. You must continue paying your mortgage, include your arrears in the plan, follow the repayment terms, and meet all deadlines. If you do these things, you can keep your home while restructuring your finances.

Your state’s homestead exemption may also protect your home equity from being taken by creditors. Most homeowners fall within the exemption limit, meaning their home equity is safe when filing Chapter 13.

Why Many Homeowners Choose Chapter 13 to Save Their Home

Chapter 13 is designed to help people who fell behind but still want to pay their debts over time. If you have reliable income and want to avoid foreclosure, Chapter 13 gives you that opportunity. It pauses foreclosure immediately and gives you a structured plan to catch up.

It also prevents lenders from taking your home as long as you follow the repayment requirements. Many homeowners who were days away from foreclosure sale were able to stop it by filing Chapter 13 before the sale date.

How Mortgage Payments Work During Chapter 13

Your mortgage plays a central role in Chapter 13. You must continue making new monthly payments as they come due. These are called post-petition payments. You must also repay past-due balances through your repayment plan. These past-due amounts are called arrears. Your plan will divide the arrears over the three to five year payment period.

If your mortgage payment changes because of escrow adjustments or taxes, you must pay the updated amount. Staying on top of every change helps you avoid late payments that could put your home at risk. Lenders monitor payments closely during Chapter 13, so consistency matters.

How Home Equity Affects Your Case

Your home equity matters because it determines how much protection you get under your state’s homestead exemption. Equity is the difference between your home’s value and the amount you owe on your mortgage. Most states offer strong protections, and many homeowners fall below the exemption limit. If your equity is protected, creditors cannot force a sale of your house based on equity alone.

If you have higher equity than what your state protects, you may need to pay more into your repayment plan. This ensures creditors receive the value they would have gotten if you filed Chapter 7 instead. Even then, Chapter 13 rarely requires you to sell your home. Instead, you repay the difference through your plan.

Reasons You Could Still Lose Your House During Chapter 13

Most homeowners keep their house successfully, but certain mistakes can put you at risk. You must know these risks early so you can avoid them.

Here are the main reasons homeowners lose their home during Chapter 13:

Missing regular mortgage payments
Missing Chapter 13 plan payments
Filing too late after the foreclosure process has gone too far
Not having enough income to support the repayment plan
Ignoring lender notices or trustee requests
Not including arrears properly in the repayment plan
Home value rising above exemption limits without covering the difference in the plan

If you avoid these problems and follow the rules, your chances of keeping your home remain strong.

How the Automatic Stay Helps You Keep Your Home

One powerful benefit of filing Chapter 13 is the automatic stay. The stay immediately stops foreclosure, collections, and creditor lawsuits. Once the stay takes effect, your lender cannot continue their foreclosure process. This gives you time to set up a repayment plan and regain control of your finances.

However, the stay is not permanent. It lasts as long as you follow your repayment plan. If you fall behind again, your lender can request permission from the court to continue foreclosure.

What Happens if You Fall Behind Again After Filing

If you fall behind on your mortgage after filing, your lender can ask the court to remove the stay. If the stay is removed, your lender can continue foreclosure. Many homeowners lose their homes because they filed Chapter 13 but did not keep up with new mortgage payments.

If you know you will miss a payment, you should act fast. You may be able to modify your plan or request permission to adjust your budget. The worst thing you can do is ignore the issue. Early action helps you stay in control.

Recent Statistics About Chapter 13 and Homeowners

Recent federal data shows that a large percentage of Chapter 13 cases are filed by homeowners seeking to stop foreclosure. Many homeowners successfully complete their repayment plans. In 2023, over one hundred thousand households filed Chapter 13 to reorganize their debts. Analysts point out that Chapter 13 remains one of the strongest tools for homeowners behind on mortgage payments.

While not every filer completes the plan, those who stay disciplined often save their homes. Completion rates increase significantly among filers who work closely with their trustee and stay current on mortgage payments.

Tips to Increase Your Chances of Keeping Your Home

Staying organized helps you complete your plan successfully. Here are a few tips that make a big difference:

Create a simple monthly budget
Stay current on all essential bills
Keep mortgage payments first on your priority list
Track every payment and save receipts
Communicate with your trustee if your income changes
Review mortgage escrow adjustments immediately
Avoid taking on new debt during the plan
Protect your credit by avoiding unnecessary spending

These steps help you stay stable throughout your case and protect your home.

Can You Sell Your House During Chapter 13

Yes, you can sell your house during Chapter 13, but you must get approval from the bankruptcy court. The court will review your sale terms and decide how the proceeds should be handled. You may need to satisfy mortgage balances, pay liens, or contribute part of the equity to your plan. Homeowners sometimes sell their home during Chapter 13 to downsize or relocate while still managing their repayment plan.

Can You Refinance Your Mortgage During Chapter 13

You may be able to refinance your mortgage if your lender agrees. Refinancing may help lower your payment or secure a better interest rate. You must get approval from the bankruptcy court before completing the refinance. A refinance can help you finish your plan successfully, especially if it reduces your monthly expenses.

Conclusion

You will not automatically lose your home if you file Chapter 13. Many homeowners use Chapter 13 to stop foreclosure and catch up on mortgage payments at a manageable pace. The key to keeping your home is staying current on payments, completing your repayment plan, understanding your equity, and acting quickly when financial changes happen. 

If you stay committed, Chapter 13 gives you a strong opportunity to protect your home and rebuild your financial stability. Filing Chapter 13 gives you structure, time, and legal protection so you can move forward with confidence. You have the power to keep your house when you follow the process correctly.