Your Home

• Chapter 13 is often known as the wage-earners bankruptcy. Unlike in Chapter 7, you create a repayment plan and contribute to paying back at least a part of your debts. In return for this your property is safe from seizure to pay back your creditors. This includes your home, which cannot be sold as part of a Chapter 13 bankruptcy.
  
  

Repayment

• You can make your mortgage a part of your repayment plan that will be approved by your bankruptcy trustee through the Connecticut judicial system. If you were behind on your mortgage and facing foreclosure, your mortgage lender must accept this altered payment plan, so long as it gets you current on your mortgage payments within three to five years. This agreement may include reducing the interest charges on your overdue debt, allowing you to catch up quicker.
  
  

Other Help

• Chapter 13 is also helpful in saving your home in that at least some of your unsecured debt (credit cards or medical bills fall into this category) may be canceled, freeing up money to help pay your mortgage arrears. In addition, if you have a second mortgage on the home, and if the value of your home has gone down, it is sometimes possible to have this second lien declared as an unsecured debt, which can be discharged under a Chapter 13 fling.
  
  

When it Does Not Work

• In order for a Chapter 13 filing to be effective in saving your home from foreclosure, you must stick to your agreed payment plan and continue to make your mortgage payments. If you do not, your lender can apply to the court for permission to continue with the foreclosure process. You may also find your bankruptcy dismissed or converted to a Chapter 7 filing, under which your home may be at risk.
  
  

Alternatives

• If saving your home is your primary motivation for filing bankruptcy, Connecticut has other help available that's worth considering first. It is one of the few states with a mandatory foreclosure mediation system. If you request mediation after you receive your foreclosure notice, a representative from the lender is compelled to attend sessions with you and a court-appointed mediator. This may lead to a loan modification agreement that could help you get current on your payments without the need for a Chapter 13 filing.