Falling behind on mortgage payments can put a Phoenix homeowner on a tight timeline, particularly once a lender begins the trustee’s sale process. Arizona law generally allows a trustee’s sale to be scheduled no sooner than the 91st day after a notice of trustee’s sale is recorded. For homeowners who are trying to catch up on mortgage arrears while keeping their property, chapter 13 bankruptcy may provide an important legal option. For an eligible Phoenix homeowner, the plan may provide a way to stop Phoenix foreclosure with Chapter 13.
To learn more, read on for this helpful guide from the Phoenix chapter 13 bankruptcy attorney at Lerner and Rowe Law Group.
How to Stop Phoenix Foreclosure with Chapter 13
Filing chapter 13 generally triggers the federal automatic stay under 11 U.S.C. 362, which stops most collection activity, including foreclosure proceedings. Chapter 13 also allows individuals with regular income to propose a court-supervised repayment plan that typically lasts three to five years.
The automatic stay generally takes effect when a bankruptcy petition is filed. This protection can stop a pending foreclosure from moving forward while the stay remains in effect. The U.S. Courts specifically identify stopping foreclosure and curing delinquent mortgage payments over time as important features of chapter 13.
Timing matters, however. A homeowner should not assume that filing bankruptcy at any point will automatically save a property. If a foreclosure sale has already been completed before the bankruptcy filing, chapter 13 may not be able to undo the sale.
A homeowner who has received a Notice of Trustee’s Sale should therefore address the situation promptly rather than waiting until the scheduled sale date approaches.
Understanding Arizona’s Trustee’s Sale Process
Arizona commonly uses a nonjudicial foreclosure process involving a deed of trust. Under A.R.S. 33-807, a trustee may exercise the power of sale when the conditions specified by Arizona law are met. The related notice requirements are established under A.R.S. 33-808.
One important deadline is the minimum time between recording the notice of trustee’s sale and the scheduled sale. Arizona law provides that the sale date generally cannot be sooner than the 91st day after the notice is recorded.
That period can move quickly when a homeowner is trying to negotiate with a lender, bring an account current, or determine whether bankruptcy is appropriate. Missing a payment or receiving a foreclosure notice does not necessarily mean a homeowner immediately loses the property, but it is important to understand the deadlines stated in the documents received from the trustee.
Can Chapter 13 Cure Mortgage Arrears?
One of the central reasons homeowners consider chapter 13 is the ability to cure mortgage arrears with chapter 13 in Phoenix. Rather than requiring the homeowner to immediately pay the entire amount that has become past due, chapter 13 can allow qualifying mortgage arrears to be paid through the plan over time.
Chapter 13 can allow homeowners to bring delinquent mortgage payments current over time while keeping the home. The regular mortgage payments that become due after filing generally must still be made on time.
This distinction is important. A chapter 13 plan does not simply eliminate a mortgage. Instead, it can provide a structure for addressing the past-due amount while the homeowner continues making the ongoing payments required under the mortgage.
For example, a homeowner who has fallen several months behind may have both an existing mortgage payment and a separate plan payment. The plan can address the arrears while the homeowner remains responsible for the ongoing mortgage obligation.
What Happens to a Trustee’s Sale after Filing?
Once chapter 13 is filed, the 11 USC 362 automatic stay in Phoenix generally prevents creditors from continuing foreclosure activity against the debtor’s property. The stay can therefore interrupt the progression toward a scheduled trustee’s sale.
The protection is not necessarily permanent. A mortgage lender may seek relief from the automatic stay in certain circumstances. A homeowner can also put the bankruptcy case at risk by failing to make required plan payments or ongoing mortgage payments.
This is why filing bankruptcy is only one part of the process. The proposed chapter 13 plan must be feasible and satisfy the requirements of the Bankruptcy Code before it can be confirmed.
How a Chapter 13 Plan Addresses Mortgage Debt
Chapter 13 is designed for individuals with regular income who can make payments under a court-approved plan. Plans generally last three to five years, depending on the debtor’s circumstances and applicable requirements.
Mortgage debt receives special treatment in chapter 13. A homeowner generally cannot simply use the bankruptcy plan to rewrite the terms of a qualifying mortgage secured by the debtor’s principal residence. However, the Bankruptcy Code permits certain defaults to be cured while ongoing payments are maintained.
This can make chapter 13 different from chapter 7 when the primary concern is keeping a home. The U.S. Courts identifies chapter 13’s ability to help homeowners catch up on delinquent mortgage payments as one of its principal advantages.
The exact treatment of a mortgage depends on the loan, the amount of arrears, the value and status of the property, the proposed plan, and other circumstances.
What Phoenix Homeowners Should Do Before a Trustee’s Sale
A homeowner facing foreclosure should gather the documents connected to the mortgage and trustee’s sale. These may include:
- Mortgage statements showing the amount past due
- Notices from the mortgage servicer
- The Notice of Trustee’s Sale
- Correspondence from the foreclosure trustee
- Information about household income and expenses
- Documentation concerning any prior loan modification or repayment agreement
It is also important to determine whether a trustee’s sale has already been scheduled and identify the exact date. Arizona law permits sales to be postponed in certain circumstances, but homeowners should not assume that a postponement or other change will occur without confirmation.
If bankruptcy is being considered, having these documents available can help a chapter 13 bankruptcy attorney in Phoenix determine how much is owed, how quickly action may be necessary, how to stop the trustee sale in Arizona, and whether chapter 13 could provide a workable path forward.
Can Chapter 13 Save Every Phoenix Home?
Chapter 13 can provide significant foreclosure protection, but it is not a guarantee that a homeowner will keep a property. Eligibility requirements, income, mortgage arrears, plan feasibility, property value, exemptions, and the status of the foreclosure can all affect the outcome.
A homeowner also must continue meeting obligations after filing. A debtor may still lose the home if regular mortgage payments coming due after the bankruptcy filing are not made or if other requirements of the case are not satisfied.
Additionally, if a trustee’s sale has already occurred before the bankruptcy petition is filed, chapter 13 may not provide a way to reverse the completed sale. Acting before the sale can therefore be especially important.
Stop Phoenix Foreclosure with Chapter 13
For a Phoenix homeowner facing mortgage arrears or a scheduled trustee’s sale, understanding the available legal protections can make a significant difference. Chapter 13 may provide a way to stop a pending foreclosure, establish a repayment plan for qualifying mortgage arrears, and work toward keeping the home while making ongoing mortgage payments.
The Phoenix chapter 13 bankruptcy attorney at Lerner and Rowe Law Group can help you understand how the automatic stay, mortgage arrears, and chapter 13 repayment plan may apply to your situation.
If you are facing foreclosure, struggling with overwhelming debt, or considering bankruptcy, contact Lerner and Rowe Law Group to schedule a consultation and learn more about your options. Give us a call, fill out your contact form, or use LiveChat now to get started.
The information on this blog is for general information purposes only. Nothing herein should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.