Attorney at Debt Advisors Law Offices
Practice Areas: Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, Stop Foreclosure
The housing market is closely tied to the financial health of families. When home sales rise, it often signals economic strength. When sales slow or foreclosures climb, many households feel the strain. For homeowners facing missed mortgage payments, the threat of foreclosure can be overwhelming.
Understanding how Chapter 13 bankruptcy works and how it connects with broader housing trends can help people protect their homes and regain financial stability.
Home sales are a key measure of the economy. When mortgage interest rates rise, fewer people can afford to buy, which puts stress on existing homeowners who may already be stretched thin.
Inflation, job loss, or sudden expenses like medical bills can quickly make a mortgage unaffordable.
Recent housing data shows that while prices have climbed in many areas, foreclosure filings are also increasing. According to the Consumer Financial Protection Bureau, foreclosure activity in the U.S. has trended upward since interest rates began rising in 2022.
This demonstrates how even a strong housing market can mask struggles for individual families.
Foreclosure is the legal process through which a lender takes ownership of a home when the borrower cannot keep up with mortgage payments.
In Wisconsin, foreclosures are judicial, meaning the lender must file a lawsuit in court. Once a judgment is entered, the home may be sold at a sheriff’s sale.
Common triggers for foreclosure include job loss, wage reductions, unexpected medical debt, or simply buying more house than a budget allows. Even temporary setbacks can push homeowners into default if they have little financial cushion.
Recognizing these risks early is the first step toward finding solutions.
Many homeowners hear about bankruptcy as a possible option when foreclosure looms, but it is important to understand the difference between Chapter 7 and Chapter 13.
Chapter 7, often called liquidation bankruptcy, may wipe out unsecured debts and eliminate mortgage deficiency balances if the home is lost. However, it does not allow homeowners to catch up on missed payments or keep a home long term if they are far behind.
Chapter 13 bankruptcy is designed differently. It allows people to set up a structured repayment plan, usually lasting three to five years, so they can catch up on mortgage arrears while continuing to make current payments.
Under 11 U.S.C. § 362, the automatic stay immediately halts foreclosure proceedings once a Chapter 13 petition is filed.
This automatic stay is one of the most powerful tools available to homeowners at risk of losing their property.
For families behind on mortgage payments, Chapter 13 bankruptcy often provides the best chance to keep their home. Once filed, foreclosure stops immediately, giving the homeowner time to create a repayment plan approved by the court.
This plan bundles past-due amounts with other debts, allowing repayment in manageable monthly installments.
The repayment plan also prevents lenders from moving forward with the foreclosure sale as long as payments are made. Over time, this can restore stability and give homeowners a clear path forward.
Recent adjustments in foreclosure regulations also make bankruptcy an important tool. For example, mortgage servicers must now follow stricter notice requirements before starting foreclosure, giving homeowners a narrow but valuable window to act.
Filing Chapter 13 before the foreclosure sale is crucial, because once the home is sold, the chance to save it is lost.
Housing trends and bankruptcy filings often move together. During the 2008 financial crisis, a wave of foreclosures led to a sharp rise in Chapter 13 petitions. More recently, ATTOM’s Q2 2025 Foreclosure Market Report showed foreclosure filings up nationwide compared to last year, even as home prices remain elevated.
This pattern highlights the fragile balance between homeownership and debt. When interest rates rise, mortgage payments increase. When wages stagnate, foreclosure becomes more likely. In turn, many people turn to Chapter 13 bankruptcy to stop foreclosure and reorganize their debts.
According to the U.S. Courts Bankruptcy Basics guide, Chapter 13 allows individuals with regular income to develop a plan to repay all or part of their debts over time.
By understanding these connections, homeowners can make informed decisions instead of waiting until the last minute.
| Feature | Chapter 7 Bankruptcy (Liquidation) | Chapter 13 Bankruptcy (Repayment Plan) |
| Stops foreclosure | Temporarily via automatic stay | Yes, allows repayment of arrears |
| Keep your home? | Usually no | Often yes, if payments maintained |
| Handles mortgage arrears | No | Yes |
| Duration of plan | N/A | 3–5 years |
| Credit impact | Significant, shorter duration | Significant, longer duration |
Yes. Filing Chapter 13 triggers an automatic stay, which halts foreclosure as long as the case proceeds properly and payments are made.
It restructures arrears into a repayment plan spread over three to five years while you continue paying your regular mortgage.
Chapter 7 may discharge certain debts but does not provide a way to keep your home if you are behind on mortgage payments.
It generally must be filed before the foreclosure sale takes place. Once the sale happens, saving the home through bankruptcy is no longer possible.
No. Chapter 13 allows repayment of arrears while keeping the mortgage in place. Ongoing payments must still be made to retain the property.
High interest rates, falling home values, or job market instability can increase foreclosure risk, making Chapter 13 protections more relevant.
The connection between home sales, foreclosure, and Chapter 13 bankruptcy is clear. Shifts in the housing market can leave homeowners vulnerable, but Chapter 13 offers a structured path to catch up on payments and avoid losing a home. Acting quickly is essential, especially before a foreclosure sale takes place.
Working with an experienced Wisconsin bankruptcy lawyer can make the difference between losing a home and creating a manageable repayment plan. Debt Advisors Law Offices has guided many Wisconsin families through financial challenges using Chapter 13 bankruptcy.
If you are facing foreclosure or struggling with mortgage debt, learning about your legal options is the first step toward stability. Contact us today for a free consultation.
Learn about bankruptcy protections, types of bankruptcy, how to get started, what to expect, and who to trust. Filing bankruptcy is the ONLY way to completely eliminate debt. If bankruptcy is right for you, it offers powerful protections that cannot be achieved through alternative solutions such as hardship relief, loans, or debt settlement.
