Bankruptcy in Chapter 13 will stop foreclosures.

May 17, 2010 - PRLog -- What today we call Chapter 13 reorganization began in Alabama in the 1930s when a federal district court judge, having no statutory authority to conduct reorganization proceedings for individuals, but also recognizing the dire need for individual reorganization, cobbled together a makeshift individual reorganization process that eventually grew into chapter 13 under the Bankruptcy Code enacted in 1978. Filing
Chapter 13 is designed to effectively deal with individual consumer debtors who cannot pay their obligations and to encourage them to pay their debts through reorganization under court supervision rather than to liquidate their assets and discharge debts in chapter 7. In re Estus. 695 F.2d 311 (8th Cir. 1982) In exchange for filing for relief under chapter 13 and paying disposable income overtime to creditors, a debtor is permitted to retain his/her assets. In re Estus. 695F.2d311.
As Congress wanted individuals to pay debts to the extent of their ability to make payments over time, rather than discharge debts in chapter 13, chapter 13 was designed to solve problems that chapter 7 does not, e.g., home foreclosures.
Intellectually, chapter 13 proceedings are the individual counterpart to chapter 11 business reorganization except that the chapter 13 debtors are individuals who have regular incomes while chapter 11 debtors tend to be business entities.

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