One of the most stubborn myths about bankruptcy is the one which says that chapter 13 requires full payment of all your debts over 60 months.  If true, this would indeed rule out chapter 13 for most consumers.  After all, what good would come from being granted 60 months to pay off all your debts?  If you can’t afford your payments now, how in the world could you afford your payments if you had only 60 months to pay them?  This myth about paying your debts in full in chapter 13 is, happily, only a myth.

In fact, the law says something quite different: in chapter 13, your monthly plan payment is based on what you can afford.  Then, and at the end of the chapter 13 case (either 36 or 60 months), all the remaining balances on your debts are wiped out, just like in chapter 7.

You might wonder how that can be fair to your creditors, but the answer is easy, and the law gives it full recognition – your creditors were slated to get absolutely no payment in a chapter 7, weren’t they?  So how could it be unfair to pay them a dividend consisting of what you can offord, in a chapter 13?  This is especially true when the law requires that you pay what you can afford into your chapter 13 plan, after paying all your reasonable monthly living expenses.

And no, there isn’t any catch-22 lurking in chapter 13.  Congress would not have bothered to enact chapter 13 if you had to pay more than you could afford as a monthly payment, because no one would be ever file chapter 13 if that were so.  Also, lawyers wouldn’t steer clients into chapter 13 if the monthly payments were not possible for clients living in the real world to pay.

So think about it — maybe chapter 13 wouldn’t be such a bad idea for you after all.  There’s no means test to worry about, you can get rid of more debts in a chapter 13, and your case is often subject to less scrutiny by creditors than a case under chapter 7.  And whatever your reason for choosing chapter 13, you can be sure it will solve your debt problems just as effectively as a chapter 7.

Photo used by permission from Fried Dough.

Most persons with debt problems are, at least intially, highly resistant to the idea of filing for bankruptcy.  Filing chapter 7 or chapter 13 is often viewed as taking the easy way out, or looked at as a good way to ruin one’s future credit rating, or as a moral failing best to be avoided.  These viewpoints, combined with financial stress and inability to pay one’s obligations, often results in a great deal of stress on persons considering bankruptcy.

The fact is that people do have pride, and no one wants to file a bankruptcy if it can be avoided.  As a result, most consumer bankruptcies are filed by persons who have been bothered by collection phone calls or even lawsuits by creditors.  In short, they are usually  filed when there is no reasonable alternative except asking the bankruptcy court for relief.

Does this mean a person gives up his or her pride by choosing to file bankruptcy?  Is it really a shameful thing to do?  And what standard should be used in evaluating whether filing is the “right” thing to do, or a morally correct course of action?

For most, it might be useful to consult one’s own sense of what are the most important obligations to honor.  If a person must choose between the obligation to support one’s family, and the obligation to pay the required monthly payments on credit cards and lines of credit, it might be most reasonable to decide in favor supporting one’s family.  After all, who will support the family if not the primary wage earner?  Probably no one, which would have a huge impact on their lives – but the banks would hardly notice if you don’t pay.

Maybe this sounds a little too convenient, though.  Perhaps you can see that the person considering the interests of their own family has a vested interest in the outcome, so that the supposedly altruistic motive of thinking of the needs of one’s family is really just a self-serving rationalization leading to filing bankruptcy.

Let’s use a different standard, then, one developed over time by Congress: what really happens in a Chapter 7 or Chapter 13 bankruptcy?  Remember, not all debts are discharged in bankruptcy, not all property can always be protected, and not all persons can file just any type of bankruptcy they desire to file.  Instead, Congress has made value judgments based on human morality, and it put those moral concepts into the federal bankruptcy laws.  Congress has already performed the moral calculations regarding who comes first, the creditors or the family of the debtor who files a bankruptcy.

This might be all you need to consider.  The purpose Congress was trying to serve in enacting the bankruptcy laws was the proper balancing of the need of a debtor to support his or her family, as compared to the need of certain types of creditors to get paid back, which involves making moral judgments.  What’s more, the debtor has to pass a need-based “means test” to file chapter 7, and a debtor has to pay back what he or she can afford in chapter 13.

Furthermore, not all debts simply go away in bankruptcy.  Congress decided that some creditors are better than others and that they deserve to get paid, no matter whether the debtor can afford to pay the debt or not.

For example, Congress decided that if the bank goes to the trouble of taking a mortgage on your house, then you still have to pay the mortgage even if you file bankruptcy.  According to Congress, human morality dictates that such a debt either be paid or the house goes back to the bank, bankruptcy or no bankruptcy.

Another example is a car loan: Congress wrote in the bankruptcy law that the car loan has to be paid even if a bankruptcy is filed, no matter how badly the debtor might need to keep the car without paying.

Or income tax — Congress says back taxes don’t go away in bankruptcy.  Remember, the IRS didn’t ask to be a creditor.  The debtor unilaterally made the IRS into a creditor through inadequate wage withholding.  There was never any loan agreement signed by the parties, as with other debts.  And the government’s need for money has little to do with it: after three years, back taxes are dischargeable, on Congress’ theory that the IRS must not have cared too much about the tax debt, if it couldn’t collect the money over that period of time.

And child support — that can’t be discharged in bankruptcy.  Congress simply made a moral judgment that the debtor’s obligation to support his children, and the children’s need for the money to live on, overrides a debtor’s “need” to free of that type of debt.

This brings us to the type of debt that most persons seeking bankruptcy relief want to shed in chapter 7 or 13: credit cards, bank loans and lines of credit.  In contrast to the examples listed above, Congress decided that credit cards and similar debts ought, as a matter of human morality, to be discharged in bankruptcy.  This is the kind of debt that persons fret, or even agonize, over discharging in bankruptcy.  The point to remember is that Congress considered that question carefully, and after much thought, Congress said credit cards and similar debts just didn’t deserve getting back when a bankruptcy is filed.

Why, though?  What’s different about this kind of debt that made Congress treat it so poorly?  Okay, think about the credit card bank that you owe $10,000.00 to — did that bank take a mortgage on your house to secure payment?  Did that bank charge five percent interest, like on your mortgage, or did it charge, say, twenty-five percent?  Did the credit card bank verify your employment and income level, or did it simply dump five million credit card applications into the U.S. Mail and wait to see who, in all innocence, applied to be graced with their toxic credit card accounts?  You probably already know the answers to these questions.

The point is that the bankruptcy laws enacted by Congress contain a balancing of competing interests, and Congress resolved these in the bankruptcy laws by considering, in its collective mind, the morality of each of its choices.  It’s reasonable for us to defer to the morality of these choices when considering whether filing bankruptcy is the morally “right” thing to do.

When struggling with the decision of whether to file bankruptcy, don’t feel you have to decide between right and wrong, all by yourself, using only your own family’s needs as a standard to guide you.  Remember, the rest of us have a stake in whether your boat rises or falls.  Our bankruptcy laws as enacted by our representatives in Congress contain an impartial moral standard arrived at through years, even centuries, of legislative consideration of what your real responsibilities are.  For persons who have to choose between buying groceries or paying Citibank, there really isn’t a need to think about it any further.

When a creditor obtains a court judgment against a debtor, wage garnishment can be soon to follow.  Most persons subjected to wage garnishment will consult a lawyer to see if it can be stopped, and many of those will file either chapter 7 or chapter 13 bankruptcy to stop the wage garnishment.  While stopping a garnishment through an immediate bankruptcy filing is often a good idea, care must be taken to avoid filing bankruptcy too soon.

This might sound a bit strange — after all, if one’s wages are being garnished, and if filing bankruptcy will put an end to this hemorrhage of dollars into the creditor’s pocket, shouldn’t the bankruptcy lawyer be asked to sprint to the courthouse with the bankruptcy petition?  Wouldn’t a speedy bankruptcy filing bring the paycheck right back to where it should be?  Yes, but often there more to this question than meets the eye.

Section 522(h) and section 547 of the bankruptcy law allows a debtor to recover money involuntarily taken from him or her in the ninety days preceding the bankruptcy filing.  These sections apply to wage garnishment, and they are often used to recover money garnished before a bankruptcy filing.  Of course, this results in a happy bankruptcy debtor, who has just discovered that he or she actually made money, in a sense, by filing bankruptcy and the recovering the garnished funds.

However, there is a catch: section 522(h) and section 547 can only be used in this way if $600.00 or more was garnished before the bankruptcy filing.  To put it another way, if $600.00 or more was garnished before the bankruptcy was filed, then all the funds can be recovered by the debtor; if less than $600.00 was garnished before the bankruptcy was filed, then the creditor gets to keep the money.

As you can now see, this is where the bankruptcy debtor needs to get the timing right.  It might be a mistake to file the bankruptcy right now if, for example, $550.00 has been garnished from the paycheck, because then the debtor will be unable to the money back.  Often, in this example, if the debtor can stand to wait until one more paycheck is garnished, then the total garnished before bankruptcy can be manipulated legally into a figure exceeding $600.00.  This will often allow the debtor to recover every penny of the garnished funds.

The possibility of recovering garnished funds will mean that a decision has to be reached between the debtor and the bankruptcy lawyer regarding exactly when to file the bankruptcy case.  Filing the case too soon would be a shame, if less than $600.00 has been garnished and if waiting a short time would enable the debtor to recover the money.

Furthermore, the strategy discussed here makes sense only if the debtor can claim the recovered funds as exempt in the bankruptcy.  If no exemptions are available to allow the debtor to retain the funds, then waiting to file the bankruptcy is probably a bad idea and will result only in further suffering for the debtor.  And, of course, if more than $600.00 has already been garnished, then waiting to file bankruptcy will not help the debtor either.

The point is simply this: discuss the timing of the bankruptcy filing with your lawyer to avoid filing the case too soon to meet the $600.00 threshhold, and avoid missing the chance to recover the wage garnishment.

Everyone seems to have heard of a simple “formula” for determining when you should consider filing a chapter 7 or chapter 13 bankruptcy.  The problem is that once you start looking for the formula, it becomes apparent that there are numerous versions, and none of them seem to agree with one another.

Many seem to think that it’s the sheer total of all your debts that indicates you are a candidate for bankruptcy — but that can’t be right, can it?  If you have a $200,000 mortgage and can handle the payments, that’s a far cry from having $200,000 in credit card debt and not being able to handle the payments.

Or how about the one about your debt-to-income ratio — will that tell you whether you should be considering bankruptcy?  Probably not.  Many persons’ debts total three or four times their annual income, yet they can handle the payments without much trouble, depending on the type of debts and the interest rates the debts carry.

Maybe the total of your monthly debt payments compared to your net monthly income?  How about that one?  For example, what if your monthly debt payments total more than half your monthly income?  This formula at least makes some sense, but once again, it’s only a rule of thumb.  It would easy for many persons living alone to make debt payments totaling half their monthly income, while the breadwinner of an eight person household might find it impossible to pay that much income toward debt payments.

By now, you are probably beginning to see where the answer lies.  The “formula” for helping decide whether you should consider bankruptcy is complicated.  In fact, calling it a formula might even be a stretch.  Instead, we might just call it an old fashioned mathematical excercise involving a sheet of paper, a calculator and your pile of monthly bills.

Here’s what you should focus on: finding out how much net monthly income you typically bring into your household; totalling up the monthly payments on your debts (but excluding your rent or mortgage and your car payment); and adding all of your necessary monthly living expenses, such as rent or mortgage, car payment, groceries, utilities, and the like.

The formula for determing whether you are candidate for bankruptcy goes like this:  if your net monthly income, minus the monthly payments on your debts, leaves you without enough money to pay for your necessary monthly living expenses, then your monthly household budget is broken.  This means you need to take action to fix your broken budget.

Such action could include getting a second job to increase your income, or cutting back on living expenses which you decide, after giving it some thought, you can live without.  However, you should consider bankruptcy as an option when there is no reasonable way for you to either increase income or reduce living expenses.

While filing chapter 7 or chapter 13 bankruptcy will usually have no effect on your monthly living expenses, bankruptcy will eliminate most of your unsecured debts, taking your monthly payments on debts away from you.  Without the need for you to make overwhelmingly large monthly payments on old debts, you can plug your monthly income and expenses figures into the above formula — and the result will show you whether, and how much, filing bankruptcy can help you.

Everyone knows that you can’t discharge income taxes in bankruptcy.  Right?  No, not right at all.  This misconception about bankruptcy law illustrates just why you shouldn’t substitute cocktail party gossip for the advice of a good lawyer.  Especially when the question involves discharging income taxes in a consumer bankruptcy case.

Generally, income taxes are discharged in a chapter 7 or chapter 13 bankruptcy case when the tax is four years old or more.  (For those readers who owe substantial income taxes and who are learning this here for the first time, kindly place your eyeballs back into their sockets and read on for some additional qualifications.)

It’s not accomplished through special legal wizardry; in fact it’s routine and it happens automatically in most cases where the legal tests are met.

How is this possible?  Because of bankruptcy code section 523(a)(1), which lays out the tests for determining whether your income taxes can be discharged.

First, the tax must be owed for a year where three years have passed since the tax return was due.  Most of the time, the return was due on April 15.

Second, the return must have been filed more than two years ago.  Obviously, this rule applies only to late filers.

Third, the tax must not have been assessed with the last 240 days.  This rule applies where the return didn’t accurately show all the tax that was owed, and the IRS just finished assessing additional taxes after discovering your mistake.

Fourth, if you wilfully attempted to evade or defeat payment, it can’t be discharged.  Courts have ruled that simple non-payment, without anything more, is not enough to show that you tried to evade or defeat payment of the tax.

Sections 523 and 507 of the bankruptcy code do impose some additional requirements, but what has been written above is enough for most people to know.  If you filed your tax return on time, and if the return was accurate, and if it’s been more than three years since the return was due at the latest (usually April 15 of a given year), then your taxes are going to be discharged if you file for bankruptcy, unless a specific exception in the law applies to you.  It’s that simple.

If you owe income tax that you can’t pay, here is what you now know you should do: first, try to avoid listening to legal advice about bankruptcy from well-meaning friends at cocktail parties, and second, get yourself to a bankruptcy lawyer to find out for sure if your income taxes are dischargeable in bankruptcy.

One of the things that troubles those considering filing personal bankruptcy is the fear that it might be impossible to qualify for a home mortgage after a chapter 7 or 13 case.  Indeed, it would be a cruel irony if a bankruptcy filing freed you at last from a heavy debt burden, enabling you to finally afford a house payment, only to find that you were now a member of a no-credit underclass, shunned forever by mortgage lenders, permanently consigned to a cot in your parents’ basement.

If this has been a factor in your thinking about bankruptcy, there is good news for you: the federal home mortgage guaranty agency says that bankruptcy will not stop you from qualifying for a mortgage to buy a home.  Better still, you don’t have to rely on this writer’s credentials or anecdotal evidence to know that bankruptcy won’t stop you from buying a home.  FHA and HUD regulations, publicly available to anyone who cares to look, say in so many words that a chapter 7 or 13 filing will not disqualify a borrower from eligibility for an FHA-insured mortgage.

Regarding chapter 7 bankruptcy, HUD Guideline 4155.1 : 4.C.2.g provides:

A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA-insured mortgage if at least two years have elapsed since the date of the discharge of the bankruptcy.

During this time, the borrower must have

• re-established good credit, or
• chosen not to incur new credit obligations.

An elapsed period of less than two years, but not less than 12 months, may be acceptable for an FHA-insured mortgage, if the borrower

• can show that the bankruptcy was caused by extenuating circumstances beyond his/her control, and
• has since exhibited a documented ability to manage his/her financial affairs in a responsible manner.

Note:  The lender must document that the borrower’s current situation indicates that the events which led to the bankruptcy are not likely to recur.

Regarding chapter 13 bankruptcy, HUD Guideline 4155.1 : 4.C.2.h provides:

A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an FHA-insured mortgage, provided that the lender documents that

• one year of the pay-out period under the bankruptcy has elapsed
• the borrower’s payment performance has been satisfactory and all required payments have been made on time, and
• the borrower has received written permission from bankruptcy court to enter into the mortgage transaction.

TOTAL Scorecard Accept/Approve Recommendation

Lender documentation must show two years from the discharge date of a Chapter 13 bankruptcy.  If the Chapter 13 bankruptcy has not been discharged for a minimum period of two years, the loan must be downgraded to a Refer and evaluated by a Direct Endorsement (DE) underwriter.

Reference:  For more information on the TOTAL Scorecard recommendations, see the TOTAL Mortgage Scorecard User Guide.

What’s more, because bankruptcy usually relieves you of most or all of your monthly debt payments, the above regulations make clear that filing bankruptcy could actually help you to qualify for an FHA mortgage, rather than preventing you from qualifying.  This would be true for those whose monthly debt payments leave them with insufficient income to pay a mortgage, but for whom a bankruptcy filing would eliminate those monthly payments, freeing up the disposable income necessary to qualify for the monthly mortgage payment.

Additionally, if you are not a first time home buyer, you should be aware that conventional mortgage lenders typically follow regulations similar to those followed by HUD and the FHA.

This doesn’t mean that everyone who wants to buy a home should file bankruptcy first, but it does mean that persons considering bankruptcy can be free of the fear that a bankruptcy filing will prevent them from ever qualifying for a mortgage.

The Bankruptcy Appellate Panel for the federal Eighth Circuit Court of Appeals has added its voice to the other nine circuits that have have ruled in favor of wholly unsecured second mortgage lien stripping in chapter 13.  This means that debtors in the Eighth Circuit (Minnesota, North Dakota, South Dakota, Iowa, Missouri, Nebraska, and Arkansas) are virtually assured of being able to strip junior mortgages, in appropriate cases.  What’s more, the appeals court did so in a chapter 13 case which followed on the heels of a chapter 7 (a so-called “chapter 20″ case).  This makes for the first federal appellate court ruling to allow lien stripping in chapter 20 cases.

This case, In re Fisette, No. 11-6012 (8th Cir. BAP Aug. 29, 2011), involved a debtor who had filed chapter 7 in 2009.  He received a discharge of debts, and he elected to retain his home, continuing payments without formally reaffirming on any of his three mortgages.  By 2010, he had fallen behind on mortgage payments.  He filed chapter 13 to gain extra time to catch up on the back mortgage payments.  Because he had received a chapter 7 discharge within the prior four years, he was not eligible for a discharge in his new chapter 13 case, unlike most chapter 13 debtors.

The debtor’s chapter 13 plan stated that his home was appraised at a value of $145,000.00, and that his first mortgage had a total balance owed in excess of $145,000.00.  This rendered his second and third mortgages unsecured by any actual value in the real estate.  Because the supposedly secured junior mortgages were, in actuality, unsecured by any value in the home, the chapter 13 plan proposed to strip them off using the bankruptcy code’s section 506(a).

The appeals court agreed with the debtor that sections 1322(b)(2) and 506(a) should be read together to allow wholly unsecured junior mortgage lien stripping on homestead real estate.  Due to the recent national trend of falling real estate values, the use of chapter 13 to strip second or third mortgages has become an important part of the debtor’s arsenal of bankruptcy remedies to be used against creditors.  The Eighth Circuit joined the unanimous voices of other federal appeals courts in approving the availability of this remedy for chapter 13 debtors.

Perhaps more importantly, the appeals court approved lien stripping in a chapter 20 case, where no discharge could be granted.  It rejected arguments that section 1325(a)(5)(B) required full payment of an unsecured junior mortgage unless the debtor was eligible for a chapter 13 discharge, ruling that section 1325(a)(5) applies only to secured creditors.

Although bankruptcy courts around the country have been split on the issue of chapter 20 no-discharge lien stripping, the Fisette ruling now arms debtors with the first federal appeals court decision approving the practice.

If you’re considering filing bankruptcy, you probably already know how important it is to properly complete Form B22, the bankruptcy means test, which determines whether you are eligible to file chapter 7, or whether you must instead file a repayment chapter 13 case.  The means test also affects how much you must pay into a chapter 13 plan each month towards repaying your debts.

Conventional wisdom has long held that no matter how many motor vehicles you have in your household, you are limited to claiming operating expenses for only two vehicles on the means test form.  Now there is good news for debtors, as a Florida bankruptcy court has ruled that expenses can be claimed for any number of vehicles in the household, so long as such vehicles are reasonably needed by the family.

In re Johnson, case no. 8:11-bk-00810-MGW (Bky.M.D.Fla. July 8, 2011), allowed the debtors to claim the standard $239.00 operating expense allowance for three vehicles, as long as the three vehicles were necessary to the family, as well as an extra $200.00 operating/ownership expense for third vehicle.  This would allow the debtors to “pass” the means test and remain in chapter 7, rather than being forced to convert to chapter 13.

The debtors in Johnson owned three vehicles, two of which were subject to loans.  The third was owned free and clear of liens, and it was used by their teenage daughter to assist in transporting her and her siblings to school, medical appointments and other activities.

The U.S. Trustee objected to the debtors including all three vehicles’ operating expenses on the means test in the amount of $239.00 each, pointing out correctly that the means test form only provides for two vehicles, which in turn implied that only one vehicle could be claimed for each of the two married debtors.

The debtors countered that the U.S. Supreme Court’s recent ruling in Ransom v. FIA Card Services, 131 S.Ct. 716 (2011), mandated a broad reading of the term “applicable number of vehicles” in the means test form.  If they owned and operated three vehicles, they argued, then the applicable number of vehicles for which an operating expense could be claimed was indeed three, regardless of the language appearing on Form B22.  It was, after all, only a form.

The court agreed and allowed an operating expense for all three vehicles, as long as it could be shown that all three cars were reasonable necessary for the debtors to have in their household.

If other courts follow this reasoning, it will be easier for chapter 7 debtors with more than two vehicles in their households to pass the all-important bankruptcy means test.

Paper checkbook registers?  Ask around; they seem to be going the way of the dinosaurs.  Why keep track of your checking account using paper, of all things, when the bank helps you do it online with no fuss and no muss?  Well, maybe the paper checkbook register question is not as simple as it seems — especially for those who habitually spend more than they should.  Maybe for some, the lowly paper checkbook register should be their best friend.

Why?  Because keeping a paper checkbook register makes a person feel differently about his or her money.  Keeping a paper checkbook register enables a person to keep track of expenditures accurately and immediately, in real time as expenditures are made.  Using a paper checkbook register, neither the bank nor anyone else intervenes between you and your checking acount balance.  And that’s the key to responsible personal financial management — feeling empowered, knowing that you control your money and that no one else controls it.

Let’s face it, overspending is not caused by an inability to add or subtract — it’s caused by how people feel about their money, and what they think they know.  It’s like dieting: the problem isn’t a failure to understand how to add up calories, it’s a failure to understand how human emotion drives a certain behavior, eating.  Similarly, overspending is driven by a failure to recognize how human emotion drives a another behavior, spending money.

You need something, you buy it.  Without a paper checkbook register, you can wait until later to find out, online, what your checking balance is or if you can afford the expenture.  Someone else, your bank, has been keeping your most important bank record, if you don’t use a paper checkbook register.  This is bound to have an effect on how you think about your checking account balance.

If you’re living from paycheck to paycheck, and relying on your bank’s online statement to keep track of your checking balance for you, consider the idea of going back to your paper checkbook register for awhile.  Every time you write a check or pay for a purchase with your checking debit card, write it into the paper register, just like you did before there was online banking.  You will feel more in control, and it might even help you understand how to better manage your money.

A U.S. bankruptcy court in California agreed with a chapter 13 debtor that the terms of his chapter 13 plan could prevent a foreclosure, even though he had previously filed a chapter 13 which was dismissed in the one year prior to his second case.  Mortgage banks will consider this ruling to be an “end run” around the strictures of 11 U.S.C. section 362(c)(3)(A), especially because the debtor in this case failed to make a timely motion to extend the bankruptcy stay pursuant to section 362(c)(3)(B).

Section 362(c)(3)(B) provides that in a bankruptcy case filed within one year of a prior case, the stay expires after 30 days, unless the debtor files a motion to extend the stay prior to its expiration.  Normally, a mortgage bank is permitted to foreclose once the stay is terminated.

The result in this case was that the repeat bankruptcy filer was able to avoid the consequences of filing chapter 13 within one year of having a prior case dismissed, and then failing to obtain an order extending the bankruptcy stay, by simply including his mortgage bank in the terms of his chapter 13 plan.

In this case, In re Hileman, 2011 WL 2341090 (Bky.C.D.Cal. June 13, 2011), the debtor filed a second chapter 13 case within one year of a prior chapter 13, and filed a motion to extend the stay 31 days after filing the case.  The motion was denied due to having been filed too late.  However, the debtor’s chapter 13 plan provided that he would continue paying his home mortgage, and that the debtor would “cure” the past due mortgage payments over 60 months.  This plan was confirmed by the court without any objection by the mortgage bank.

A few months later, the mortgage bank started a new foreclosure proceeding, relying on the bankruptcy stay having automatically terminated by reason of section 362(c)(3)(A) regarding repeat bankruptcy filings.

The bankruptcy court surprised the mortgage bank by halting the foreclosure.  It ruled that the mortgage bank was legally bound by the chapter 13 plan’s provision that the debtor would both continue monthly mortgage payments and catch up the arrears over 60 months.  The mortgage bank’s failure to object to the plan made the plan binding, and no foreclosure could be started, unless the debtor defaulted on plan payments and the bankruptcy court authorized a foreclosure.  This was true even if the stay had expired pursuant to section 362(c)(3)(A).