Last Minute Chapter 13 to Stop a Foreclosure and “Buying Time”

02 Feb Last Minute Chapter 13 to Stop a Foreclosure and “Buying Time”

One of the most powerful benefits of Chapter 13 arises from its power to stop a foreclosure. Although the foreclosure process varies depending on where the debtor lives, many Chapter 13 cases are filed on the eve of foreclosure to stop the process.

Chapter 13 is designed to help a debtor reorganize, but, inevitably, some debtors want to use Chapter 13 to “buy time.” Buying time can have many meanings – sometimes a debtor wants to stop foreclosure so that he can stay in his house for free for a few months, never intending to fulfill the terms of a Chapter 13 reorganization. Other debtors want to stop foreclosure to secure time to get the house sold, after which they will voluntarily dismiss their case.

Faced with a request to file a Chapter 13 where the debtor has no real ability or intention to fulfill his plan obligations, most bankruptcy lawyers will struggle with two opposing considerations. On one hand, bankruptcy lawyers are officers of the court and we have both an ethical obligation to offer zealous representation to our clients. At the same time we have a professional obligation to the Bankruptcy Court to file only cases that are intended to support the purpose of the Bankruptcy Code – that is to give the honest, but unfortunate debtor a chance for a fresh start.

Faced with a decision of whether to file a case solely to stop a foreclosure, some lawyers will refuse to accept representation, while others will take the position that zealous representation compels them to use any means available to help the client.

On the other hand, the BAPCPA laws do provide for expanded liability pursuant to Rule 9011 against lawyers who file pleadings without performing an reasonable inquiry as to the facts and circumstances of a case. Section 527 of the Code specifically speaks to duties of debtors’ counsel.
I invite the experienced and knowledgeable lawyers who regularly post on this blog, or any bankruptcy lawyer who has faced this situation to comment below.

The point here – if you are facing a foreclosure and you are considering using a Chapter 13 to buy time, you may discover that experienced Chapter 13 lawyers in your community may be unwilling to assist you if you have no desire to actually reorganize. Given the trend in the law that puts more of a burden on debtors to prove their qualifications for bankruptcy relief, it may be that the days are numbered for Chapter 13 filings designed to buy time only.

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Jonathan Ginsberg, Esq.

I represent individuals in Chapter 7 and Chapter 13 cases filed in the Northern District of Georgia, which includes Atlanta, Newnan, Gainesville and Rome. I publish several informative web sites, including and an Atlanta bankruptcy blog, Please mention Bankruptcy Law Network when you call.

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