Stop Foreclosure: Chapter 13 Relief for Arizona Families

How Chapter 13 Helps Arizona Homeowners

Chapter 13 is a reorganization bankruptcy for individuals with regular income. When you file, most collection activity must stop because of the automatic stay (11 U.S.C. § 362). That pause typically includes foreclosure or an Arizona trustee’s sale, allowing time to propose a repayment plan that cures mortgage arrears while you continue making new payments that come due after filing. Unlike Chapter 7, Chapter 13 is structured to help you keep property by spreading catch-up payments over time, subject to court approval and your budget’s feasibility (11 U.S.C. § 1322(b)(5)).

The Automatic Stay and Arizona Trustee’s Sales

Arizona commonly uses a nonjudicial foreclosure process called a trustee’s sale under the Deeds of Trust statutes (A.R.S. Title 33, ch. 6.1). Filing a bankruptcy petition generally triggers the automatic stay, which halts most steps in that process (11 U.S.C. § 362). Important exceptions and timing issues apply. For example, if a sale has already been completed under state law, a later filing will not unwind it. In Arizona, courts look to whether the trustee’s sale was completed under the Deeds of Trust statutes (see, e.g., A.R.S. §§ 33-810, 33-811); post-sale options are very limited. Creditors can also ask the bankruptcy court to lift the stay, and repeat filings can limit or restrict the stay (11 U.S.C. § 362(d), (c)(3)-(4)).

Curing Mortgage Arrears in a Chapter 13 Plan

A Chapter 13 plan can propose to catch up on past-due mortgage payments over a defined plan period while you keep making your regular payments that come due after filing. Arrears are typically paid through the Chapter 13 trustee, while you remain responsible for ongoing installments. Secured claims like home mortgages must be treated in compliance with bankruptcy rules; missed ongoing payments or an infeasible budget can jeopardize plan confirmation and may lead to relief from the stay.

What About Second Mortgages and HOA Liens?

Depending on your home’s value and senior liens, Chapter 13 in the Ninth Circuit (which includes Arizona) may allow you to treat a wholly unsecured junior deed of trust as an unsecured claim through lien stripping, subject to valuation and confirmation by the court. See, e.g., Zimmer v. PSB Lending Corp., 313 F.3d 1220 (9th Cir. 2002). Whether a junior lien is modifiable depends on valuation, lien priority, and federal bankruptcy rules (including the anti-modification rule in 11 U.S.C. § 1322(b)(2)). Homeowners’ association liens are governed by Arizona statutes and your CC&Rs; priority and remedies can differ for condos and planned communities (see A.R.S. § 33-1256 and A.R.S. § 33-1807). A careful valuation and title review are essential.

Plan Feasibility: Income, Expenses, and Priority Debts

To be confirmed, a Chapter 13 plan must be feasible. You will document regular income, reasonable household expenses, and the amounts needed to cure arrears and pay required priority debts (for example, certain taxes or domestic support obligations). The plan payment must fit your budget while addressing required claims. If your income fluctuates or you expect changes, your attorney can help structure a plan and seek adjustments when appropriate.

Timing Considerations Before a Trustee’s Sale

If a trustee’s sale is scheduled, waiting can reduce your options. Filing before the sale generally provides stronger protections than filing after critical steps have occurred under Arizona’s deed of trust statutes. Because timelines and notice requirements can vary, consult counsel as early as possible to evaluate whether a filing can still stop the sale and to avoid last-minute issues with incomplete documents or missing counseling certificates. Post-sale remedies are narrow under Arizona law (see A.R.S. § 33-811).

Credit Counseling and Filing Requirements

Most individual filers must complete approved credit counseling before filing and submit required documents such as schedules, a plan, and recent pay information. In emergencies, you can file a skeletal petition to invoke the stay and then complete remaining documents shortly after, but missing deadlines can result in dismissal and may affect the availability or duration of stay protections in a later case (11 U.S.C. § 362(c)(3)-(4)).

What Happens After Filing

After filing, the court appoints a Chapter 13 trustee and schedules a meeting of creditors. You must begin plan payments promptly, even before plan confirmation. Mortgage servicers typically file a proof of claim stating arrears and ongoing amounts. If the numbers are inaccurate, your attorney can object or reconcile payment histories. Staying current on post-petition mortgage payments is critical to avoiding stay relief.

Alternatives to Consider

Chapter 13 is not the only path. Depending on your goals, you might pursue a loan modification, reinstatement, forbearance, a negotiated repayment plan with the servicer, a short sale, or deed in lieu. Each option has tradeoffs, including credit impact, tax considerations, and potential deficiency exposure under Arizona law. If saving the home is your priority and income supports it, Chapter 13 often provides a structured, court-supervised path to do so.

FAQ

Will Chapter 13 stop my Arizona trustee’s sale?

Usually yes, if you file before the sale is completed under Arizona law. Timing is critical; a filing after completion will not unwind the sale.

Do I have to repay all missed payments at once?

No. A confirmed Chapter 13 plan can spread arrears over the plan term while you resume regular payments going forward.

What if my income changes during the plan?

Your attorney can seek a plan modification if your circumstances change, subject to court approval.

Can my lender still foreclose during Chapter 13?

Not without permission. The lender can ask the court to lift the stay if you miss post-filing payments or the plan is not feasible.

Can I strip a second mortgage in Arizona?

Potentially, if the junior lien is wholly unsecured based on the home’s value and senior liens. This requires valuation and court approval.

How Our Firm Can Help

We assess sale timelines, review your mortgage and arrears, analyze income and expenses, and prepare a tailored plan. When a sale is looming, we coordinate swiftly, file complete paperwork, and advocate to keep the stay in place. We also evaluate lien-strip potential, HOA issues, and tax claims, and we communicate with your servicer to reconcile escrow, fees, and payment changes.

Next Steps

• Gather recent mortgage statements, any sale or default notices, HOA ledgers, pay stubs, tax returns, and a list of monthly expenses.
• Speak with a bankruptcy attorney early to assess timing and feasibility.
• If appropriate, we can prepare and file an emergency petition to invoke the stay and protect your home.

Ready to talk? Contact us for a consultation about whether Chapter 13 can stop a trustee’s sale in your situation.

Sources

• 11 U.S.C. § 362 (Automatic stay; relief and limitations for repeat filings)
• 11 U.S.C. § 1322(b)(2) and (b)(5) (Anti-modification; cure and maintain)
• A.R.S. Title 33, ch. 6.1 (Deeds of Trust, including trustee’s sale procedures)
• A.R.S. § 33-810 (Trustee’s sale; completion) and A.R.S. § 33-811 (Effect of sale; defenses and waivers)
• Zimmer v. PSB Lending Corp., 313 F.3d 1220 (9th Cir. 2002) (wholly unsecured junior lien strip-off in Chapter 13)
• A.R.S. § 33-1256 (Condominium assessment liens) and A.R.S. § 33-1807 (Planned community assessment liens)