Filing Chapter 13 to stop tomorrow's auction

Have you talked to an attorney yet?n That should be your first step.l

Yes we hired one and she met with them yesterday and I paid part of the fee. I just have so many questions and I cant ask my mother as it upsets her so much!

In short...she will still be paying the monthly mortgage each month...what the Ch 13 does is take the delinquent amount of the mortgage and pays that portion in full over the repayment plan (in this case - 3 years). Unsecured creditors may only get a % of amount owed. Once the BK is discharged, she won't owe the unsecured creditors any more $.

After the BK discharge, she will be current on her mortgage and will continue to make the monthly payments until the mortgage is paid in full (or she sells, etc.).

For some reason they lawyer told her she would need to put the house on the market right away. And now they are telling her that they will convert it to a Chapter 7 later on. I thought Chapter 7 means liquidation. My mother needs to hang onto the house so she can sell it and hopefully make a small amount to at least get her into something smaller. Do you think its because there is a fear she wont be able to keep up the mortgage payments? She is 63 and self employed with a home design business that was hit hard by the recession.

Can't give a qualified answer without knowing the background details...you might want to go with your mother to visit the attorney and have him/her clarify the plan of action your mother should take.

Good idea, just such a sensitive situation. Had no idea she was in this trouble!

Are you ever allowed to keep your house if you do Chapter 7?

Yes. The amount of value varies from state to state. See the Federal Bankruptcy Code regarding exemptions.