📅 2026 Update: Key Changes in Foreclosure Law and Bankruptcy

Since the original article was written, there have been important updates to U.S. bankruptcy law that affect individuals facing foreclosure. These updates include changes to debt limits and processes in Chapter 13 bankruptcy. The earlier article continues below and provides foundational knowledge on foreclosure attorneys and bankruptcy options.

📈 Chapter 13 Debt Limits

As of March 31, 2028, the debt limits for Chapter 13 bankruptcy have increased. Now, individuals can have secured debts up to $1,580,125 and unsecured debts up to $526,700. These limits are adjusted periodically to reflect economic changes.

This adjustment is crucial for those considering Chapter 13 as a way to manage debt.

💼 Attorney Fees

The U.S. Trustee Program does not set specific fees for bankruptcy attorneys. Instead, fees can vary widely based on the complexity of the case and the attorney's experience.

Individuals should consult with several attorneys to understand the typical rates in their area.

🔍 Means Test Requirements

To qualify for Chapter 7 bankruptcy, individuals must complete the Chapter 7 Means Test Calculation form. This form assesses income and expenses to determine disposable income. Passing this test is essential for moving forward with Chapter 7 bankruptcy.

⏳ Processing Times

Individuals filing for Chapter 7 bankruptcy usually receive a discharge of qualifying debts within about four months after filing. In contrast, Chapter 13 bankruptcy involves a repayment plan that lasts between three to five years. This timeline is important for those looking to stabilize their financial situation.

📚 Credit Counseling

Before filing for bankruptcy, individuals are required to complete a credit counseling course from an approved agency within 180 days. This course helps individuals understand their financial situation and explore their options, including bankruptcy.

📌 Key Points Summary

  • Debt limits for Chapter 13 bankruptcy have increased as of March 31, 2028.
  • Attorney fees vary based on case complexity and experience.
  • The Chapter 7 Means Test is mandatory for eligibility.
  • Discharge timelines are about four months for Chapter 7.
  • Credit counseling is required before filing for bankruptcy.

💡 Tips for Navigating Bankruptcy and Foreclosure

It is important to go over the details of your financial situation with your attorney.

📅 Know Your Debt Limits

Understanding the current debt limits for Chapter 13 bankruptcy can help you determine if this option is right for you. As of March 31, 2028, ensure your secured debts are under $1,580,125 and unsecured debts are below $526,700.

📝 Complete the Means Test

Before filing for Chapter 7 bankruptcy, make sure to complete the Chapter 7 Means Test Calculation form. This step is necessary to assess your disposable income and determine if you qualify for this type of bankruptcy.

⏰ Be Aware of Processing Times

Keep in mind the processing times for bankruptcy filings. A Chapter 7 discharge typically occurs four months after filing, while Chapter 13 requires a repayment plan of three to five years. Understanding these timelines can aid in planning your financial recovery.

📚 Take Credit Counseling Seriously

Do not overlook the requirement for credit counseling. Completing a course from an approved agency within 180 days before filing is essential. This step can provide valuable insights into your financial situation and available options.

🔄 Consider Conversion Options

If you're in Chapter 13 bankruptcy and circumstances change, know that you can convert to Chapter 7. Ensure you meet all requirements for this conversion, including passing the Chapter 7 Means Test.

🚪 Explore Alternatives to Bankruptcy

In addition to bankruptcy, explore other options for managing debt and avoiding foreclosure. These may include negotiation with creditors or exploring state-specific programs designed to assist individuals facing financial difficulties.

🏆 Free Options Ranked by User Reviews (2026)

No national paid service met the review threshold for this section, so it focuses on free government and nonprofit resources available to individuals facing bankruptcy and foreclosure. These options can provide valuable assistance without the burden of fees.

🥇 1. Approved Credit Counseling Agencies

Approved credit counseling agencies offer free or low-cost services to individuals. They help clients understand their financial situations and explore bankruptcy options. These agencies can guide individuals through the credit counseling requirement for bankruptcy.

🥈 2. U.S. Trustee Program

The U.S. Trustee Program oversees bankruptcy cases and ensures that individuals receive fair treatment. They offer resources and guidance for those considering bankruptcy.

Individuals can find information on how to navigate the bankruptcy process effectively.

🥉 3. Local Legal Aid Services

Many areas have local legal aid services that provide free legal assistance to low-income individuals. These services can help with bankruptcy filings and related legal issues. They are an essential resource for those who cannot afford private legal representation.

4️⃣ State Bankruptcy Resources

Each state has specific resources and information regarding bankruptcy law. These state resources can provide valuable guidance and support. Individuals should check their state’s official website for information on local bankruptcy laws and procedures.

5️⃣ Nonprofit Debt Management Organizations

Nonprofit debt management organizations offer services to help individuals manage their debt. They provide counseling and create personalized debt management plans. These organizations can assist individuals in exploring their options and finding a path to financial stability.

🔎 Before Paying for Help

  • 🏦 Check for government-funded options first.
  • 📄 Verify the credentials of any organization.
  • 🤝 Look for nonprofit status to ensure no profit motives.
  • 📞 Ensure they offer transparent pricing for any services.
  • 🕵️ Research reviews and feedback from past clients.

❓ Frequently Asked Questions

❓ What is the automatic stay in bankruptcy?

The automatic stay is a legal provision that halts all collection actions, including foreclosure, once bankruptcy is filed. This protection gives individuals time to reorganize their debts without the pressure of losing their property.

💰 How do bankruptcy exemptions work?

Bankruptcy exemptions allow individuals to protect essential property from creditors during bankruptcy. Exemptions can cover items like a primary residence, personal belongings, and retirement accounts, but the specifics vary by state.

🛠️ Can I convert from Chapter 13 to Chapter 7?

Yes, individuals in Chapter 13 can convert to Chapter 7 if they qualify for a Chapter 7 discharge. This process involves passing the Chapter 7 Means Test and updating income and expense disclosures.

🔄 What happens to my debts after bankruptcy?

After completing a Chapter 13 repayment plan, individuals can discharge certain debts, such as credit card balances and medical bills. However, some debts, like most tax obligations and child support, are usually non-dischargeable.

📉 What is disposable income in bankruptcy?

Disposable income is the amount left after subtracting allowed deductions from monthly gross income. This figure is crucial for determining eligibility for Chapter 7 bankruptcy and influences repayment plans in Chapter 13.

📅 How long does Chapter 13 bankruptcy last?

Chapter 13 bankruptcy typically involves a repayment plan that lasts three to five years. This duration can vary based on individual circumstances and income levels.

⚖️ Recent Court Cases and Their Impact

Recent court rulings have clarified various aspects of bankruptcy law and its impact on foreclosure. These cases can provide insights into how courts interpret bankruptcy rules and the rights of debtors facing foreclosure.

You can browse more rulings on the news page for recent updates and additional information.

End of October 2026 Update





A foreclosure lawyer will be keen
to see his or her clients avoid having their property taken away at the hands
of creditors, noting some of the ill effects of this decision. Still, one of this
lawyer's key functions is to negotiate alternatives for the homeowner that may
not be ideal either, but will be superior options all the same.



 

Learn About Foreclosure Attorneys


Prior to a foreclosure sale,
a foreclosure attorney may be able to help his or her client try to
put off debt by securing an extra mortgage (usually a second mortgage, but
potentially a third or fourth mortgage and so on) that will allow for the
represented party to take out extra money in loans against the house as a
security. It should be noted, though, that a second mortgage does not nullify
the first and, in fact, stands behind the first mortgage in terms of priority.
Consequently, defaulting on either mortgage may still lead to a lender's appeal
for a foreclosure sale, making this a risky maneuver in its own right and
something of which a foreclosure lawyer should apprise his or her client.



 



Perhaps a better option that
a foreclosure attorney could take the lead in bargaining for would be
the restructuring of debt. Ways to achieve this include the extension/refinancing
of existing mortgages, the issuance of a forbearance (i.e. a postponement of
collections), or negotiating what is known as a "partial claim"
payment.



         



There are a lot of choices available to
homeowner-debtors. Still, to what extent these are long-term options is
dubious. Loan payment forbearance, for instance, is by nature meant to be
temporary and will do nothing to cancel out debts.Ultimately, it may only amount to stalling on the
investor's part.



 



A more drastic, large-scale solution to
mortgage-related debts is to sell the property to offset one's financial
obligations to the lender, something a foreclosure lawyer should be able
to facilitate or render an opinion on. This route may manifest itself in a
pre-foreclosure "short sale," in which the lender will agree to
swallow the loss of the sale relative to the debt still owed on the mortgage,
or a "deed in lieu of foreclosure," in which the debtor serves up the
deed to the house in exchange for a cancellation of existing monies owed on the
property.



 



Then again, a foreclosure attorney may
end up advising his or her client to opt for Chapter 7
or Chapter 13 bankruptcy.