Tennessee allows for a non-judicial foreclosure process. In a non-judicial foreclosure the lender does not have to go to court in order to foreclose on property. Lenders usually provide notice by mail at least 20 days in advance of the scheduled sale date. The lender will not perform the sale, instead a trustee is in charge of the process.

If you file a Chapter 13 bankruptcy at any time before your house is actually sold at auction then the sale is stopped. The sale is stopped because of the operation of the automatic stay, which goes into effect after filing bankruptcy. Once you file a bankruptcy the automatic stay stops most creditor actions, including foreclosure sales. Therefore, a foreclosure sale is stopped or it has no legal effect.

There are several things you will need to do before you may file a Chapter 13 bankruptcy. You will need to have filed your taxes for the most recent year. You will need to provide proof that you filed these taxes to your attorney. A list of all of your creditors with their addresses is also needed. You will also need to provide pay advices for the previous 6 months prior to filing bankruptcy. Finally, a government issued photo ID and proof of your social security number is required.

One element of a Chapter 13 bankruptcy that is different than a Chapter 7 (”straight” or “liquidation”) bankruptcy is the Chapter 13 Plan. It is the Chapter 13 Plan where you propose to pay your creditors, most importantly your mortgage holder. This will always include paying the regular monthly note along with an “extra” amount that will be large enough to pay off the arrears in a period of 36 to 60 months.

For any property you wish to keep that has a lien on it you must pay for that property. The debts owed on these properties are “secured” debts – these include a mortgage and debts owed on cars. “Unsecured” debts are not backed by any property. You may be able to pay less than 100% of these debts, depending on certain things – like your current income, your income over the last 6 months, and the value of all your property.

Automobiles and certain other property, but not homes, are subject to cram downs. A cram down occurs when a secured debt is “cram downed” to the value of the property that secures the debt. For example, if you owe $25,000 on a vehicle that is worth $10,000 then a cram-down would result in the secured debt being only $10,000 and the remaining $15,000 would be unsecured. There are special rules for accomplishing a cram-down.

A Chapter 13 Plan must be confirmed before it can go into effect. Upon confirmation the Chapter 13 Trustee will begin to distribute the funds you have paid into your plan. You make payments to the Chapter 13 Trustee either through a payroll deduction or directly.

When your Chapter 13 bankruptcy is completed you will be current on your mortgage. At that time you will begin to pay your mortgage lender directly. Unsecured debts that were not paid will be discharged – which means that creditors cannot take any adverse actions against you.

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