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Can I short sale my home during chapter 13 bankruptcy?

Los Angeles, CA |

I just file chapter 13 bankruptcy 4 days ago and still working on more documents that they requested. However, I know that I cannot afford to keep my house because my income is less than half of what it used to be. A realtor told me that I should ask the bank to do short sale but not sure if I can still do it now since I already file for chapter 13. Can ask the bank to do short sale now or I have to cancel the bankruptcy first then file it again once the short sale is done?

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Attorney answers 4


All of your assets are assets of the bankruptcy estate which is overseen by the trustee assigned to your case. Generally to sell estate property requires court approval, but the trustee would need to be involved as you are not really in control of your estate. Unless there is equity in the home, I am not sure why you need or want to do a short sale. You can surrender the home during the bankruptcy case if you can't pay. Realize your realtor obviously has different interests in mind with the possible commission versus what is in your best interest. You should speak with a bankruptcy attorney as there are a lot of issues in a chapter 13 case as well as tax and other consequences of dismissing the case and then doing a short sale.


Yes, you can, with Court approval. Consult your BK lawyer about filing a Motion to Sell Property.

Yes, you can hire an attorney to represent you, however, why are you fighting a debt that is most likely yours? You owe the debt, so what's your defense to not paying it?

My point is that even if you hire a lawyer, if the debt is yours, you will still lose the lawsuit and get a judgment against you. And, lawyers for litigation are expensive.

Consult with a bankruptcy attorney to see if that is an option for you. We practice in Minooka, give us a call for a free consult and we'll advise you from there. A bankruptcy would put an end to the collection efforts once and for all, for all your debts.

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Very truly yours,

Dean D. Paolucci, Attorney at Law
Select Legal, Practicing in Illinois and Ohio
Illinois> 312-427-9131
Ohio> 614-223-1235

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It really looks like you don't have a clear strategy and you have not received competent advice. The best that I can tell you is that you would be best served by calling my office to set up a free consultation with me so that you can receive some clarity.

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Gerald Wolfe
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The last thing you want to do is take the advice of a real estate agent (a little bit of knowledge is dangerous) about bankruptcy, particularly the extremely difficult laws of Chapter 13. Filing a Chapter 13 without a lawyer is almost a guarantee of getting the case dismissed and based on your question (confusion) and who is advising you dismissal is very likely and that might have bad consequences for you and limit your options. So do yourself a big favor and call an experienced bankruptcy attorney in your area to see if you even need to be in C13 or if conversion to C7 and surrendering the house is a better choice. There might be other choices you have no idea exist! A short sale in your situation is good for the real estate agent but likely the only benefit for you is that foreclosure might be delayed and you can stay at the house free of charge longer.

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