Can You Sell Your House While You Are a Debtor in Chapter 13?
What will happen when you need to sell your house for some reason (you need to move, downsize or for any other reasons)? A current question is: Can I sell my house if I am a debtor in Chapter 13 bankruptcy? The answer is yes, you can sell your house while you are in Chapter 13.
Chapter 13 vs. Chapter 7Chapter 13 bankruptcy is bankruptcy proceeding where you reorganize your debt; you create a payment plan under the supervision and approval of the Court. One of the primary benefits of Chapter 13 bankruptcy is that it often allows you to keep your assets, for example, your house that you might lose in Chapter 7 bankruptcy. You will use future income to make the payments. This option is usually preferred by those who are interested in keeping their non-exempt property intact or who want to buy time against property seizures or foreclosures.
Selling your house while in Chapter 13To sell your house while in Chapter 13 you will need a competent bankruptcy attorney who will assist you with all the necessary steps, as they relate to the Bankruptcy Court and the Chapter 13 Trustee.
First, you need an initial consultation with your lawyer to understand your situation and develop a personalized plan. Your lawyer will need to prepare a motion to sell the property and schedule a hearing before your judge. Give your lawyer plenty of time to prepare the documentation and complete the necessary steps.
Normally it takes a couple of weeks to get the hearing. You choose a real estate agent who must then be approved by the Bankruptcy Court. The Bankruptcy Court doesn't care which real estate agent you hire. The Court wants to make sure the agreement between you and the realtor is fair to both parties. Your bankruptcy attorney will submit the purchases contract to the Bankruptcy Court for its approval once you have a purchase contract for your property.
You can expect a discharge of your Chapter 13 after the sale if your house sale can pay off your repayment plan. If your house is worth more than you owe, Chapter 13 bankruptcy can help you protect your assets while reorganizing your other debt. You will need a competent and skilled bankruptcy attorney who knows how to protect your assets and who can assist you with all the necessary steps.