Your house and all of your other belongings become a part of the bankruptcy case after you file for bankruptcy. Because it is protected by bankruptcy protection, your creditors cannot foreclose on your property, but you are unable to sell it without the bankruptcy court’s express consent. The trustee may, though, request a court order before selling your house to pay off your debts.

Chapter 7 Versus Chapter 13 Bankruptcy

Selling a house is challenging after a Chapter 7 bankruptcy (asset liquidation). You must first get the court’s permission to sell before you may do so. The court must also give its approval before the court-appointed trustee can sell your house in order to pay creditors.

In a Chapter 13 bankruptcy (reorganization), you are allowed to keep your home or sell it if doing so will benefit you while not harming your mortgage lender financially. While under Chapter 13, you must nonetheless obtain the trustee’s approval before you may sell or refinance your house.

Can I Still Keep My House After Declaring Bankruptcy? 

Theoretically, a person going through bankruptcy should sell off any unnecessary possessions in order to pay off their debts. However, the goal of bankruptcy is to provide you a financial head start without utterly uprooting you. The type of bankruptcy you file for and the amount of equity in your property are important determinants of your chances of keeping your home while you’re going through bankruptcy.

Compared to Chapter 13 exemptions, the exemptions for selling property under Chapter 7 have a lower maximum and less flexibility. It is considerably more likely that you will be able to keep your house if you file for Chapter 13. There are several circumstances, though, in which filing for Chapter 7 bankruptcy will still allow you to keep your home. State and federal laws may have different exemptions. It’s crucial to research the exemptions that your home state provides.

Can I Sell My Home While Filing for Bankruptcy?

In some cases, selling your home when filing for bankruptcy is possible. When you decide to sell the house and the type of bankruptcy you file will have a significant impact on the procedure. The requirements for selling a home in each of the following three broad bankruptcy scenarios are listed below:

1. Selling Your Home Prior to Filing for Chapter 7 or Chapter 13 Bankruptcy
   
   

You must be careful not to come across as dishonest if you decide to sell your home before declaring bankruptcy. If the property is exempt, selling it won’t have any repercussions. However, you must proceed cautiously if you decide to sell your home before declaring bankruptcy. Selling the property in an effort to avoid paying back debt could result in punishment. Selling nonexempted property just before declaring bankruptcy is only permitted if necessary to raise funds for necessities.

Selling Your Home After Filing for Chapter 7 Bankruptcy

A trustee is chosen as the official owner of all of your assets the moment you file for Chapter 7 bankruptcy. You are legally prohibited from making any changes to your property without the trustee’s or bankruptcy court’s approval. The trustee has the right to your property up until the case is resolved, even if they decide that your house qualifies as an exemption. In a Chapter 7 bankruptcy, you must first get the court’s permission before you can sell your home.

By submitting a Motion to Sell Real Property, this can be done. The formal motion must contain essential details including the selling price, the mortgage lender, and a thorough explanation of what you intend to do with the sale’s earnings. You’ll probably need to quickly invest the selling funds into another residential property if you want to keep them.

1. Selling Your Home After Filing for Chapter 13 Bankruptcy

With this type of bankruptcy, your assets are still in your ownership. While filing for Chapter 13 bankruptcy, you are still permitted to sell your house, but doing so will require a lot of paperwork and require the trustee’s final approval. In order to submit a motion to sell your home during a Chapter 13 bankruptcy, you need let your lawyer know as soon as possible whether you intend to sell your home.

If you are considering filing for bankruptcy and need to sell your house, it is critical that the procedure be simple and quick so you can move on to the next phase of reducing your debt. Phoenix Rising is committed to assisting homeowners in all circumstances. We can offer quick closings on a day that suits you the most. Call us at (number) today to get a free, no-obligation cash offer!

Sources:

https://www.pavelbuyshouses.com/blog/how-to-sell-your-house-while-going-through-bankruptcy/

https://homeguides.sfgate.com/best-air-purifying-plants-13771628.html