Sometimes, financial hardships occur, leaving homeowners wondering if filing for Chapter 13 is the solution to their problems. This option may provide some financial relief, but it’s not without its drawbacks. As such, you may want to ask questions like “Can I sell my house during bankruptcy?” before initiating the process.
If you need to sell your house fast in Glen Allen, VA, during bankruptcy, our experts at The Red Door Guys can help. Consider our guide below to learn more about what you could expect when managing a home sale under Chapter 13.
What You Should Know About Selling Your Home During Chapter 13 Bankruptcy
People may file for Chapter 13 once they learn how it works. With this kind of bankruptcy, you may have money to pay some of your debt, but not all of it.
Your bankruptcy trustee will arrange a repayment plan with your creditors and equity exemptions prevent all of your home equity from going to creditors. That’s why homeowners often choose Chapter 13 bankruptcy over Chapter 7; you can keep your home.
However, you might consider putting the property up for sale if you’re still struggling with your mortgage payments. So the answer to “Can I sell my home during bankruptcy?” is yes. Here’s what you should know about that process.
You Need the Bankruptcy Court’s Approval
To initiate the sale, you must hire a bankruptcy attorney and seek court approval. A bankruptcy judge must agree to the terms of the sale, ensuring it aligns with your repayment plan.
People Can Object to the Sale of Your Home
A judge isn’t the only person who could deny a home sale during Chapter 13 bankruptcy. Unless the sale allows for 100% repayment, your creditors and trustee could block the sale. They can also prevent you from purchasing new property.
You Must File Specific Documents With the Court and Your Creditors
Selling a home during bankruptcy requires a lot of paperwork. Two documents your attorney will file on your behalf are the Motion to Sell and the Statement of Sale.
When filing the Motion to Sell, expect to disclose the following information about the sale:
- The house’s sale price
- Property appraisal amount
- A detailed sales proceeds distribution plan
The Statement of Sale outlines the deductions and profits for your home sale. It contains information about closing costs including the amount of money that goes to your lender and the remaining funds.
The Proceeds of the Sale May Not Go to You
Your creditors and trustee will receive their payments first if you get permission to sell your property. If the sale pays off your plan in full, the bankruptcy gets discharged.
Sell Your House Fast During Bankruptcy With a Cash Sale
If you’re asking, “Can I sell my house during bankruptcy?” The answer is yes.Red Door Guys is a cash home buyer serving Chester and Central Virginia. We purchase residential properties in as-is condition for cash, regardless of the homeowner’s circumstances.
Avoid common house-selling mistakes by partnering with a knowledgeable buyer with experience working with bankruptcy-related home sales. Call (804) 395-7355 today for your fair cash offer!
