If you're in Chapter 13 bankruptcy and you want to sell your home, there are few things you need to know before you proceed:
- The bankruptcy court must approve the terms of the sale before a debtor closes on the property.
- The debtor's bankruptcy attorney must notify all of the creditors in the bankruptcy before the property is sold.
- You and your bankruptcy attorney must disclose the details of the proposed sale to both the creditors and the bankruptcy court before you can proceed. Those details should include, the home's sale price, proof of the property's current value and the details of how the proceeds from the sale will be disbursed to the creditors. That takes us to our next point.
- Your bankruptcy attorney must provide the bankruptcy trustee and creditors with a detailed account of all deductions made and profits earned from the sale of the home. All proceeds from the sale of your home during Chapter 13 bankruptcy become part of the bankruptcy estate and must be paid directly to the bankruptcy trustee. The bankruptcy trustee will then disburse the proceeds from the sale to the creditors.
Can I Sell My House While in Chapter 13?
It is possible that after selling your home in Chapter 13 bankruptcy you will not see any of the proceeds of the sale. The question then becomes, should you sell your home during Chapter 13 bankruptcy? Well, it depends. If it is your primary home and you can afford the payments it may not be a wise decision. However, if it is a second property that you are struggling to pay for, it may be wise to proceed.
But before you sell any property, work with your bankruptcy attorney to create an effective plan. A matter of fact, you should create a plan with the help of your bankruptcy attorney before you file.
If you would like a free consultation from a bankruptcy attorney feel free to contact us today.