Can You Sell Your House During Bankruptcy?

Can you sell your house during bankruptcy? Bankruptcy real estate sales are possible, but they are always subject to the bankruptcy court’s approval. 

Read below for general information about selling property subject to an ongoing bankruptcy court proceeding from Simply Sold. We buy houses in Syracuse, NY, in any condition for cash, so long as the sellers can legally convey the title at closing. 

Types of Bankruptcy and Selling Your Home

The rules involved in selling real estate vary depending on the type of bankruptcy case involved.

In a Chapter 7 property liquidation case, the trustee usually oversees the sale of assets to pay off creditors. In a Chapter 13 asset management case, the court usually allows debtors to present plans to reorganize their debts for repayment over three to five years. 

A home sale under bankruptcy protection requires bankruptcy trustee approval. The trustee protects the interests of certain debtors and ensures compliance with some specific bankruptcy code requirements. 

What Happens to the Proceeds?

The bankruptcy court also determines what will happen with the proceeds upon approving the sale. 

Generally, under a Chapter 7 case, any proceeds left over after paying a mortgage go to the trustee to benefit unsecured creditors. 

In Chapter 13 cases, the trustee uses the proceeds to pay down other debts and potentially reduce your repayment plan. 

The Process of Obtaining Court Approval for Selling Assets During Bankruptcy

Can you sell your house during bankruptcy? The bankruptcy court must approve any sale of significant assets, including your home. 

The steps involved generally include:  

• Consultation with your attorney. Work directly with your attorney to discuss your desire to sell real property and determine whether you can qualify under bankruptcy law. 
• Petition for court approval. Your attorney will file paperwork that provides notice of your plan to all interested parties. If an agreement for a proposed consent order is not reached, you may need to attend a court hearing.
• Obtaining a property appraisal. You may have to obtain and provide an independent appraisal of the property’s value.
• Set closing after court approval. You can schedule a closing after receiving legal approval. 

Important Legal Considerations

Even though there are legal processes available in bankruptcy cases for selling real estate, the process is complex and often involves complicated legal issues. Additionally, the exemptions that could allow you to keep part of the proceeds from a home sale vary from state to state. 

We want this post to be informative, but it is not legal advice. Always consult directly with your attorney for independent legal advice about the process involved in selling real estate subject to a bankruptcy case. 

Simply Sold Can Help You Sell Fast

Can you sell your house during bankruptcy? Now that we’ve looked at parts of the process of obtaining court permission to sell property under bankruptcy protection, you can work with top home buying company Simply Sold to make a fast and free cash offer for your property for closing upon lifting legal restrictions. 

Call Simply Sold at (866) 408-4952 or contact us online for a cash offer for your real estate.