Selling A House in Chapter 13 Bankruptcy
While many people use chapter 13 bankruptcy to save their house and avoid foreclosure, the reality is that sometimes you may find yourself in a situation where you need to sell your house after you’ve filed for Chapter 13 bankruptcy.
You may have questions like:
Can I sell my house in bankruptcy?
Can I lose my house if my bankruptcy is dismissed?
What happens if my house isn’t covered by bankruptcy?
In this post, we’re going to talk about these issues and ensure that you understand your options if you want to sell your house fast while still in Chapter 13 bankruptcy.
Can I Sell My House During Chapter 13 Bankruptcy?
Even if you’ve filed for Chapter 13 bankruptcy and your home is under its protection, you still have the option to relinquish your house and move on, despite the ongoing bankruptcy proceedings. There are many reasons you might want to sell your house that is protected by Chapter 13 bankruptcy protection.
Financial Relief
Keeping up with a home and all of the costs that come with it while managing an expensive bankruptcy payment can be a massive burden. Selling the house can provide some immediate financial relief and help you repay your debt more easily.
Reducing Your Debt Repayment Plan
The proceeds from selling the house can be used to pay off a large portion, or even all of the bankruptcy repayment plan. This could clear your bankruptcy altogether or shorten the duration of the payments and process.
Avoid Losing Bankruptcy Protection
The high monthly payment that typically comes with a Chapter 13 bankruptcy settlement can often be a struggle. Sometimes selling a house that is protected by Chapter 13 bankruptcy is a last resort to avoid losing the bankruptcy protection altogether.
Lifestyle Changes
There can be personal reasons for wanting to sell a house that is covered by bankruptcy protection. For example, downsizing, moving for a job, family reasons, or simply wanting a new start.
Home Needs Too Many Repairs
If the house requires extensive repairs or renovations, the cost could be prohibitive, especially during bankruptcy. Selling the house as-is can save the homeowner from sinking further into debt, while also eliminating the stress and time involved in managing the repairs. Many cash home buyers, like Capstone Homebuyers, buy properties in any condition, providing a hassle-free solution for homeowners in this situation.
Will I Lose My House If My Chapter 13 Is Dismissed?
If your home is no longer protected by Chapter 13 bankruptcy, it’s possible that you could lose your home if you lose your protection. This typically happens if your bankruptcy is discharged and your home was being temporarily protected by bankruptcy from creditors such as your mortgage company and you were facing an upcoming foreclosure.
If the county is seeking to collect a property tax debt, your home might also be at risk. However, it’s crucial to remember that you still have time and options available to you. But be aware, as time is of the essence. As the clock ticks, your window of opportunity narrows, potentially limiting your choices. Acting promptly will ensure you have the broadest range of alternatives to navigate this situation.
Consider selling your home as a strategic alternative to losing it to creditors should bankruptcy protection be lifted. This proactive step not only puts you in control but could also provide you with the means to settle debts and start afresh.
When it comes to selling your house fast to avoid losing it due to bankruptcy protection removal, you do have a few options at your disposal.
First, you have the option of listing the house for sale with a realtor. This process can be a little bit longer and more drawn out though and may not be the best option given the fact that you have a limited amount of time.
Many people consider selling their house to a neighbor or family member. While selling your house to a neighbor or family member may appear convenient, it’s crucial to remember that this may not necessarily be your best option. There can be timing issues as well as possible financing issues that could put you in an even more difficult situation if problems with the sale arise.
You also have the option to sell the house to a local real estate investor. This can be a great option because local “We Buy Houses” investors can purchase with cash and close quickly offering a guaranteed sale as a solution. While choosing to sell your home to a real estate investor can be a great option, it must be done with care.
When selling your house for cash to an investor, it’s critical to ensure the investor you’re considering has a strong track record with bankruptcy situations and can act swiftly, given your impending foreclosure deadline. While there may seem to be an abundance of appealing options, the selection of a suitable investor should not be taken lightly. It’s recommended to opt for an investor with high-quality reviews, an A+ rating on the Better Business Bureau, and a reputable standing in the community.
Capstone Homebuyers fits these criteria perfectly. With our extensive experience in dealing with bankruptcy house selling scenarios and our ability to expedite purchases, we stand ready to assist you. Our impeccable reviews and stellar reputation in the San Antonio, TX community underscore our commitment to helping homeowners navigate through tough times. Trust Capstone Homebuyers – we’re here to help.
Understanding the Process of Selling Your House During Chapter 13
Once you decide to sell your house while you’re in Chapter 13 bankruptcy, you must first find a buyer. As we mentioned, this can be done by going the traditional route with a realtor, by selling your house to a house-buying company or a company that buys houses, or you can sell your house for sale by owner. Each of these options has its own benefits and drawbacks when selling during a bankruptcy.
For example, selling your house with a realtor often helps you get the most money possible from the sale of your house, there could be challenges going through the bankruptcy court when dealing with real estate agents and buyers who aren’t familiar with the process of buying a house from bankruptcy. Honestly, most agents haven’t bought or sold a house from bankruptcy and are often uncomfortable in navigating the process of dealing with the bankruptcy court and all of the motions that are required to sell your house.
Selling your home to a local cash investor comes with many of the pluses of selling your house in a bankruptcy such as dealing with a knowledgeable buyer who will handle the entire process for you however there is the drawback that you may not get as much money for your house as you would like. However, if your house is in need of any type of repairs or if your house isn’t in move-in ready condition a good real estate investor will buy your house for market value.
Once you have found a buyer and agreed on a sales price you must submit a motion to the bankruptcy court requesting approval to sell your home. This involves filing a motion with the court and giving all parties involved in your bankruptcy, your creditors, trustee, and even the judge overseeing your case, the opportunity to review and object to the sale.
From our experience, it’s extremely rare for there to be any objection to the sale of a house during a bankruptcy. All the players involved are generally aware that the sale of the home is a good thing because it will lead to more of the debt being repaid.
After this, a hearing will be set and the bankruptcy judge will approve the sale. The judge will make sure that the house is being sold for a reasonable price and not being given away for less than it’s worth.
Your Path Forward with Chapter 13 and Home Selling
Filing for Chapter 13 bankruptcy doesn’t necessarily mean that selling your home is off the table. On the contrary, selling your home could provide much-needed financial relief, help expedite the repayment of your bankruptcy plan, prevent loss of bankruptcy protection, allow for lifestyle changes, or mitigate the potential stress and cost of needed home repairs.
We’ve walked through the options of listing your house with a realtor, selling to a neighbor or family member, or selling to a local real estate investor. While each has its own potential benefits, the speed, certainty, and expertise of an investor like Capstone Homebuyers stand out, especially when dealing with bankruptcy scenarios.
Lastly, we’ve outlined the steps of selling your home during Chapter 13, with a reminder that navigating this process doesn’t have to be done alone. Choosing Capstone Homebuyers means choosing a partner that works with your bankruptcy attorney to manage all aspects of the sale swiftly and efficiently.
When you’re facing the complicated crossroads of Chapter 13 bankruptcy and selling your home, remember Capstone Homebuyers is here, ready to guide you, every step of the way.
Disclaimer: This article does not constitute legal advice. It’s recommended to consult with an attorney who specializes in bankruptcy law before making any decisions.
