Many people who enter bankruptcy worry that they will lose their home. Since the intent of bankruptcy is not to leave you destitute, you stand a good chance of holding on to your house. But what if you have petitioned for Chapter 13 bankruptcy and you want to go ahead and sell your home?
You may have been planning to put your house on the market for a while and see bankruptcy as an opportune time for it. According to SFGate.com, it is possible to sell your home while going through Chapter 13. However, you will have a lot of work ahead and you must take your trustee and other factors related to bankruptcy into consideration.
Informing parties about your bankruptcy
If you are going to sell your home, your trustee must approve it first. Your attorney should give notice to your trustee and prepare the paperwork for your trustee, which will include a motion to sell document that contains your home sale price and the appraised price of your property. You must also inform your real estate agent and possible buyers that you are in Chapter 13.
What you will keep from the sale
Some of the money you receive from the sale will likely go towards repaying your creditors. Even so, many home sellers in bankruptcy can still use proceeds to pay closing costs and the remaining mortgage. You will need to propose how you want to distribute the money you earn from your sale in your motion to sell document. Your trustee will determine if your plan has merit before approving the sale.
Your sale and your creditors
Be aware that your creditors might become an obstacle to your sale. As part of Chapter 13, you must come up with a repayment plan that should satisfy your creditors. If one or more of them have a problem, they can object to it. Similarly, your creditors may object to your home sale if they feel they will not benefit from it. However, an acceptable distribution plan in your motion to sell document should ward off creditor concerns and keep them from delaying your sale.