Can I Sell My House During a Chapter 13 Bankruptcy?

Filing for Chapter 13 bankruptcy and going through the bankruptcy process involves more time than some debtors realize. Indeed, Chapter 13 repayment plans typically have a time frame of three to five years, which means that your bankruptcy case will be open (and you will be making monthly payments) during that period of time. Yet a debtor’s situation and circumstances can change over time, and original plans to catch up on mortgage payments and to remain in a home might be different after a year or more. If you decide you want to sell your home during your Chapter 13 bankruptcy case — while you are making payments on your repayment plan — can you sell your home? It may be possible to sell your home, but you will need to take certain steps in order for this to be feasible. Our West Palm Beach bankruptcy lawyers can say more.

Understanding What Happens to Your Home in a Chapter 13 Bankruptcy 

When a debtor files for Chapter 13 bankruptcy, their real property will become part of the bankruptcy estate. What this means is that the bankruptcy trustee will be the one who will make any major decisions concerning your real property while your bankruptcy case is ongoing and while you are making payments as part of your repayment plan.

To be clear, many debtors file for Chapter 13 bankruptcy in order to stop foreclosure, catch up on mortgage payments, and remain in their home. This is one of the major benefits of a Chapter 13 bankruptcy case. Yet it is important to understand that, during the time of catching up on payments through the terms of the repayment plan, the bankruptcy trustee will have significant control over the home.

How to Sell Your Home During Your Chapter 13 Bankruptcy Case 

What does the bankruptcy trustee’s general control over your property in a Chapter 13 case mean for you in terms of selling your house? In order to sell your home, you will need permission to do so from the trustee and ultimately the bankruptcy judge. Accordingly, if you want to sell your home during your Chapter 13 bankruptcy case, you will need to go through a number of steps.

First, you will need to file a motion to sell your property. In the motion, you will need to provide detailed information about the property and the proposed sale, including the appraised value and sale price, information about the purchaser, and more. In general, you will also need to provide information about how profits from the sale of your home will be distributed. If the trustee approves of your plan, then the bankruptcy judge will need to agree to the motion to sell before the property can be sold. Once the property is sold, any necessary revisions to your Chapter 13 plan (based on the sale of the house) must be made.

Contact Our West Palm Beach Bankruptcy Attorneys Today 

Debtors in Florida file for Chapter 13 bankruptcy for a wide range of reasons. Given the longer length of a Chapter 13 bankruptcy case, a debtor’s circumstances can change during the course of the bankruptcy case. Indeed, as we have discussed, at some point in the three to five years during the Chapter 13 repayment period, a debtor may realize that their situation has shifted and they need to sell their home. It is possible to do so, and you should discuss the specific details of your case with an experienced West Palm Beach bankruptcy attorney at Kelley, Fulton, Kaplan & Eller. Contact our firm today to receive assistance with any questions you have about Chapter 13 bankruptcies in South Florida.

Sources:

uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics

flsb.uscourts.gov/local-rule/sale-property