Filing for bankruptcy can be a complex and stressful experience, especially when it comes to your significant assets like your home. A common question that arises during this process is, “Can I sell my house while in bankruptcy?”
The answer depends on the type of bankruptcy you file, but generally, selling your house during bankruptcy is not straightforward. How does this work and how a bankruptcy attorney can help you protect your home and other assets?
Understanding the Types of Bankruptcy
There are primarily two types of bankruptcy for individuals: Chapter 7 and Chapter 13.
- Chapter 7 Bankruptcy: This is a liquidation bankruptcy where non-exempt assets can be sold to pay off creditors. The process typically lasts a few months, and it’s more difficult to sell your home during this period since it becomes part of the bankruptcy estate managed by the trustee.
- Chapter 13 Bankruptcy: This is a reorganization bankruptcy where you repay your debts over a three to five-year period. You can usually keep your property, including your home if you comply with the repayment plan approved by the court. Selling your house is possible but requires court approval and adherence to the repayment plan.
Selling Your House During Bankruptcy
Selling your house while in bankruptcy is possible but requires navigating legal hurdles and obtaining permission from the bankruptcy court and trustee. Here’s what’s involved:
- Permission from the Court: In both Chapter 7 and Chapter 13 bankruptcies, you need court approval to sell your house. This involves filing a motion to sell and providing detailed information about the sale, including the sale price and how the proceeds will be used.
- Trustee’s Role: The bankruptcy trustee oversees your estate. In Chapter 7, the trustee’s goal is to maximize the return to creditors, which may involve selling non-exempt assets. In Chapter 13, the trustee ensures that the sale complies with your repayment plan.
- Exemptions: Exemptions play a crucial role in protecting your home. Federal and state laws determine what portion of your home equity is exempt from the bankruptcy estate. If your equity is fully exempt, you may have more flexibility in dealing with your home.
How a Bankruptcy Attorney Can Help
Navigating the sale of your house during bankruptcy is intricate, and here’s how a bankruptcy attorney can help you protect your home and other assets:
- Expert Advice: A bankruptcy attorney provides expert advice on whether selling your home is in your best interest and how it fits into your overall financial strategy. They can assess the impact on your bankruptcy case and advise on timing and legal requirements.
- Maximizing Exemptions: An attorney can help you maximize the use of exemptions to protect as much equity in your home as possible. They understand the nuances of federal and state exemption laws and can strategically apply them to safeguard your assets.
- Handling Legal Filings: Selling your home requires precise legal filings, including motions and documentation for the court and trustee. An attorney helps you complete and submit bankruptcy paperwork, reducing the risk of errors jeopardizing the sale or your case.
- Negotiating with the Trustee: If the trustee objects to the sale or if there are disputes, your attorney can negotiate on your behalf, aiming to reach an agreement that allows you to proceed with the sale while protecting your interests.
- Compliance with Repayment Plan: In Chapter 13 bankruptcy, an attorney ensures that the sale of your home complies with your repayment plan. They help you understand how the proceeds should be used and assist in modifying the plan if necessary.
- Protecting Other Assets: Beyond your home, a bankruptcy attorney helps protect other assets by strategically using exemptions and guiding you on permissible transactions during bankruptcy.
Should You Sell Your Home in Bankruptcy?
Selling your house while in bankruptcy is a complex process that requires careful legal navigation. While it’s possible, especially with court approval and proper legal handling, it’s not straightforward. A bankruptcy attorney is invaluable in this scenario, offering expertise in maximizing exemptions, handling legal filings, negotiating with the trustee, and ensuring compliance with the bankruptcy plan. With their guidance, you can protect your home and other assets, making the bankruptcy process more manageable and less stressful.
If you’d like to learn more about how bankruptcy affects your home or other assets, contact the Law Offices of Robert M. Geller at (813) 254-5696 to schedule a free consultation with an experienced attorney.