CAN I SELL MY HOUSE WHILE IN BANKRUPTCY?
Many people do not realize that they can sell their home while they are still in a Chapter 13 bankruptcy.
You will want to start by finding someone to put the house on the market. Once you have an interested buyer, then the realtor will draw up a contract between the buyer and the seller. Once this is done, you will need to contact your attorney’s office, so they can forward this information on to the trustee. The trustee will give you approval to sell your home and in the same letter it will also state anything that may need to be done, for example; the proceeds you receive may be used to payoff the bankruptcy.
If you are trying to sell real property that is not your homestead, then it must be dealt with a little differently. We will still have to have the contract between the buyer and the seller, but now we have to file a motion to sell non-exempt property. There are attorney fees associated with this, so make sure that you consult your attorney for those fees. The hearing will take about 30-45 days to be heard before the Judge. If there are no objections then the attorney is able to upload the order and put any explanations that the trustee may want in there. Again the example of putting “x” amount of dollars towards your bankruptcy.
If you are in a Chapter 7 bankruptcy you do not have to get permission, however, you need to wait 30 days after your meeting of creditors meeting. The reason for this is that that is the deadline the creditors have to object to your exemptions. If there are no objections filed by then, you don’t have to do anything but proceed to selling.
But remember regardless if your file bankruptcy or not if your house is not sold before the foreclosure date, you will still have on your credit the "Foreclosure". Regardless of the circumstances, a "Foreclosure" will stay with you for a minimum of 10 years with no forgiveness. With my research I have found that in pattern it goes, Short Sale, Bankruptcy then Foreclosure. Short Sale having the ability to repair your credit within a 1-2 year term depending on the extent that you put into it. A "Bankruptcy" is a minimum of 3 years, if you are looking to repurchase a home within the next 3 years, DON'T, but that doesn't mean that you shouldn't repair in the meantime. Though lenders have lock down on allowing any loans to be released to anyone with a bankruptcy less than 3 year it does not mean that after those 3 years, you won't be able to purchase again, so make sure to continue to clean up your credit and bring up your scores, as you still have hope for a bright future. And then of course there is the "Foreclosure" as I've talked about at the begining of this paragraph, once there it cannot and will not be removed under any circumstance regardless of the effort that you put in to make it go away. Remember though regardless of the reason, this DOES NOT mean to throw everything away and not pay your bills because regardless in life there is always a situation that comes about that someone squeezes through the cracks and gets a break, and if you keep everything else in good standing, with the exception of the "Foreclosure", you never know you may be that one who slips through and is still allowed a new mortgage loan regardless of the past, but if you don't make sure you try your hardest you'll never have the chance to find out if you could of been.
NOTE: All divisions of bankruptcy may be different, so make sure that you consult your attorney before making any decision to move forward, and make sure to ask your attorney specific questions so you get the right answers!