If you own a home when you file for bankruptcy, it becomes part of the bankruptcy estate, the property or assets you own. In October of 2022, there was a twenty-seven percent increase in chapter 13 bankruptcy filings over the previous year. Bankruptcies, including all chapters, total a seven percent increase overall, which correlates strongly with the seven percent increase in inflation. Many homeowners are overwhelmed by their debt. As financial issues due to circumstances beyond their control changed their ability to pay creditors, they find they have no option but to claim bankruptcy, which can stop a foreclosure on their primary residence.
It is generally possible to sell a property while you are in bankruptcy proceedings, but the process may be more complex than a typical sale. If you are in a Chapter 7 bankruptcy, which is a liquidation bankruptcy, you may need to get permission from the bankruptcy court before you can sell your property. This is because the bankruptcy estate, which includes your assets, is being managed by a bankruptcy trustee who is responsible for collecting and selling your assets in order to pay your debts. If you are in a Chapter 13 bankruptcy, which is a repayment plan bankruptcy, you may also need to get permission from the bankruptcy court before you can sell your property, depending on the terms of your repayment plan.
It is important to consult with your bankruptcy attorney and the bankruptcy trustee if you are considering selling your property while you are in bankruptcy. They can help you understand your options and the steps you will need to take in order to complete the sale. It may also be helpful to work with a real estate agent or broker who has experience in working with sellers who are in bankruptcy proceedings. They can help you navigate the process and ensure that the sale is handled properly.
While the rules for the process may differ for the type of bankruptcy you file under, and many factors influence the final determination, for most homeowners, the short answer is yes. So read on as we explore how to sell your house during bankruptcy in Louisiana. Please note that this article is for informational purposes, not financial or legal advice.
Court Permission
You’ll need to file a motion with the court for leave to sell real property or approval to sell your house during bankruptcy in Lafayette LA. You will want to include the selling price, your plans for the proceeds, and names of creditors holding liens on the property. This motion allows your creditors and any trustee to object, with the court determining the disbursement of any funds.
Contingency
In a traditional sale, you’ll need to add a contingency clause to the contract to sell your house during bankruptcy in Lafayette LA, stating that the sale is contingent upon obtaining bankruptcy court permission. However, under chapter 7, the trustee may determine to sell the house if your home has high unprotected equity under your bankruptcy exemption. With the funds, the trustee pays any secured debts like the mortgage, provides you with the exempted amount you are entitled to and then satisfies any unsecured creditors with a pro ratio share of any remaining funds.
Proceeds
If you sell your property while you are in bankruptcy proceedings, the proceeds from the sale will generally be used to pay your debts and any other expenses related to the bankruptcy case. The specific distribution of the proceeds will depend on the type of bankruptcy you are in and the terms of your bankruptcy plan.
In a Chapter 7 bankruptcy, the proceeds from the sale of your property will generally be used to pay your unsecured creditors, in accordance with the priorities established by the bankruptcy code. Any remaining proceeds will be distributed to you, the debtor. In a Chapter 13 bankruptcy, the proceeds from the sale of your property will generally be used to pay your secured creditors, such as your mortgage lender, and then to pay your unsecured creditors, in accordance with the terms of your repayment plan. Any remaining proceeds will be distributed to you, the debtor, once you have completed your repayment plan.
It is important to consult with your bankruptcy attorney and the bankruptcy trustee if you are considering selling your property while you are in bankruptcy. They can help you understand the distribution of the proceeds and any other impacts on your bankruptcy case.
Planned Payments
Under chapter 13, if you sell your house during bankruptcy in Lafayette LA, you will need to modify your planned payments. Depending on the realized sale value, you may pay your plan off earlier as the proceeds go directly towards the bankruptcy.
Itemized Payoff Statement
To ensure no fees remain to surprise you after you sell your house during bankruptcy in Lafayette LA, you should request an itemized payoff statement.
Cedar Home Buyers
Don’t hesitate! With competition still driven by low supply and rising interest rates on the horizon, now is the time to cash in on your house, and the best way to sell your house during bankruptcy in Lafayette LA is to sell directly to the cash investors at Cedar Home Buyers. Our policy at Cedar Home Buyers is full transparency through every step of the process because we want you to decide which sales method works best for your situation. To that end, a cash investor from Cedar Home Buyers will detail your expenditures and potential profits from a conventional listing with an agent, vs. our offer, which you’ll agree is fair. At Cedar Home Buyers, we do this because we are your neighbors here in Lafayette LA, we care about our community and the people in it, and we want you to feel good about working with us long after the deal is closed.
The seasoned pros at Cedar Home Buyers have experience with sellers going through bankruptcy and have the solution you seek, providing you with a guaranteed closing date, charging no commissions or closing costs with no unpleasant surprises. If you’d like to avoid the work and out-of-pocket costs of prepping your house to list on the Lafayette LA real estate market, a direct sale to the cash investors at Cedar Home Buyers is the solution. The cash investors at Cedar Home Buyers never charge commissions, and there are no hidden fees. So you can put your wallet away and relax; you won’t even need to worry about showings when you make a direct sale to a cash investor from Cedar Home Buyers. For a no-hassle sale of your home during bankruptcy: a cash investor from Cedar Home Buyers will buy your house directly, as-is, for cash. Call Cedar Home Buyers at (337) 420-0375.