People declare bankruptcy when they are in financial difficulty to give themselves a fresh start. Selling your home under Chapter 7 or Chapter 13 bankruptcy can be troublesome without the facts. However, once your case is closed, you can sell your assets, such as your home. Keep in mind that there are certain conditions to every individual case that should be reviewed before trying to sell your home after bankruptcy.
Selling your home under Chapter 7 bankruptcy
Filing for Chapter 7 bankruptcy allows your assets to be controlled by the court. This control simply means that you will need the court’s permission should you ever decide to sell your possessions, including your home. However, in many cases, the court will call for a home sale as a result of filing for bankruptcy. This order usually happens when the house is considered a significant asset. The money from the sale will then be used against some debts.
Some people are entitled to a homestead exemption, but it depends where your home is located. This exemption protects some equity from creditors under the Chapter 7 bankruptcy. If the total amount of your mortgage loan and your exemption combined exceeds the estimated value of your home, the court may not order a sale. You can ask for the court to “abandon” your house due to the fact that it offers no value to your bankruptcy estate. In this case, you can sell your home whenever you choose, even if the case has not closed.
Selling your home under Chapter 13 bankruptcy
The debtor keeps control of the property in Chapter 13 bankruptcy. In this case, the debtors can list the house and sell it during the time in which debts are being paid. However, any offer that is accepted is conditional. The court must first approve the sale of the home. A lawyer needs time to file the motion and liaise with the court. After this process is finished, the court might declare that the debtor must use some or all of the earnings from the sale to pay debts.
Selling your home after closing your bankruptcy
Once the court closes your bankruptcy, you can sell any possessions that you still have. This closing or discharge of bankruptcy usually happens after 3 – 6 months, but every case is different. The court can make certain conditions that you must adhere to. These conditions, such as clearing any liens, might cause the selling of your house to be delayed significantly.
Your credit report will display your bankruptcy for up to 10 years and it will negatively affect your credit score. After your bankruptcy has closed, some mortgage lenders might prevent you from taking out any new mortgage for up to four years. The Federal Housing Administration (FHA) will allow you to take out a new mortgage two years after bankruptcy, but only for those with reestablished good credit.
For more information on selling your home after bankruptcy, contact the Elite Real Estate Group in Amarillo. Give us a call today at (806) 337-0883 or Contact Us via email. You can also view our listings to see the homes we currently have available in the Texas Panhandle area.