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can I sell my house after bankruptcy - Yes I Pay Cash

Can I Sell My House After Filing Bankruptcy?

Bankruptcy is not a topic people often jump at talking about, probably because it often comes with a negative connotation. It’s like the unsightly mole nobody really wants to discuss or even acknowledge. However, understanding what it entails could actually lighten the load. There are plenty of folks out there wondering, perhaps you’re one of them – “Can I Sell My House After Filing Bankruptcy?”

Well, I’ll happily unravel this for you. So, let’s dive in, shall we?

According to statistics released by the Administrative Office of the U.S. Courts, annual bankruptcy filings in calendar year 2022 totaled 387,721, compared with 413,616 cases in 2021. The most common reason for homeowners to file for Chapter 7 bankruptcy is medical debt. Other common reasons include job loss, divorce, and unexpected expenses.

Generally, Chapter 7 bankruptcy allows homeowners to keep their homes if they can afford to pay their mortgages. However, they may have to pay off any arrears or other debts that are secured by the home. Filing for Chapter 7 bankruptcy can have a negative impact on a homeowner’s credit score, but it can also help them to get a fresh start financially.

What Is Bankruptcy?

Bankruptcy, simply put, is a federal court process that can help individuals and businesses eliminate or repay their debt under the protection of the bankruptcy court. To understand the implications of selling your house after filing bankruptcy, it’s quite important to grasp the basics of two major types of personal bankruptcy: Chapter 7 and Chapter 13 bankruptcy.

Chapter 7 Bankruptcy, also known as “liquidation bankruptcy,” is primarily for people with limited incomes who can’t pay back all or some portion of their debts. The bankruptcy trustee (the individual appointed to administer your bankruptcy case) will sell, or liquidate, your non-exempt property to repay your creditors.

As for Chapter 13 Bankruptcy, it’s designed for people with steady income who want to pay off all or some of their debt in manageable installments. It enables you to keep all your properties, including houses and cars while you make repayments under revised terms.

Below, I’ve included a table to help differentiate these two types of bankruptcy further:

Chapter 7

Chapter 13

Speedy process—usually takes a few months

Lengthy process—usually three to five years

Involves selling property to repay debts

Involves creating a plan to repay debts

An option when you have lower income

An option when you have regular income

Selling Your House Before Declaring Bankruptcy

Chapter 7

Continuing from where we left off, selling your house before filing Chapter 7 bankruptcy might not be the best idea. Now, let’s draw on that cute velvet painting you bought at a garage sale. Imagine that painting soared in value, and you sold it right before filing. You’d end up with quite a bit of cash, which your bankruptcy trustee could nab in a heartbeat to pay your creditors.

The same principle is applied to selling your house before filing bankruptcy. It’s crucial to have an in-depth conversation about the possible implications with a qualified attorney though. This advice may not exactly have the same effect as sipping on amaretto on a moonlit beach, but it’s essential.

Chapter 13

Chapter 13, is something of a different animal. This type of bankruptcy allows you to keep your property. However, selling it before filing may significantly increase your disposable income, which could impact your monthly payment plan. Imagine suddenly having your “light” dinner become a six-course feast—you’re “expected” to share more of your goods!

How to Sell Your House After Bankruptcy

Chapter 7

If we’re talking Chapter 7 bankruptcy, then here’s the kicker: you cannot sell your house without the bankruptcy court’s permission once you have filed. Just think of the court as a strict but caring parent that needs to know where you’re going, who you’re with, and what time you’re coming home—only replace all of that with every detail about selling your house.

In other words, all property you own, including your house, becomes part of the bankruptcy estate administered by the trustee. Sale proceeds might be used to pay off your debts. However, if your home’s equity is exempt (more on that later), you might keep some or all of the sales proceeds.

Chapter 13

Selling your house under Chapter 13 bankruptcy can be likened to walking your pet porcupine—delicate, full of potential prickles, but definitely doable. You also need permission—from the bankruptcy trustee and possibly the court—to sell your home while in Chapter 13 bankruptcy. Luckily, Chapter 13 is often the friendlier beast, allowing you to pay the money you receive from the sale to the bankruptcy repayment plan.

Selling a House Under Chapter 7 Bankruptcy Exemptions

Exemptions in bankruptcy? Yes, they exist. They’re like your grandma’s “famous” apple pie recipe—except everyone knows it, and it’s written in state or federal law! Exemptions are the selected possessions that you’re allowed to keep after going through Chapter 7 bankruptcy.

When it comes to selling your house under Chapter 7, exemptions are your little golden ticket. Each state has a homestead exemption that determines how much equity you can shield in a primary residence during bankruptcy. If your home’s equity does not exceed the exemption limit in your state, you, good sir or madam, may sell your home and keep the proceeds. Now, how about that for a silver lining?

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Sell Your House in Maryland Before Bankruptcy

Now that we’ve waded through the bankruptcy bog, let’s say: “Hello, Maryland!” If you’re finding yourself circling the bankruptcy drain, let’s chat about us, Yes I Pay Cash, and how we can throw you a life preserver.

We’re not only reliable but also deal with everything in a jiffy. We buy homes in any condition, so you don’t have to worry about making your house look like a page of the IKEA catalog. With us, you have the chance to sell faster. And let’s be real—who wouldn’t want to ditch financial burdens ASAP? Your house gets sold, we hand you cash without any delay, and you can lighten your debt load before ever stepping into bankruptcy court.

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Selling a House After Bankruptcy - Related Questions

What happens if I sell my house before filing for Chapter 7 bankruptcy?

If you sell your house before filing for Chapter 7 bankruptcy, the cash you get from the sale might have to be used to pay off your creditors. Doing this might not be in your best interest.

Can I keep my house in Chapter 13 bankruptcy?

Yes, you can. In Chapter 13 bankruptcy, you create a repayment plan and you can keep all of your property, including your house, as long as you stick to the plan.

Can I sell my house without the court's permission after filing bankruptcy?

No, you can’t. Once you file for bankruptcy, whether it be Chapter 7 or Chapter 13, you need to get permission from the court before selling your house.

What are bankruptcy exemptions?

Bankruptcy exemptions allow you to keep certain property after going through Chapter 7 bankruptcy. Your state determines these exemptions.

How does selling my house to 'Yes I Pay Cash' work?

No, selling your house during Chapter 7 Bankruptcy should not affect your ability to discharge other debts. The proceeds from the sale of your house are typically used to pay off creditors as part of the bankruptcy process. However, it’s crucial to consult with your bankruptcy attorney to ensure that the sale adheres to bankruptcy regulations and does not jeopardize your discharge eligibility.


Bottom Line: Selling a House After Chapter 7 Bankruptcy

Whether you’re already on the bankruptcy merry-go-round or you’re just contemplating jumping on, whether it’s Chapter 7 or Chapter 13, there’s no denying it can be a high-speed roller coaster ride. Selling your house during this time could either be a refreshing pit stop or one that adds a couple more loops to the track.

Let’s also remind ourselves of the unforgettable memory we made learning about exemptions, your bankruptcy “get out of jail free” card. So, before making any definitive decisions, please wrap up in this cozy reminder to consider all options and seek advice from an attorney.

Disclaimer: This article is for informational purposes only and should not be construed as legal or financial advice. Please consult with professionals for advice specific to your situation.

If you need to sell your house in Maryland after filing bankruptcy, contact Yes I Pay Cash today. We buy houses all throughout Maryland. You can reach us at (443) 200-4882 to get a fair cash offer or fill out the form below.

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Tariq Thomas

Tariq Thomas, has been a full-time real estate investor since 2002 and has personally flipped hundreds of properties. He is the founder and owner of Yes I Pay Cash - We Buy Houses. Tariq's goal is to help home sellers find the best solution for their real estate needs, whether that's selling their home quickly, getting top dollar, or avoiding the hassle of a traditional home sale.

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