Once you file for bankruptcy, everything you own becomes part of the case. Your creditors can’t foreclose your house because it’s under bankruptcy protection, but you can’t sell it without permission from the bankruptcy court. However, the trustee can ask the court to sell your home to pay your debts.
If you’re asking, “How do I sell my Texas home in bankruptcy?”, read on to learn more how you can navigate this difficult time.
What Type of Bankruptcy Did You File?
Bankruptcy law in Texas allows you to file one out of two bankruptcy chapters—Chapter 7 and Chapter 13.
When you’re in Chapter 7 bankruptcy (liquidation of assets), it’s hard to sell your house. To sell, you must first get court approval. If the court-approved trustee wants to sell your home for creditors, he has to get court approval.
On the other hand, Chapter 13 bankruptcy (reorganization) lets you keep your house or sell it if you benefit, but without causing financial harm to your mortgage lender. However, you still need the trustee’s permission to sell or refinance your home while in Chapter 13.
When You Want to Sell
If you want to sell your house, you’ll need to file a Motion to Sell Real Property with the bankruptcy court. The formal motion must have all the details, including the selling price and creditors with liens on the property. You’ll also need to tell the court what you’re going to do with the sale proceeds.
Trustee Sale Approval
A court-appointed trustee may think that selling a house is the best way to satisfy creditors. The trustee must provide all relevant information about the property, including how the proceeds will be distributed. In addition, the trustee has to convince the court that this sale won’t hurt the bankruptcy petitioner too much. Almost all states allow some or all of a home’s value to be protected as “exempt” property, limiting the chance of a trustee-requested sale.
Owner-Occupied or Investment House
Your owner-occupied house has bankruptcy protection from a court-ordered sale, but investment properties don’t. Chapter 7 bankruptcy may let you keep your primary residence, but investment properties are usually included in the bankruptcy. To save investment property, you have to prove undue hardship if it’s sold.
Exempt Property
Despite being a federal law, bankruptcy has some features that are state-specific. Exempt property is one of them.
States decide what kind of property is exempt from bankruptcy liquidation. They also determine the maximum amount of each exemption. Homes, jewelry, autos, clothing, and other items can vary a lot from state to state. Personal residences, up to a certain amount, are usually exempt. This can prevent a house from being sold while you’re in bankruptcy.
How to Sell Your Home While in Bankruptcy
Regardless of whether you’re in the middle of your bankruptcy or years into your repayment plan, tell your attorney when you know you’re selling. There’s a lot of paperwork involved in selling a home while in a bankruptcy case, and your lawyer needs time to work on that. You should also let your real estate agent and the buyer know you’re in bankruptcy. It’s likely your attorney will put language in the sale agreement that the sale is conditional on the trustee’s approval.
You need to hurry if you’re in the middle of a bankruptcy case or if the trustee hasn’t approved your plan. Give your lawyer 30 to 45 days to negotiate the sale with your trustee. They’ll need time to get everything in order. Also, your creditors have a right to object to the sale, just like they have a right to object to your repayment plan.
Sell Your House As-is
If you’re asking, “How do I sell my house fast in Houstan, Texas?”, we have you covered.
Ohana Legacy Properties, LLC is a trusted cash homebuyer in Houston, TX that can buy your house in any condition, regardless of what you owe if you’re in foreclosure. We’ve been buying homes for years, and we buy hundreds of houses a year.
We take pride in buying homes in a straightforward process. Get in touch with us to tell us more about the house and how we can help. You’ll get a call back with a range of what we can pay. We will close if the offer works and you are happy. Then, you pick the closing date.
Get your cash offer today. Call us at (832) 740-9788 or fill out our contact form here.