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.
Those with secured and unsecured debts totaling less than $2,750,00 are eligible for chapter 13. However, chapter 7 is a liquidation process in which the trustee sells your assets to pay debts based on your total income, debt, and ability to repay. Often, these homeowners want to sell their houses to solve at least some of their financial difficulties but wonder if it is possible during bankruptcy proceedings.
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 Jacksonville NC. 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, also known as a motion to sell, in order to gain approval to sell your house during bankruptcy in Jacksonville NC. This legal step is essential because once you file for bankruptcy, your assets—such as your home—become part of the bankruptcy estate and fall under the jurisdiction of the bankruptcy court. In your motion, you’ll need to clearly outline key details including the proposed selling price, how you intend to use the proceeds (such as paying off liens, closing costs, or funding your fresh start), and a list of all creditors who hold liens or interests in the property.
Transparency is crucial here. The court and your bankruptcy trustee will evaluate whether the sale is in the best interest of the estate and its creditors. The motion triggers a notification process, allowing creditors or the trustee to file objections if they believe the sale terms are unfair or if they dispute how the proceeds are to be distributed. Ultimately, the judge will review all objections, if any, and issue a ruling that determines how the sale can proceed and how the funds will be allocated.
Keep in mind, timing is everything in bankruptcy proceedings. If you’re considering selling your home, it’s wise to consult with a bankruptcy attorney early on to ensure you’re in compliance with court procedures and to help expedite the process. Successfully navigating this step could not only protect your equity, but also provide you with a much-needed financial reset.
Contingency
In a traditional sale, you’ll need to add a contingency clause to the contract to sell your house during bankruptcy in Jacksonville NC, 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
You may wonder what happens to any proceeds after the mortgage is satisfied when you sell your house during bankruptcy in Jacksonville NC. While the specifics can vary depending on the details of your case, a key factor will be your homestead exemption, which is a protection that allows you to keep a certain amount of equity from the sale of your home. The homestead exemption amount differs from state to state, and in some cases, it can be quite substantial, especially in areas like Jacksonville NC where property values may be higher. If the sale proceeds exceed the amount covered by your exemption, the surplus funds will likely be directed toward paying off any remaining unsecured creditors, such as credit card debt, medical bills, or personal loans. These funds may also be used to cover administrative costs related to the bankruptcy case, including trustee fees and other court-related expenses.
It’s important to note that if you have a significant amount of equity above the exemption limit, your creditors may seek to recover those funds as part of the bankruptcy settlement. This is where working closely with your bankruptcy attorney becomes crucial to navigate the nuances of asset distribution. Depending on the type of bankruptcy you’re filing (Chapter 7 or Chapter 13), the treatment of proceeds can differ—whether they go directly to the bankruptcy estate for distribution or if you’re allowed to keep some funds to help with your fresh start.
In some cases, the court may approve a payment plan that allows you to retain some of the proceeds, particularly in a Chapter 13 filing, where your assets are reorganized rather than liquidated. Understanding your state’s homestead exemption rules and how your bankruptcy chapter affects asset liquidation is key to anticipating how the proceeds will be allocated.
Planned Payments
Under chapter 13, if you sell your house during bankruptcy in Jacksonville NC, 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 Jacksonville NC, you should request an itemized payoff statement.
Easy Day REI - I BUY NC
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 Jacksonville NC is to sell directly to the cash investors at Easy Day REI - I BUY NC. Our policy at Easy Day REI - I BUY NC 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 Easy Day REI - I BUY NC will detail your expenditures and potential profits from a conventional listing with an agent, vs. our offer, which you’ll agree is fair. At Easy Day REI - I BUY NC, we do this because we are your neighbors here in Jacksonville NC, 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 Easy Day REI - I BUY NC 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 Jacksonville NC real estate market, a direct sale to the cash investors at Easy Day REI - I BUY NC is the solution. The cash investors at Easy Day REI - I BUY NC 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 Easy Day REI - I BUY NC. For a no-hassle sale of your home during bankruptcy: a cash investor from Easy Day REI - I BUY NC will buy your house directly, as-is, for cash. Call Easy Day REI - I BUY NC at (516) 444-0840.