When you file for bankruptcy, you essentially create a bankruptcy estate which places all of your debts and assets in the hands of the court. A trustee is appointed to manage the estate during the process and you are not permitted to sell or give away anything in the estate without the courts approval.
Under Chapter 7, the trustee may sell some of your items in the estate to settle your debt with your creditors. There are certain items which are exempt from sale including a vehicle, family keepsakes, and personal items. In addition, a certain portion of the equity in your home is exempt. In some cases the exemptions eliminate all of your items and nothing can be sold to pay your debts so the debt is discharged. If this is the case and your home is exempt, you will get to keep your home. If that happens you would want to wait until your bankruptcy is completed and all of your debt is discharged so that your creditors don’t get the proceeds of your home sale.
Chapter 13 doesn’t permit seizure of your property or assets because you are establishing a repayment plan to settle your debts. You can sell your home during the repayment plan processing time but you must get approval from the court first. To get this permission you must file a motion to sell. The process to get the motion granted takes about a month and the court oversees the sale of the house to ensure that the money is used to pay off the mortgage and any liens on the property. You are then entitled to any remaining funds after those are paid.
When you are facing bankruptcy, it is important to look at the long term goals and process of rebuilding your credit. After a bankruptcy it will be difficult to get a loan, purchase a vehicle or even rent a place to live. You might also find it more challenging to get insurance and to get new utilities connected. So if you can find a way to remain in your home that might be a good decision. If the home is clearly too much to pay for then selling with court approval is a good way to lower your monthly bills and to use any equity that you may have in the home.
Bankruptcy is a long and complex process and it is important to understand all of the legal aspect of the process. Getting advice from Phoenix Home Buyer Group is a great way to learn about your options from a trusted team of real estate professionals. If you decide to sell your home, they can make you a fair and reasonable offer for a fast sale and a cash payment. This is a good way to repay some of your debt and speed you the process of rebuilding your credit. Visit www.phoenixhomebuyergroup.com to learn more about a fast sale to a real estate investor and how it can help with your bankruptcy issues.