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 Baltimore, MD. Please note that this article is for informational purposes, not financial or legal advice.
Court Permission
If you’re undergoing bankruptcy proceedings in Baltimore, MD and wish to sell your house, you’ll need to file a motion with the court for leave to sell real property. This motion should include crucial details such as the proposed selling price, how you plan to use the proceeds, and the names of any creditors holding liens on the property. By filing this motion, you provide transparency about the sale, allowing creditors and any appointed trustee to review and, if necessary, object to the sale. The court will ultimately make a determination regarding the disbursement of any funds from the sale, ensuring that creditors are appropriately paid according to their priority. It’s essential to work with a bankruptcy attorney to ensure the motion is filed correctly and that all necessary steps are followed to obtain court approval for the sale, as this can impact your bankruptcy case and your financial recovery.
Contingency
In a traditional sale, you’ll need to add a contingency clause to the contract to sell your house during bankruptcy in Baltimore, MD, 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
When you sell your house during bankruptcy in Baltimore, MD, the disposition of any proceeds after the mortgage is satisfied largely depends on your homestead exemption. If the proceeds exceed the exemption limit, the excess funds will typically be used to pay off any remaining unsecured creditors or to cover the costs of your bankruptcy case, such as legal fees and trustee fees. Your homestead exemption allows you to keep a portion of the proceeds, typically up to a specific amount depending on state law, which can help provide you with some financial relief. However, if the sale results in funds beyond what is protected by the exemption, those funds may be directed toward satisfying other debts as part of your bankruptcy plan. It’s important to consult with your bankruptcy attorney to understand how the sale of your home will impact your case and ensure you’re following the correct procedure to maximize your financial recovery.
Planned Payments
Under Chapter 13 bankruptcy in Baltimore, MD, if you sell your house during the process, you’ll need to modify your repayment plan to reflect the sale proceeds. The funds from the sale will likely be used to pay down your existing debt, and depending on the sale price of your home, you may be able to pay off your bankruptcy plan earlier than originally scheduled. This could accelerate the conclusion of your bankruptcy, allowing you to move forward with a cleaner financial slate. However, it’s crucial to work closely with your bankruptcy attorney and trustee to ensure that the proceeds are properly allocated according to your plan, and to adjust your payments accordingly. The sale of your home during a Chapter 13 case can be an opportunity to reduce your debt burden more quickly, but it also requires careful planning to ensure compliance with the bankruptcy rules and an optimal outcome.
Itemized Payoff Statement
To ensure no fees remain to surprise you after you sell your house during bankruptcy in Baltimore, MD, you should request an itemized payoff statement.
Perry Hall Investment Group
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 Baltimore, MD is to sell directly to the cash investors at Perry Hall Investment Group. Our policy at Perry Hall Investment Group 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 Perry Hall Investment Group will detail your expenditures and potential profits from a conventional listing with an agent, vs. our offer, which you’ll agree is fair. At Perry Hall Investment Group, we do this because we are your neighbors here in Baltimore, MD, 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 Perry Hall Investment Group 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 Baltimore, MD real estate market, a direct sale to the cash investors at Perry Hall Investment Group is the solution. The cash investors at Perry Hall Investment Group 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 Perry Hall Investment Group. For a no-hassle sale of your home during bankruptcy: a cash investor from Perry Hall Investment Group will buy your house directly, as-is, for cash. Call Perry Hall Investment Group at (410) 989-5200.