March 6, 2023

Can I Sell My House While in Chapter 13 Bankruptcy? [What Happens?]

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Wondering if you can sell your house while in Chapter 13? We buy houses from homeowners in all kinds of situations including bankruptcy. If you need to sell fast, request a free CASH offer below!

Can I Sell My House While in Chapter 13 Bankruptcy?

can i sell my house while in chapter 13 bankruptcy

Homeowners who filed for Chapter 13 bankruptcy are given a chance to settle their finances and repay their debts in three to five years. While this legality is primarily made to protect the debtors, it may also pose some challenges when trying to sell a house. 

Chapter 13 bankruptcy does not prevent a homeowner from selling a property; however, the sale can only proceed if the Bankruptcy court and creditors approve. Note that the sale proceeds will be disbursed to the creditors by the bankruptcy trustee. In other words, the homeowner would end up with no profit, but his debts would be paid and he would be out of bankruptcy.

Navigating a home sale while in Chapter 13 bankruptcy can be immensely tricky. If you need further guidance, this blog has you covered!

What is Chapter 13 Bankruptcy?

what is chapter 13 bankruptcy

According to the United States Courts, Chapter 13 bankruptcy or the "wage earner's plan" allows homeowners with regular income to develop a repayment plan to their lenders in three to five years. 

One of the most significant advantages of filing for Chapter 13 bankruptcy is saving a house from foreclosure. To elaborate, during those three to five years, the creditors aren't allowed to start or continue collecting funds from the debtor.

To be eligible for Chapter 13 or to get relief under the bankruptcy code, an individual must be a wage earner or self-employed whose value of secured debts is lower than $1,395,875, while the value of unsecured debts should be less than $465,275.

Can I Sell My House While in Chapter 13 Bankruptcy?

can  sell my house while in chapter 13 bankruptcy

Yes, you can sell your house while in Chapter 13 bankruptcy. But as established, you would need the Bankruptcy court permission.

You aren't allowed to list the property or sell to a cash home buyer unless the mortgage lender is also informed and they did not object to the proposition of sale. Moreover, if your property's equity were not exempted from the bankruptcy you filed, you would get nothing from the sale as everything will go into paying your debts.

Since a house sale while in Chapter 13 bankruptcy is extra challenging, you would benefit from hiring a bankruptcy attorney for guidance. Many will offer a free consultation.

What Happens if I Sell My House During Chapter 13 Bankruptcy?

what happens if i sell my house during chapter 13 bankruptcy

By now, you must have already weighed your chances of selling your house while in Chapter 13. But to fully understand what you have to go through, here's an overview of the whole process— from approval to being discharged of your debt.

1. Notify Your Bankruptcy Attorney of Your Intent to Sell

First off, you have to notify your bankruptcy attorney once you decide to sell property since all your assets are under a trustee's management.

Among everyone, a bankruptcy attorney knows how to navigate a home sale in Chapter 13 and they have your best interests in mind.

Moreover, you would greatly benefit from maintaining a great attorney client relationship. Your bankruptcy attorney will handle the paperwork and file appropriate motions for the sale to be approved.

2. File a Motion to Sell with the Bankruptcy Court and Trustee

Once you have informed your bankruptcy attorney regarding your plans, they'll help you file a motion to sell with the Bankruptcy court and the trustee to get sale permission. 

A motion to sell to get court approval usually includes the following:

  • The asking price of the bankruptcy estate
  • An appraisal to identify the value of the property
  • How the proceeds of the house sale will be disbursed to the creditors

3. Notify Your Creditors

When the bankruptcy court receives the motion to sell, they'll send a notice to your creditor/s that you have decided to put the property on the market. This is a necessary step since you signed a contract with your lenders. Generally, the lenders will be given 14 days to file for objection.

This can play out in two scenarios: the mortgage holder doesn't object, so you get court approval and proceed to sell the bankruptcy estate, or the mortgage holder objects and you're left with no choice but to continue with the repayment plan previously set. 

4. File a Statement of Sale with the Bankruptcy Trustee

sell your house while in chapter 13 bankruptcy to a cash buyer

If your motion is approved and you have successfully closed the sale with the help of a real estate agent or real estate broker, filing a statement of sale is necessary. This statement should include the following:

  • The home's final sale price
  • Deductions or payments related to closing (This isn't necessary if you sold to a cash buyer who covered closing costs.)
  • The amount that will be turned over to the trustee to pay off the mortgage
  • Other remaining proceeds of the home sale

Again, you would not receive money from the house sale since all your assets are being managed by the trustee. What you'll get from the sale will be used to pay your debts.

5. Discharge the Debt

When the proceeds of the sale are already forwarded to the bankruptcy trustee, the sales will then be distributed to your creditors.

If the amount is enough to pay your repayment plan for your mortgage payments or other debts owed to an ex-spouse, business partner, etc., the trustee will discharge you from bankruptcy. The bankruptcy judge will then approve the discharge in the form of a final decree.

If you are unsure of the procedures, consider our suggestion to contact a bankruptcy lawyer. If you're lucky, you may even find a bankruptcy attorney offering free consultation.

Does a Debt Relief Agency Play a Role in Selling a House While in Chapter 13?

does a dept relief agency play a role in selling a house while in chapter 13

No. A debt relief agency or debt settlement company doesn't play a role in selling a house while in a Chapter 13 bankruptcy case.

The primary role of a debt relief agency is to negotiate with your lenders or creditors regarding the amount you owe. They don't exactly have a hand in the sale. Although, if they are able to settle the debt for you, you won't have to sell your home. 

Note, however, that working with a debt relief agency is very risky. They also charge expensive fees.

Sell Your House While in Chapter 13 Bankruptcy to a Cash Buyer

While selling your house on the traditional real estate market with the help of a real estate agent can get you better offers, selling to a cash buyer is also favorable if you want a faster home sale and don't have enough money to finance repairs or renovations.

Remember that when you sell your home on the market it also requires staging and marketing fees. All of these may put you in further financial trouble— something worth avoiding when heading into a state of bankruptcy.

Cash buyers purchase houses as-is even if the owner is in Chapter 13 bankruptcy. They also move fast and guarantee a simple process. What's more, they cover closing costs!

Final Thoughts: Can I Sell My House While in Chapter 13 Bankruptcy?

Selling a house while in Chapter 13 bankruptcy is not a walk in the park, even with the help of a bankruptcy attorney. There are a lot of approvals to be sought and in the end, the homeowner doesn't end up with any profit. The great news, however, is that the home's final sale price can settle the owner's debts.

If you're looking to sell your home fast while in Chapter 13 bankruptcy, connect with us at Sell My House Fast. Our process is simple and we don't charge any fees!

Fill out our form below or contact us at (844) 207-0788 to learn more about selling your house in Chapter 13.

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Author: Andy Kolodgie

Andy Kolodgie is an experienced real estate investor with a network that expands nationwide. As owner of Sell My House Fast, Andy’s goal is to provide home sellers with more options to their real estate problems than a traditional home sale. 

He’s been featured on multiple publications including Amazon, Yahoo Finance, MSN, HomeLight,, Apartment Therapy,, LegalZoom, Zolo, and

Sell My House Fast has been a cash home buying company since 1999. We buy houses nationwide! At Sell My House Fast, we offer cash for houses and connect sellers with local buyers. If you want to sell your house for cash, fill out our short form to get fair all cash offers for your house!

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