Can I Sell My Home During A Personal Bankruptcy?

When deciding whether to keep your house when you file for bankruptcy, you need to consider several factors.  Ask yourself these questions and make sure to answer honestly:

• Do I want to keep it?
• Can I afford to keep it?

For some people, they see filing  bankruptcy as a chance to get a fresh start, away from everything, including their house.  It may be that they no longer want the house, or that the upkeep is just too much for them.

Other people decide that they want to keep the house.  It may be cheaper than renting, or they are hoping they can sell it and make money from it in the future.

Either way, it’s important to review this decision carefully, BEFORE you file for bankruptcy.  If you decide to sell after you have filed for bankruptcy, you may not be happy with what you hear from your trustee.

What happens if I decide to sell my house after I file for bankruptcy?

The first thing to know is that you can’t.

When you file for bankruptcy, you agree to assign your assets to the trustee.  Simply stated, you lose control over the sale of your house.  If you want to sell it, the first thing you need to do is talk to your trustee.  The trustee will need to know:

• What the house could sell for;
• What the mortgage payout is; and
• What the closing costs are.

If the sale of the house can garner a lot of money for your creditors (in other words, it has equity), your trustee will likely work with you, your lawyer and real estate agent to list and sell the house.  Keep in mind that any profit from the sale of the house will be paid into your bankruptcy and you will receive nothing.

The purpose of bankruptcy is to maximize the money that is paid to your creditors.  If the sale of the house won’t yield the bankruptcy any money, you may find that your trustee is not willing to sell it.  Why would they sell it if there is nothing in it for the creditors?  If you can’t sell the house and cover all of the costs associated with it, your trustee will not agree to list the house for sale (for your sake and the sake of your creditors).  You may be in a situation of having to wait until you are discharged from bankruptcy before selling your house.

Whatever your decision is, review it carefully before filing for bankruptcy.  Once made, you must stick with that decision until your bankruptcy is completed.  If you need help with this decision or need to review your situation with a bankruptcy expert, contact a local trustee in bankruptcy to book a free consultation.  We can help you to crunch the numbers and decide whether to sell your home before filing or whether you need to sell at all. We understand that It’s a big decision; know that you’re not alone and you have options.