Filing for bankruptcy restricts what you can do with your assets, but it’s not the end of the world. In fact, you may benefit from selling some of your property to reduce your debts faster, like fulfilling mortgage obligations or paying off credit cards. With that in mind, can you sell a house in bankruptcy?
At Next Step Offers, we help people sell their houses fast in Las Vegas, NV, even with various complications. We’ve compiled some useful information to help ease your post-filing house sale.
Types of Bankruptcy
Most homeowners will either file for Chapter 7 or Chapter 13 bankruptcy. While they are similar in many ways, they have different legal implications:
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is for individuals and business entities who need to eliminate most of their unsecured debts by giving up unsecured assets. Also known as a “liquidation bankruptcy,” this type represents about 70% of all bankruptcy filings. While working with a Chapter 7 trustee, the discharge process usually finishes within three to six months.
Chapter 13 Bankruptcy
This type of bankruptcy is only for individuals or sole proprietorships. Also known as a “reorganization bankruptcy,” it allows those with consistent income to repay a part of or all their debts. A court manages the repayment plan via a Chapter 13 trustee, who distributes the payments to the individual’s creditors.
Unlike Chapter 7 bankruptcy, discharge can take three to five years.
How a Bankruptcy Affects a Sale Plan
Considering how each type affects a person’s property and income, can you sell a house in bankruptcy?
Chapter 7 House Sale
A person’s primary residence is generally considered exempt property under Nevada’s bankruptcy exemptions. This means the trustee cannot liquidate it (sell it) to pay off creditors. However, the exemption may only cover a limited amount of equity, so the entirety of your home may not be covered.
It’s best to wait to sell until after bankruptcy proceedings finish and your case is closed. Otherwise, you can safely sell your house if the trustee provides a formal notice that it isn’t included in the property they manage.
Chapter 13 House Sale
House sales are reliant on court approval and trustee permission. The filer is on a repayment plan to ensure they can properly pay off the debts they owe to their creditors. Selling their house could interrupt or alter the plan, and the creditors may not approve.
However, creditors almost always agree if the filer says that all or most of the proceeds will go to paying off debts.
Sell Your House Fast
While selling your house after bankruptcy works best, can you sell a house in bankruptcy? Because of how difficult it is, you’re better off selling before the case opens or after it closes.
Next Step Offers helps people in Las Vegas and nearby cities sell houses before bankruptcy. We work quickly and professionally, able to go from making an offer to closing in just seven days.
If you want to sell your house as is while navigating bankruptcy, call (702) 389-1919 for a hassle-free offer on your property today.