Selling Home in a Chapter 13

[womanonfire]

We have a little over a year remaining in our 100% Chapter 13 plan and owe a little less than $12,000. Our mortgage was modified in Chapter 13, and as a result, we resumed payments outside of the bankruptcy. Our mortgage servicer still sends statements with the BK disclaimer, not that it matters, but it's just worth mentioning, I guess.

We want to sell the house and buy another house that we can purchase outright in another city and county. I have no bankruptcy attorney, but I suppose that I would just file a motion to get permission to sell the house even though the payments are outside the plan? I think the only obstacle is moving in the first place, not the sale of the home, but I could be wrong about this. We would likely use the proceeds from the sale to pay off the BK unless we were allowed to continue payments, in which case, I'd just set those funds in a separate interest-earning account. Any other obstacles to this scenario?

[justbroke]

First, you talk to the Chapter 13 Trustee. Many of them have forms to incur debt or sell property. Your real issue is whether the sale proceeds are property of the bankruptcy estate... and probably are. This is why you need an attorney so that you do the procedure correctly without causing other issues.

You should have a bankruptcy attorney. A Chapter 13 bankruptcy attorney is with you through discharge.

[womanonfire]

First, you talk to the Chapter 13 Trustee. Many of them have forms to incur debt or sell property. Your real issue is whether the sale proceeds are property of the bankruptcy estate... and probably are. This is why you need an attorney so that you do the procedure correctly without causing other issues.

You should have a bankruptcy attorney. A Chapter 13 bankruptcy attorney is with you through discharge.

Looks like a little research turned up a motion that I can utilize: https://www.ganb.uscourts.gov/sites/...on_to_sell.pdf

Further research concludes that it is a relatively simple process and is usually approved in a 100% plan. I think we're going to try and keep the balance of the proceeds after paying off the existing mortgage and continue the plan payments. We're not opposed to paying it off early, and it seems like that is the only thing that may stand in the way of a sale, creditors wanting to get paid off early, but because they didn't object to my keeping cash and my settlement, I doubt they'll object to this. So if this is the only thing that gets in the way, we're prepared to do that.

Would love to hear from others who went through the process, however.

[MyAZLawyers]

You’ll probably need court approval for the sale of the house, even if the mortgage was not included in the plan, because the property itself can still be considered part of the bankruptcy case. Also, the trustee could ultimately have issues with what you do with the proceeds from the sale, particularly if the funds are applied toward personal expenses or debts that were not prioritized in the plan. Don’t forget to check the legal requirements, ideally with guidance from a bankruptcy attorney to avoid complications during the process.