Going into Chapter 13 bankruptcy is not something one does casually. While it is less extreme than some forms of bankruptcy, often allowing you to keep your home and to work out affordable payments with your creditors so that you can pay back part of what you owe, it is still an involved process that can be a strain to get through.
If you find yourself considering Chapter 13, it is possible to sell your house while you’re going through the process. In some states your attorney must do a special “motion to sell” the house, but this is usually not necessary in Minnesota. In Minnesota, so long as you live in the house and have less than $420,000 in equity, you can sell it without doing the motion. You just list it with a realtor and go through the normal closing.
What You Need To Do
The first thing you need to do according to SFGate, is to notify your attorney as soon as you’ve decided you’re going to try to sell your home. It’s perfectly legal for you to sell it whether you’ve just started the process, or you’re several years into your repayment plan, but there are a few traps for how the transaction is done. The attorney will make sure it goes smoothly. Walker & Walker Law Offices does not charge extra for this, although some other lawyers do.
If the house isn’t your primary residence or if it has more than $420,000 in equity, then the attorney must ask the bankruptcy court for permission to sell it. This is called a “motion to sell.” In this motion, the attorney proposes a plan for the sale price and how the sale proceeds will be used. Because the house is not your homestead, or too valuable to be protected by the homestead exemption, some of the sale proceeds must be used to pay into the chapter 13 plan.
The Sale Could Help, If You Go Through With It
You can, if you like, use the sale proceeds to pay off your chapter 13 plan early. Selling a home, especially if you make a good profit off the sale, can go a long way toward making your creditors happy when it comes to your Chapter 13 status. It’s even possible, if the sale goes well, that you could discharge your Chapter 13 status through the profits made by selling your home. While it might not feel like a victory, getting the decree signed by a bankruptcy judge proving that you’re out of Chapter 13 can certainly make the endeavor worthwhile.
In fact, for some people, that’s the entire goal of selling their home in the first place. Because even though Chapter 13 may not be as severe as other forms of bankruptcy, getting out of it as quick as possible can sometimes take some rather extreme measures.
Make The Right Move – Call Walker & Walker Today
Making the right moves when you’re considering Chapter 13 bankruptcy is important. If you’re not sure what you should do to get the results you want, all you have to do is contact us today! We’ll help you navigate your choices, and find the ones that will work best for you, and your particular situation.