If you own a home when you file for bankruptcy, it becomes part of the bankruptcy estate, the property or assets you own. In October of 2022, there was a twenty-seven percent increase in chapter 13 bankruptcy filings over the previous year. Bankruptcies, including all chapters, total a seven percent increase overall, which correlates strongly with the seven percent increase in inflation. Many homeowners are overwhelmed by their debt. As financial issues due to circumstances beyond their control changed their ability to pay creditors, they find they have no option but to claim bankruptcy, which can stop a foreclosure on their primary residence.
Those with secured and unsecured debts totaling less than $2,750,00 are eligible for chapter 13. However, chapter 7 is a liquidation process in which the trustee sells your assets to pay debts based on your total income, debt, and ability to repay. Often, these homeowners want to sell their houses to solve at least some of their financial difficulties but wonder if it is possible during bankruptcy proceedings.
While the rules for the process may differ for the type of bankruptcy you file under, and many factors influence the final determination, for most homeowners, the short answer is yes. So read on as we explore how to sell your house during bankruptcy in Springfield MA. Please note that this article is for informational purposes, not financial or legal advice.
Court Permission
When selling your home during bankruptcy in Springfield MA, you’ll need to file a motion with the court requesting permission to sell your property. This motion should clearly outline the proposed selling price, plans for the proceeds, and any creditors holding liens. Filing allows creditors and the bankruptcy trustee to review the proposed sale and object if necessary, while the court ultimately determines how the proceeds will be distributed. Proper preparation of this motion is crucial to ensure a smooth process and avoid unnecessary delays.
Contingency
For a traditional sale during bankruptcy in Springfield MA, you’ll typically include a contingency clause stating that the sale depends on receiving court approval. Under Chapter 7 bankruptcy, the trustee may choose to sell the property if your home contains unprotected equity beyond your exemption. After the sale, secured debts like the mortgage are paid first, then you receive the exempted amount you are entitled to, and any remaining funds are distributed proportionally to unsecured creditors.
Under Chapter 13, the sale proceeds will likely be applied toward your repayment plan, which could shorten your plan duration depending on the amount realized from the sale. Being aware of these contingencies ensures you can plan your finances and avoid surprises during the process.
Proceeds
Many homeowners wonder: what happens to the funds after the mortgage is paid off? The answer depends heavily on your homestead exemption and bankruptcy type. Generally, proceeds from the sale are first used to satisfy secured debts. Any remaining funds are either distributed to unsecured creditors or used to cover bankruptcy-related costs.
Understanding how proceeds are handled is essential to make an informed decision and avoid potential disputes with your trustee or creditors. Working with knowledgeable professionals can help ensure you receive the maximum benefit possible under the law.
Planned Payments
If you’re under Chapter 13 bankruptcy, selling your home may require modifying your repayment plan. The proceeds from the sale are applied directly to your plan, which could allow you to pay it off faster than originally scheduled. This can reduce your long-term financial obligations and provide relief from the stress of managing multiple debts.
Consulting with a financial advisor or bankruptcy professional can help you understand how a home sale fits into your overall repayment strategy.
Itemized Payoff Statement
Before completing the sale, request an itemized payoff statement from your lender. This ensures there are no hidden fees, penalties, or outstanding balances that could create surprises at closing. A detailed payoff statement provides clarity, giving you confidence that the sale will proceed smoothly and that all obligations are properly satisfied.
Revival Homebuyers
Now is an ideal time to act! With limited housing inventory and rising interest rates, selling directly to cash investors at Revival Homebuyers can be the smartest solution for homeowners facing bankruptcy in Springfield MA. At Revival Homebuyers, we pride ourselves on full transparency, providing detailed comparisons of what you could earn from a conventional listing versus a direct cash offer.
Our cash investors are experienced professionals who have helped numerous homeowners navigate bankruptcy with confidence. We provide:
- Guaranteed closing dates – often within days.
- No commissions or closing costs – you keep more of your money.
- No repairs or prep work – sell your house as-is.
- Hassle-free process – no showings, open houses, or extensive paperwork.
At Revival Homebuyers, we aren’t just investors; we are members of your community in Springfield MA. Our goal is to ensure you feel confident and comfortable throughout the process, leaving you with peace of mind long after the deal is closed.
If you want a fast, fair, and straightforward sale of your home during bankruptcy, a direct sale to the cash investors at Revival Homebuyers is the solution. We’ll buy your property as-is, provide a fair cash offer, and close at your convenience.
Call Revival Homebuyers today at (413) 351-9294 and take the first step toward a stress-free sale of your home.