Filing bankruptcy doesn’t automatically block you from selling your home. In many cases, you can sell—so long as you follow the court’s rules, keep your trustee in the loop, and use the right language in your contract. Below is a plain-English guide to how a sale works during Chapter 7 and Chapter 13, what approvals you need, and how to avoid delays.
This article is general information, not legal or tax advice. Always consult your bankruptcy attorney before taking action.
First things first: what bankruptcy means for your home
- Your house becomes part of the bankruptcy estate. A court-appointed trustee (Ch. 7) or your Chapter 13 plan will control what happens to the property and any sale proceeds.
- The automatic stay usually stops foreclosure activity while the case is pending. That pause gives you time to explore a sale—with permission.
- Exemptions may protect some home equity. How much protection you get (and whether a sale makes sense for you) is a legal question—ask your attorney.
Can you sell in Chapter 7?
Sometimes. In Chapter 7 (liquidation), the trustee’s job is to determine whether there’s non-exempt equity worth administering.
- If there’s significant non-exempt equity, the trustee may sell the property (not you), pay liens and costs, pay you any allowed exemption, and distribute the remainder to creditors.
- If there’s little to no non-exempt equity, a trustee may abandon the property. With abandonment (or after case closure), you may sell more like normal—but still coordinate with your attorney.
- If you want to initiate a sale during the case, your attorney typically files a motion to sell (often called a §363 sale) asking the court to approve the buyer, price, and how the money will be distributed.
Contract tip: Use language like “sale contingent on bankruptcy court approval” and allow enough time for the motion, notice to creditors, and any hearing.
Can you sell in Chapter 13?
Often, yes. In Chapter 13 (repayment), you keep property while making plan payments. You can propose a sale to:
- Pay off the mortgage and use net proceeds to pay down your plan (sometimes paying the plan off early), or
- Deal with arrears or liens as part of a court-approved closing statement.
Your attorney will file a motion to approve sale and may also file a plan modification showing how proceeds will be applied. The court’s order will direct the closing attorney/title company exactly where the money goes.
Contract tip: Again, include court-approval contingency and build a realistic timeline for the court process.
The approval process (what to expect)
- Hire representation. Tell your bankruptcy attorney you want to sell; share your payoff, estimated equity, and timeline.
- Get a buyer & signed contract. Your contract should be as-is friendly and state “subject to bankruptcy court approval.”
- File a motion to sell. The motion typically includes the address, buyer, price, key terms, estimated closing statement, and how proceeds will be used.
- Notice to creditors. Parties get a chance to object (rare if terms are reasonable).
- Court order. The judge signs an order authorizing the sale (often “free and clear of liens,” with valid liens paid from proceeds).
- Close. Title/escrow follows the order to the letter, paying liens, trustee, and any approved distributions.
Timing: Court approval can add a few weeks to a normal sale. Build that into your contract dates.
What happens to the money?
- Mortgages, taxes, HOA liens and closing costs are paid first at closing.
- Chapter 7: If the trustee sells, they pay you any allowed exemption, then distribute the remainder to creditors. If you initiate a sale, the order will still control where the money goes.
- Chapter 13: Proceeds are typically paid to the trustee for your plan. Your attorney will outline whether that pays the plan off or reduces balances.
Good to know: Ask your attorney and closing agent for a draft settlement statement before the hearing so you know your net and there are no surprises.
How to write the offer (so it actually closes)
- Contingency: “Subject to bankruptcy court approval.”
- Time: Allow extra time for the motion, notice, and order (your attorney will suggest a realistic number of days).
- Access: Agree on quick access for valuation and any required buyer inspections.
- Earnest money: Keep it reasonable and held by a neutral escrow per court norms.
- Backup bidder language (optional): Courts sometimes favor terms that allow overbids if materially higher—ask your attorney if this is likely in your district.
Selling options (pick the lane that fits your timeline)
List on the market (max exposure)
- Pros: Highest chance at top price; multiple offers.
- Cons: More showings/repairs; buyers must accept court-approval timing.
Direct, as-is cash sale (fastest/least friction)
- Pros: Fewer contingencies, as-is, flexible closing, simpler court motion.
- Cons: Usually trades some price for speed/certainty.
- Bankruptcy-friendly: Experienced direct buyers are familiar with court-approval language and will cooperate with your attorney and trustee.
10-Item Seller Checklist (during bankruptcy)
- Latest mortgage statements and written payoff (good-through date).
- Property tax status and HOA balance/estoppel (if applicable).
- List of liens or judgments you know about.
- Insurance in force (keep it active).
- Photos and quick condition notes (helps justify price in the motion).
- Net sheet (estimated settlement statement) from your agent or buyer.
- Contract that includes court-approval contingency.
- Third-party authorizations so your attorney/title can pull payoffs fast.
- Utilities on (valuations/inspections go smoother).
- Communication log (dates, names, deadlines).
Common pitfalls to avoid
- Pulling cash or fixtures from the property after it’s under contract—always clear changes with your attorney.
- Too-tight closing dates that ignore the court calendar.
- Skipping disclosures—as-is doesn’t mean conceal.
- Letting insurance lapse during the case.
How Middle Georgia Cash Homes helps Georgia owners sell during bankruptcy
- As-is cash offers with no commissions and many standard closing costs covered
- Court-ready contract language (subject to bankruptcy approval) and help coordinating with your attorney, trustee, and title
- Flexible timelines to match the court calendar
- Clear, written net numbers up front—no surprises
Talk to a real person today: 478-216-1795 — or message Middle Georgia Cash Homes for a no-pressure plan and a court-friendly offer.
Again: bankruptcy is legal territory—loop your attorney in early so your sale sails through approval.