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 Poughkeepsie, NY. Please note that this article is for informational purposes, not financial or legal advice.
Court Permission
You’ll need to file a motion with the court for leave to sell real property or approval to sell your house during bankruptcy in Poughkeepsie, NY. This is a critical step in the bankruptcy process, as it allows you to legally move forward with the sale of your property. When filing, you will need to include important details such as the proposed selling price, your intentions for using the proceeds, and the names of any creditors holding liens on the property. This information ensures full transparency, allowing the court and your creditors to evaluate the sale’s fairness. By doing this, you are demonstrating good faith in addressing your debts, which can help avoid complications in the process.
Once the motion is filed, creditors and the trustee involved in the bankruptcy case have the right to object to the sale. These objections may arise if they believe the sale terms aren’t in the best interest of the creditors or if the sale price is too low. The court will review all objections and make a final decision on whether to approve the sale, as well as how the proceeds will be distributed to cover your outstanding debts. The court will determine the disbursement of any funds after the sale, ensuring that creditors are paid in accordance with the priority of their claims. It’s crucial to work with a knowledgeable bankruptcy attorney during this process to ensure that all required steps are properly followed and to maximize the chances of a successful sale.
Contingency
In a traditional sale, you’ll need to add a contingency clause to the contract to sell your house during bankruptcy in Poughkeepsie, NY, stating that the sale is contingent upon obtaining bankruptcy court permission. However, under chapter 7, the trustee may determine to sell the house if your home has high unprotected equity under your bankruptcy exemption. With the funds, the trustee pays any secured debts like the mortgage, provides you with the exempted amount you are entitled to and then satisfies any unsecured creditors with a pro ratio share of any remaining funds.
Proceeds
You may wonder what happens to any proceeds after the mortgage is satisfied when you sell your house during bankruptcy in Poughkeepsie, NY. The outcome largely depends on your homestead exemption, which protects a certain portion of the home’s equity from creditors during bankruptcy. If your home’s equity exceeds the exemption amount, the surplus proceeds will typically be used to pay off any remaining unsecured creditors, such as credit card companies or medical debt collectors. The exact amount you can keep depends on your specific exemption and the laws in your state, but the goal is to ensure that your basic housing needs are met while also addressing your financial obligations.
However, even if your homestead exemption covers the full value of your equity, some of the proceeds may be used to pay for administrative costs related to your bankruptcy case, including attorney fees, court fees, and trustee fees. If there is any leftover amount after satisfying these obligations, it may be distributed to creditors based on the priority of their claims. It’s important to remember that this process can be complex, and the court will make the final determination on how proceeds are allocated. Working closely with a bankruptcy attorney can help ensure that you understand your rights and responsibilities, and that you maximize the benefits of any exemptions available to you during the sale of your home.
Planned Payments
Under chapter 13, if you sell your house during bankruptcy in Poughkeepsie, NY, you will need to modify your planned payments. Depending on the realized sale value, you may pay your plan off earlier as the proceeds go directly towards the bankruptcy.
Itemized Payoff Statement
To ensure no fees remain to surprise you after you sell your house during bankruptcy in Poughkeepsie, NY, you should request an itemized payoff statement.
Hudson Valley Cash Buyers
Don’t hesitate! With competition still driven by low supply and rising interest rates on the horizon, now is the time to cash in on your house, and the best way to sell your house during bankruptcy in Poughkeepsie, NY is to sell directly to the cash investors at Hudson Valley Cash Buyers. Our policy at Hudson Valley Cash Buyers is full transparency through every step of the process because we want you to decide which sales method works best for your situation. To that end, a cash investor from Hudson Valley Cash Buyers will detail your expenditures and potential profits from a conventional listing with an agent, vs. our offer, which you’ll agree is fair. At Hudson Valley Cash Buyers, we do this because we are your neighbors here in Poughkeepsie, NY, we care about our community and the people in it, and we want you to feel good about working with us long after the deal is closed.
The seasoned pros at Hudson Valley Cash Buyers have experience with sellers going through bankruptcy and have the solution you seek, providing you with a guaranteed closing date, charging no commissions or closing costs with no unpleasant surprises. If you’d like to avoid the work and out-of-pocket costs of prepping your house to list on the Poughkeepsie, NY real estate market, a direct sale to the cash investors at Hudson Valley Cash Buyers is the solution. The cash investors at Hudson Valley Cash Buyers never charge commissions, and there are no hidden fees. So you can put your wallet away and relax; you won’t even need to worry about showings when you make a direct sale to a cash investor from Hudson Valley Cash Buyers. For a no-hassle sale of your home during bankruptcy: a cash investor from Hudson Valley Cash Buyers will buy your house directly, as-is, for cash. Call Hudson Valley Cash Buyers at (845) 490-5694.