If you’re struggling to pay bills, and loan payments, and encounter severe financial hardship, filing bankruptcy is an opportunity for a fresh start and a way to re-establish and improve credit. Bankruptcy offers the option of discharging your debts to start over.
Once your case is closed, you can sell assets you still own, which may include your home, though it’s essential to consider applicable limitations if you plan on buying a new house once you sell your current home.
If you are selling house for cash, there are legitimate home buying companies out there that will give an offer regardless of the status of the property.
Depending on your situation, filing Chapter 7 bankruptcy versus Chapter 13 bankruptcy can significantly impact your ability to buy or sell a home or property.
During a bankruptcy case, the court authorizes an automatic stay that essentially stops any collection attempts on your debt, which includes foreclosure.
It’s essential to learn about the type of bankruptcy discharge you’re considering, as this will determine whether your home is exempt from bankruptcy proceedings, which means a trustee can’t sell your house. You continue to retain possession of your home, even once the bankruptcy case is closed.
There are critical differences between Chapter 7 and Chapter 13 bankruptcy proceedings, which are essential to get acquainted with before considering bankruptcy as an option. Essentially, the type of bankruptcy you file impacts your ability to control or retain ownership of your assets, including your home.
Chapter 7 bankruptcy involves complete liquidation, which requires that your disposable income must be low enough to be eligible, and it typically takes between three and six months for a discharge.
Chapter 7 bankruptcy can be filed by either an individual or a business, whereas a Chapter 13 can only be filed by an individual or a sole proprietorship. Chapter 7 bankruptcy allows individuals to discharge eligible debts so they can start anew relatively quickly and re-establish a better credit score.
Chapter 13 bankruptcy allows debtors to keep their homes or property and get caught up on delinquent mortgage payments and other loan payments.
Chapter 13 bankruptcy is essentially more of a reorganization of your assets and debt, which stipulates you must not have more than a specific amount in unsecured debt and secured debt, which is subject to change.
While you can keep your property when filing for a Chapter 13 bankruptcy, you’ll need to make monthly payments to the Trustee for up to five years and may be required to pay a portion of certain unsecured loans.
When the bankruptcy process is complete, the lender may continue foreclosure proceedings if your property is exempt from bankruptcy and your mortgage is in default. At this stage, you may consider selling the property if you can find a buyer who agrees to pay your mortgage balance.
If you are successful in selling real estate, the proceeds of the sale can pay off the mortgage, which may result in a profit, which can help you with credit repair and financial support for future costs.
In some cases, if you cannot find a buyer willing to pay for a home and the remaining mortgage, you may decide to sell your house for less than what’s owing, which is a short sale.
While you can sell your home immediately following a bankruptcy discharge, you won’t be able to buy a new home unless you can pay cash or in full, as applying for a conventional mortgage won’t be an option.
You may need to wait a minimum of seven years before applying for a new mortgage, and a mortgage lender may require that you establish a good credit score before consideration.
Before you consider filing for bankruptcy, seeking legal advice is essential to understand the bankruptcy process and how it will impact your circumstances now and into the future.
While bankruptcy protection provides a new start for many people, there may be challenges in finding a place to rent, applying for a personal loan, and other credit products due to bankruptcy.
While some bankruptcy cases allow individuals to sell their homes, while their case remains open, you’ll need to request permission from the court.
If you’re considering bankruptcy while looking to sell your home, a bankruptcy lawyer can provide options available that may impact your ability to keep and sell your property.
While bankruptcy is a great way to restart your life financially, it’s essential to review all pros and cons of this option and alternative methods of managing debt, including your mortgage.
When you’re able to sell your home during bankruptcy proceedings, it’s essential to work with a real estate specialist to find the best solution. Or if you’re selling house for cash, find a legitimate home buying company like WeBuyHousesInDenver.org
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