Chapter 13: Reorganization of Debt
While a typical homeowner may prefer filing a Chapter 7 bankruptcy to get out from under debt and protect their homes, in some instances, they may be required to file a Chapter 13 bankruptcy proceeding. Since Chapter 7 is sometimes called "wage earners bankruptcy" Chapter 13 bankruptcy may apply for those who are self employed, retired or who have assets that would prohibit them from filing a Chapter 7 bankruptcy. For those who file a Chapter 13 bankruptcy proceeding they will need to know how to sell a property that is in bankruptcy. Here are the steps that typically must be made:
Contact lenders - one of the first steps you will want to make when attempting to see a home in bankruptcy is to contact the mortgage holder (or holders). This step will allow you to get a complete picture of the exact amount that is owed on the property. It may also be a good idea to check with the Registrar of Deeds to find out if there are any liens on the property from other unpaid bills (e.g., judgments, taxes, etc.). This will help you determine exactly how much you have to raise from the sale to ensure the home is sold free and clear;
Contact an appraiser - while this is not required, it is helpful to have an appraiser visit your home and provide you with the appraised value of your home. This step can help you set your sales price and may also be a helpful tool when meeting with the bankruptcy trustee, your attorney and a realtor;
Contact a Realtor - contact a local realtor and have them visit your home. Questions that should be asked include how much they reasonably believe the property can be sold for, how long they believe it would take to find a buyer and approximately how long it may take to close on the property once a buyer is found;
Contact your bankruptcy attorney - finally, you will need to contact your bankruptcy attorney with all of the information you have gathered. Until you have done this, you should not list your home for sale. Your attorney will need to file a motion with the court to obtain approval to put the home on the market. You should state how much you plan to sell the home for. It is important to note, the bankruptcy trustee is required to notify your creditors of your plan to sell. Permission to sell is not automatic.