When filing for bankruptcy while owning a home, your property becomes part of the bankruptcy estate – assets you legally possess. In October 2022, chapter 13 bankruptcy filings surged by twenty-seven percent compared to the previous year. Overall bankruptcies increased by seven percent across all chapters, directly mirroring the seven percent rise in inflation. Many homeowners find themselves drowning in debt due to circumstances beyond their control. As their financial ability to meet creditor obligations changes, bankruptcy often becomes their only viable option, which can effectively halt a foreclosure on their primary residence.
Homeowners with secured and unsecured debts under $2,750,000 qualify for chapter 13 bankruptcy. Meanwhile, chapter 7 involves liquidation where a trustee sells your assets to satisfy debts based on your income, debt load, and repayment capacity. Many of these struggling homeowners want to sell their properties to alleviate their financial burdens but are uncertain whether this is possible during active bankruptcy proceedings.
While specific rules vary depending on your bankruptcy type and several factors influence the final decision, the short answer for most homeowners is yes, you can sell. Continue reading as we explore how to sell your house during bankruptcy in Texas. Please note that this article provides information only and is not intended as financial or legal advice.
Court Permission
To sell your house during bankruptcy in Texas, you’ll need to file a motion with the court for permission to sell real property. This should include the selling price, your plans for the proceeds, and names of creditors with liens on the property. This motion allows creditors and trustees to raise objections, with the court ultimately determining how funds will be distributed.
Contingency
For traditional sales during bankruptcy in Texas, you must include a contingency clause in the contract stating that the sale depends on obtaining bankruptcy court approval. Under chapter 7, if your home has substantial unprotected equity exceeding your bankruptcy exemption, the trustee may decide to sell the house themselves. The trustee then uses these funds to pay secured debts like the mortgage, provides you with your exempted amount, and distributes any remaining funds proportionally among unsecured creditors.
Proceeds
You might wonder what happens to any proceeds after satisfying the mortgage when selling your house during bankruptcy in Texas. While much depends on your homestead exemption, the remaining proceeds typically go toward paying unsecured creditors or covering bankruptcy case costs, rather than staying in your pocket.
Planned Payments
When selling your house during chapter 13 bankruptcy in Texas, you’ll need to modify your payment plan. Depending on the final sale value, you might pay off your plan earlier than expected since proceeds go directly toward the bankruptcy obligations.
Itemized Payoff Statement
To avoid surprise fees after selling your house during bankruptcy in Texas, always request an itemized payoff statement that clearly details all costs and disbursements.
Electrum
Don’t put things off any longer! With fewer homes available and the likelihood of rising interest rates, this could be the ideal moment to turn your property into cash. If you’re navigating bankruptcy in Texas, the fastest and most straightforward way to sell your home is by working directly with Electrum. We prioritize honesty and clarity every step of the way because our mission is to create a solution that truly fits your needs. Our experienced team at Electrum will walk you through a side-by-side breakdown comparing the results of a traditional home sale with the benefits of our straightforward cash offer. As local residents of Texas, we’re committed to supporting our neighbors and strengthening our community by helping homeowners take back control of their finances. At Electrum Properties, we’re experts in resolving tough real estate situations quickly, and we want you to walk away from the closing table feeling confident and at peace with your choice.
The knowledgeable team at Electrum is dedicated to helping homeowners navigate the challenges of bankruptcy with fast, reliable solutions. We offer a guaranteed closing date, zero commissions, and no out-of-pocket closing costs — all with complete transparency and no hidden surprises. If the idea of spending time and money getting your house ready for the Texas market feels overwhelming, a direct sale to Electrum may be the stress-free alternative you’re looking for. You won’t need to worry about repairs, cleaning, or staging — we purchase homes in any condition, exactly as they are. There are no fees, no showings, and no delays. Our goal is to provide a fair cash offer that helps you move forward confidently while supporting the local community. Ready to take control of your situation? Call Electrum today at 806-630-0875 and take the first step toward peace of mind and financial freedom.