If you’re behind on mortgage payments and worried about losing your house, filing Chapter 13 in Michigan might seem like your only way out. It can stop foreclosure and help you catch up through a repayment plan, but it also comes with several months of court oversight and financial restrictions. For many homeowners, it’s not the only option worth considering.
Selling your house before filing for bankruptcy can give you a clean break without the long-term stress of bankruptcy. You can pay off your debts, avoid damaging your credit, and walk away with cash in hand. Chapter 13 might save your home but selling it could save your peace of mind. The right decision depends on your finances, your home’s equity, and your long-term goals.
If I File Bankruptcy In Michigan, What Happens To My House?
Filing for Chapter 13 in Michigan does not automatically mean you will lose your house. The purpose of this type of bankruptcy is to help you keep your property while managing your debt through a court-approved repayment plan. If you have a steady income and the ability to keep up with your mortgage, Chapter 13 can give you time to catch up on missed payments without forcing a sale.
Here are the most common reasons someone might lose their house in Chapter 13:
- You fall behind on mortgage payments after the case is filed.
- Your repayment plan does not leave enough income to cover the mortgage.
- Your home equity is higher than Michigan’s allowed exemption.
- The court denies your plan because it is not financially viable.
- The lender receives court approval to resume foreclosure.
- You choose to surrender the house as part of your repayment plan.
Whether you keep your home depends on how your financial situation fits within the structure of Chapter 13. If your income can support the repayment plan and your mortgage, and your home equity stays within legal limits, you’ll likely be able to keep the property. If those requirements aren’t met, the court may decide the house cannot be protected.
Can I Sell My House During Chapter 13?
Yes, you can sell your house during Chapter 13 bankruptcy, but it isn’t automatic. Since your assets are part of a court-monitored repayment plan, the court must approve the sale before anything can move forward. Without that approval, the sale can’t be completed legally.
The court will usually allow the sale if it benefits your creditors or doesn’t harm your ability to complete your repayment plan. If you have equity, the court may decide how that money should be applied to your debts. In some cases, selling the house can help make your plan more manageable.
Selling your home won’t automatically remove you from Chapter 13, but it can change the terms of your plan. It may reduce what you owe or shorten the length of the repayment schedule. Whether the sale helps or hurts your situation depends on how the proceeds are handled.
How Do I Sell My House During Bankruptcy?
Selling your house during bankruptcy isn’t as simple as listing it and accepting an offer. Whether you’re in Chapter 7 or Chapter 13, the bankruptcy court has control over your assets, including your home. That means you can’t sell the property without the court’s permission. The process is possible, but it requires planning, legal steps, and approval from both the trustee and the judge that is overseeing your case.
Notify Your Attorney And Trustee
Before you list your home, you’ll need to talk to your bankruptcy attorney and notify the trustee. They will guide you on what information the court needs, such as your home’s market value, any equity involved, and how the sale proceeds will be used. Trying to sell without notice can lead to delays or legal issues, so transparency is key.
File A Motion With The Court
Your attorney will need to file a motion with the bankruptcy court requesting permission to sell the property. The motion should include the purchase agreement, proposed closing date, and a breakdown of any costs or liens tied to the sale. The court will review the details and decide whether the sale is in line with your bankruptcy obligations.
Wait For Court Approval
Once the motion is filed, the court will schedule a hearing. If no objections are raised, the judge will usually approve the sale. In Chapter 13 cases, the court may also require you to update your repayment plan based on the proceeds. Selling without court approval is not allowed and can jeopardize your case.
Close The Sale And Distribute Funds
After you receive approval, you can move forward with the closing. Funds from the sale will first go toward paying off any liens or mortgages. If you have remaining equity, the court will decide how those funds are distributed. In Chapter 13, some of the proceeds may be applied toward your remaining debt under the repayment plan.
Finalize Changes To Your Bankruptcy Plan
If your sale affects your financial situation, you may need to amend your bankruptcy plan. The trustee or court may adjust your payment schedule, especially if the sale reduces your debt. Any changes must be approved through a formal modification process to stay in compliance with the court.
What Is The Best Option For Selling My House During Bankruptcy?
If you’re in bankruptcy and need to sell your house, any delays or deals falling through can cause more stress. It can throw off your court timeline, affect your repayment plan, or keep you stuck in a situation you’re trying to fix. The best option is to sell your house fast in Kalamazoo, MI, as is for cash. You avoid repairs, skip buyer financing issues, and give the court a straightforward offer to review.
Benefits of selling your house as is for cash:
- No need to pay for repairs, updates, or cleaning.
- You skip the listing process and open houses entirely.
- Buyers don’t rely on mortgage approval, reducing delays.
- You present a firm cash offer to the bankruptcy court.
- The sale can close in weeks instead of months.
- You reduce legal risks tied to falling behind or losing the deal.
A fast, as-is cash sale makes the process easier when you’re dealing with bankruptcy. You avoid extra complications, shorten the timeline, and keep more control over the outcome. If you’re in Kalamazoo and want a clean, reliable way to move forward, selling for cash may be your best option.
Sell Your House To Avoid Chapter 13 In Michigan
Worried about bankruptcy and need to sell your house fast in Kalamazoo, Michigan? Ryan Buys Houses offers a simple cash sale with no repairs, no listings, and no delays. Fill out our online form or give us a call today to get a no-obligation offer. Take control of your situation before it gets worse. We are ready when you are ready so please feel free to reach out.
