About To Go Bankrupt? Your Options With Your Salem Property

by Aug 24, 2021

It is a bummer to declare bankruptcy, but sometimes it is the only option.

One of the choices you have to make is whether you should file for a Chapter 7 or Chapter 13. In any of these cases, you also have to decide whether you need to sell your property to pay your creditors.

Selling Your House Before Bankruptcy

When filing for bankruptcy in Salem, you’re allowed to protect a certain amount of property. However, if done incorrectly, you could face severe consequences, depending on the following circumstances:

  • Whether the property falls within the bankruptcy exemptions;
  • The date when you sold the property;
  • Whether you received the fair market value of the property;
  • How you spent the proceeds of the sale; and
  • Reasons for selling the property.

Selling property before filing for bankruptcy can be tricky, but it is possible when you need necessities. Sell the property for its value and keep records.

Alternatively, if you wish to sell property for any other reason, consult with a bankruptcy lawyer. An attorney can either help you reach your goals the right way or will explain why saving a little money isn’t worth getting into trouble with the bankruptcy court.

Selling Your Home During Bankruptcy

People think that filing for bankruptcy automatically results in the loss of their homes. However, if your home is more than what you owe your mortgage lender, the state homestead exemption can help protect it.

In Massachusetts, the homestead exemption allows you to protect up to $500,000 if you file for homestead protection. If you decide to file for Chapter 7, the trustee can’t sell your home if the exemption covers all of the equity. On the other hand, a Chapter 13 allows you to keep your home. In exchange, you

must repay your creditors an amount equal to the portion that isn’t covered by the exemption.
Getting permission to sell is the first step. The bankruptcy court will likely require that you file a Motion to Sale Real Property. Include all the details of the sale and your situation in the formal motion, including:

  • The selling price;
  • The name of creditors with liens on the property; and
  • What you plan to do with the proceeds of the sale.

Selling Your Property After Bankruptcy

Once your bankruptcy case is closed, you can sell any remaining assets you still own—including your home. Selling your home quickly is often the best way to avoid foreclosure if your mortgage is still in default.

The sale funds can be used for debt elimination on your last debt left over from bankruptcy if you can find a buyer who can cover the mortgage balance. You may even turn a profit if you hold equity in the home.

Your Options For Selling Your Home

When you choose to sell your property during the bankruptcy proceedings, your trustee usually has a say in how to liquidate your assets.

However, if you decide to sell your home before or after bankruptcy, you have more freedom to figure out how to sell your property.

You have two ways of selling your home. One is by putting up your home through a listing and negotiating with buyers. This is a costly option because it involves hiring a real estate agent and paying for his commission afterward. You might also need to repair and remodel your home to make it appealing to potential buyers. Another thing to consider is that you might not sell your home right away. Sometimes buyers back out from negotiations, and a sure buyer might not come along until after a few months.

Many people who plan to sell their home before or during a bankruptcy choose to sell their home for cash. One of the benefits of selling to a cash home buyer in Salem is how quick you’ll get your cash. The process can be completed in a few days, allowing you to receive your money right away. Another benefit of this option is that you don’t need to remodel or repair your home.

One of the trusted home buyers in Salem is Quality Home Reimagined, LLCa. For more information about their services, call (503) 610-8828 today.

The imminence of bankruptcy can be overwhelming, and you might consider selling your home to pay for necessities and other debt. By knowing what’s in for you in any options in selling your home, you’re likely to make the best decision for your circumstances.

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