Selling a House During or After a Bankruptcy Filing
2 min read · Last updated 2026-08-03 · Reviewed by Camilo Palacio, Licensed Florida Real Estate Professional (License #3280644, REALTOR®)
You can sell a house while in bankruptcy, but the exact steps depend on which chapter you filed. Chapter 13 requires the bankruptcy trustee and the court to approve the sale before it closes, usually through a formal motion. Chapter 7 works differently, since a trustee may already control the sale of non-exempt property. Cash Flow Deals is one option once a seller and their bankruptcy attorney confirm the sale is permitted.
| Factor | Traditional Route | Cash Flow Deals |
|---|---|---|
| Court/trustee approval | Still required in Chapter 13; a motion to sell is filed with the court | Same requirement; net price is set first, then submitted for the same approval |
| Timeline | Motion to sell process commonly runs several months from filing to closing | Net price agreed upfront so the seller isn't also marketing the house during that wait |
| Buyer certainty | Offers can fall through while a motion is pending, restarting the approval clock | One accepted offer carried through the approval process |
| Repair condition | Buyer's lender may require repairs the seller can't afford during bankruptcy | Net price locked before repairs are scoped |
What the Automatic Stay Does the Moment You File
The moment someone files for bankruptcy, whether Chapter 7 or Chapter 13, an automatic stay takes effect immediately under federal bankruptcy law. It stops most collection actions against the debtor, including lawsuits, wage garnishment, and collection calls, without requiring any separate court order to trigger it. That stay is also why a homeowner in active bankruptcy generally can't sell, transfer, or refinance real property on their own without going back to the bankruptcy court for permission first.
Chapter 7 vs. Chapter 13: Why the Sale Process Is Different
Chapter 7 and Chapter 13 handle a house sale differently because the two bankruptcy types work differently. Chapter 7 is a liquidation, where a trustee can take control of non-exempt property to sell and pay creditors, though many homeowners' equity is protected by exemptions and the house never enters that process. Chapter 13 is a repayment plan, where the debtor keeps their property but has to keep making plan payments, and selling that property mid-plan requires going back to the court for approval since it changes the assets the plan is built around.
The Motion to Sell Process in Chapter 13
Selling a house during an active Chapter 13 case starts with a motion to sell filed with the bankruptcy court. That motion typically includes the property's appraised value, the proposed sale price, information about the buyer, and how the seller plans to distribute the proceeds, including paying off the mortgage and any distribution to the Chapter 13 plan. The trustee reviews the motion first, and the court schedules a hearing before approving it. From filing the motion to a closed sale, this process commonly takes several months, longer than a typical sale outside bankruptcy.
What Happens to the Sale Proceeds
Once a court approves a Chapter 13 home sale, the existing mortgage gets paid off first from the proceeds at closing, the same as any other sale. What's left over doesn't necessarily go straight to the seller. Depending on the case, some or all of the remaining proceeds may need to go toward the Chapter 13 repayment plan or unsecured creditors, which is why the proposed distribution has to be spelled out in the motion to sell before the court will approve it.
Where Cash Flow Deals Fits
Cash Flow Deals is a real estate investment company that can work inside a bankruptcy sale process once a seller's bankruptcy attorney confirms the sale is permitted. The process runs like this. First, request a net-price review, understanding that trustee and court approval still apply on top of it if the case is an active Chapter 13. Second, that accepted net price becomes the sale price included in the motion to sell filed with the court, instead of the seller marketing the house while a motion is pending. Third, once approved, closing happens through a licensed local broker partner as a novation-based, flat-fee process, with title transferring once, directly from seller to buyer, and the mortgage and plan distribution handled at the closing table.
Common questions
Can I sell my house while I'm in an active Chapter 13 bankruptcy?
Yes, but you need the bankruptcy trustee and the court to approve the sale first, typically through a motion to sell filed by your bankruptcy attorney.
How long does it take to sell a house during Chapter 13?
From filing the motion to sell to a closed sale, this commonly takes several months, since the trustee reviews the motion and the court schedules a hearing before approving it.
Do I get to keep the money from selling my house during bankruptcy?
It depends on the case. The mortgage gets paid off first at closing. What's left may need to go toward your Chapter 13 repayment plan or unsecured creditors instead of straight to you, depending on how the court approves the distribution.
Can I sell my house right after my bankruptcy case closes instead of during it?
Yes, once your case is discharged or closed, you're generally free to sell without further court approval, though any remaining liens tied to the case, like one reaffirmed as part of the plan, still need to be resolved before or at closing.
What stops automatically the moment I file bankruptcy?
The automatic stay takes effect immediately under federal law, without a separate court order, and stops most collection actions against you, including lawsuits, garnishment, and collection calls. It's also why you generally can't sell real property on your own while that stay is active without court permission.