Selling a House During Chapter 7 Bankruptcy in North Carolina

You've filed Chapter 7 bankruptcy to eliminate overwhelming debt. Now you're wondering: What happens to my Newton home? Can I sell it? Will the bankruptcy trustee take it? Can I keep any proceeds?

Chapter 7 bankruptcy doesn't automatically mean losing your home, but it does complicate selling. Let me explain how Chapter 7 affects your ability to sell your Newton property and what to expect.

Chapter 7 Bankruptcy Basics

What It Is: "Liquidation bankruptcy"

• Discharges most unsecured debts in 3-6 months
• Trustee reviews assets
• Non-exempt assets sold to pay creditors

North Carolina Homestead Exemption:

• $35,000 equity for single filers
• $70,000 equity for married couples filing jointly
• Protected equity you can keep

Can You Sell Your Home in Chapter 7?

Short Answer: Yes, but you need court and trustee approval.

Automatic Stay: When you file, all asset transactions require court permission

Process:

1. File motion to sell property with court
2. Trustee reviews and approves/objects
3. Court hearing
4. If approved, proceed with sale

Timeline: Add 30-60 days for approval process

How Equity Affects Your Situation

Scenario 1: No Equity or Negative Equity

Example:

• Home value: $180,000
• Mortgage: $178,000
• Equity: $2,000

Result: Within $35,000 exemption, trustee not interested, you can keep or sell

Scenario 2: Equity Within Exemption

Example:

• Home value: $200,000
• Mortgage: $170,000
• Equity: $30,000

Result: $30,000 within $35,000 exemption, protected, you can sell and keep proceeds up to exemption amount

Scenario 3: Equity Exceeds Exemption

Example:

• Home value: $220,000
• Mortgage: $160,000
• Equity: $60,000

Result: Trustee may want to sell to access $25,000 above exemption ($60,000 - $35,000)

When Trustee Will Sell Your Home

Trustee Motivated to Sell If:

• Significant non-exempt equity
• Sale would benefit creditors
• Value exceeds exemption by $5,000+

Trustee Usually Won't Sell If:

• Little or no equity
• Selling costs would consume proceeds
• Not worth the effort

Selling Your Home Yourself in Chapter 7

Why You'd Want To:

• Control the process
• Choose buyer
• Potentially better outcome
• Faster timeline than trustee sale

Process:

1. Hire attorney to file motion
2. Explain why sale is beneficial
3. Propose proceeds distribution
4. Get court approval
5. Complete sale
6. Distribute proceeds per court order

Distribution of Proceeds:

1. Mortgage payoff
2. Closing costs
3. Your homestead exemption ($35,000)
4. Remaining to trustee for creditors

Cash Buyers and Chapter 7

Advantages of Cash Buyer:

• Fast closing (once court approves)
• No financing contingencies
• Simpler transaction
• Trustee prefers certainty

Process:

1. Get cash offer from Triton Homebuyers
2. Attorney files motion showing offer
3. Court approves sale
4. Close quickly (no financing delays)

Timeline: 45-75 days (30-60 court approval + 7-14 days closing)

Real Newton Example

Chapter 7 Filed

• Home value: $195,000
• Mortgage: $165,000
• Equity: $30,000 (within exemption)

Trustee's Analysis:

• Equity within $35,000 exemption
• No value for creditors
• Debtor can sell if desired

Sale Process:

Cash Offer: $190,000 Attorney files motion: Approved in 35 days Closing: 10 days after approval Proceeds:

• Mortgage payoff: $165,000
• Closing costs: $0 (cash buyer pays)
• To seller: $25,000 (after minor costs)

Seller kept proceeds because within exemption.

Staying in Your Home Through Chapter 7

Option: Keep home and reaffirm mortgage

Reaffirmation: Agree to remain personally liable for mortgage debt

Requirements:

• Continue making mortgage payments
• Must be able to afford payments
• Pass means test

Result: Debt discharged except reaffirmed mortgage

Questions About Chapter 7 Home Sales

"Will I lose my home?" Not automatically. Depends on equity and exemptions.

"How long does court approval take?" 30-60 days typically for sale motions.

"Can I buy another home after Chapter 7?" Yes, but waiting periods apply (2-4 years for most loans).

"What if I'm already behind on mortgage?" Bankruptcy stops foreclosure temporarily, but you must catch up or sell.

"Can I use a real estate agent?" Yes, but commission comes from proceeds, reducing what's available.

How Triton Homebuyers Helps

We buy Newton homes in Chapter 7 bankruptcy:

Experience With:

• Court approval process
• Working with bankruptcy trustees
• Timeline requirements
• Proceeds distribution

We Offer:

• Fair cash offers
• Fast closing once approved
• Work with your attorney
• Simple process

Contact Triton Homebuyers for help selling your home in Chapter 7 bankruptcy.