When can I sell my house?

[5yrplan]

I'll make my final 60th payment in February of 2022. When can I sell my house? Must the closing be after discharge? What if it sold in February? I want out of Iowa.

#3 payments to go

[5yrplan]

I pay my mortgage outside of the BK.

[justbroke]

I believe that you need to wait until the case is closed. It's no different than a Chapter 7. Should you choose to sell before it closes you almost certainly will need permission. The best thing to do is to speak with your Chapter 13 bankruptcy attorney to ask the process for your district.

Selling before closing could complicate things. Even with the added complications of obtaining permission, you could still sell. The question is more about the impact on your bankruptcy estate.

[Barbisi]

@5yrplan,
You sound just like me - I want out of Colorado so bad, it's affecting my health in a major way. (See my dozens of ranting posts. LOL)
Where are you moving to? We want to move to Washington State and rent for a while and then if we don't want to stay there , move on.
I don't want to ever get stuck like this again!
Good luck on selling out and leaving Iowa soon! Big congrats on your upcoming freedom!!!!

justbroke, can the trustee force you to pay the remainder of what you still owe if you haven't paid 100% of the approved claims by your 60th payment? (i.e. if you paid 40K but originally owed 110K, would you have to pay the rest from the proceeds of your home sale?(in that example, around 70k.)
Please clarify what you mean by "the impact on your BK estate". (The lawyer said the trustee would "never allow us to sell our house".) How long can he delay the closing - for years?

[Zombie13]

Hey 5yrplan , congratz! Looks like you have the final payment when Barbisi and I do, so, Cheers! We plan to sell our home ASAP as well.

justbroke : to add to Barbisi 's comments:
I thought, the 'discharge' was the prize. But it sounds like, a homeowner needs to wait til they get the closing notification before they put the house on the market.
When we make the final payment, we will ask our attorney about it, along with a few other items.

[justbroke]

I don't believe that a Trustee could, after your 60th payment, claim that you could pay more into the plan by selling the home. Chapter 13s are different from a Chapter 7. The value of the home is "determined" at the start of the case and any unprotected value (non-exempt value) must be paid over the life of the Chapter 13. That life is known as the "applicable commitment period" and is what drives the Chapter 13. As you know people are in either a 36-month plan (for under-the-median income) or must be in a minimum 60-month plan (for over-the-median debtors).

(An under-the-median income debtor can propose any plan from 36 to 60 months... they just have a minimum plan of 36-months. And, of course, one could always propose a 100% plan for any duration less than 60 months.)

I don't think that the trustee could extend the plan period, so once the 60 payments are done it's done. But there is one caveat. That's if you get to the 60th payment and you haven't met the (calculated) plan base amount. This has happened to debtors -- including at least one here on BKForum -- where the payments didn't add up to the plan base amount. For review, the plan base amount is usually simply # of months in plan multiplied by the monthly payment amount. This is usually calculated at the time of confirmation and it usually doesn't change. (Some exceptions for districts where they take the tax refunds... they just add the refund amount to the plan base thereby increasing the plan base. Another exception would be for step-up and step-down plans, forbearance, and windfalls.)

While the discharge is the prize, that just gets rid of your old debt. It doesn't change the status of you being in bankruptcy. Unless and until the case is closed, a debtor is still bound to the bankruptcy estate, even if the plan reverted property back to the debtor. It's just a requirement and keeps things nice and clean.

Nothing would stop a debtor from listing a house after the discharge and before close. You just should not enter into a sales agreement or sell the property before the closing. There may be some more nuances in whether or not you can actually enter into a sales agreement prior to closing. Since you are close to discharge and you want to move, I'd start asking my attorney for suggestions of how to wind down the plan and get out of Colorado as quickly as possible post discharge/close.

[Zombie13]

Thanks justbroke . Hopefully this info is also useful to 5yrplan and others as well.
We "plan" (pun intended) to talk with our attorney after we make our last payment. We will need to ask if we owe him any additional funds for his work. He spent time with the plan modification process, and per our last conversation, he submitted his invoice to the former employer's (employer was 'R') legal plan. Reason being, while working for 'R', we had legal insurance and filed the BK. Therefore, the attorney submitted his invoice to that legal insurance company. We have not heard back from him since. So, that is a good lead-in to a conversation with him: i.e., do we owe you, mr. attorney, money for your efforts? And, we plan to sell the house... when can we list it (ie after the close date? etc). He seems a bit cranky (again, based on conversations heh) so, we'll wait til then.
So, once we get the Bankruptcy Closure ... Affidavit... er... thing... Golden Ticket(?), then we are no longer bound to the bankruptcy estate, and additionally, no longer have a status of: bankrupt. However, I think we will still need to communicate with the mortgage lender to get the bankruptcy status removed from the mortgage, prior to selling the home. Is this true? Or, is a flag of 'bankruptcy' that remains on the mortgage, a problem with selling a home, even though, we are no longer bankrupt?
I know I am really picking this apart under a microscope, but it's necessary to anticipate/avoid unpleasant surprises.
Thanks!

[justbroke]

There is not bankruptcy status on a home. Now, your mortgage lender may have the account marked as "do not collect" due to the bankruptcy. They will not remove that flag, and you shouldn't ask them to remove that discharged-in-bankruptcy flag from that account.

There's nothing else special. You just list the home (likely through a real estate agent), wait for offers, accept one, and then proceed normally. The lender wouldn't care less that you're selling the home. In fact they are happy because they get to close the books on the account that is marked with a discharged flag. That lender will be very happy.

The buyers don't even need to know that you were in bankruptcy unless you are attempting a short sale. Now, a short sale will make things more complex because a.) you must involved the lender, and b.) you must tell the buyer that it is a short sale and it required approval by the lender. Otherwise, no one ever needs approval to sell a home that has a lien by a lender. The only requirement is that the closer (title company or attorney if your State requires attorneys for closings) has to payoff the liens and issue the title insurance for an effective warranty deed.

[Barbisi]

Thank you justbroke for explaining the steps involved to finally getting done with the BK13 for good.
We have always felt from the beginning that our trustee was never satisfied with what we were able to pay and after the last increased payment in 2020, we wondered with even 60 payments would that be enough LOL!
We may have to wait longer for Zombie13 to start his out of state job search, since now we know the closing date is the real end of the bankruptcy for us.
I do hope @5yearplan is reading your responses as well, since they are the OP and they are finishing up roughly in the same time timeframe we will be.