9 months left of Ch 13. Want to sell house - Please Help.

[itsjappo]

I have 9 payments left on my ch 13 plan (Nov. 2024) but we are trying to sell our house for financial reasons. How will that play into effect with my case?

I know it needs to be approved but how will the capital gains play into the ch 13 plan and debt owed?

Do I have to pay the original amount? Or just the left over debt in my plan or etc?

If the proceeds on the house sale is more than the debt required to be paid off, the trustee will not keep it right?

thanks for all your help

[shipo]

Welcome to the site!

Unfortunately there are way too many moving parts in this equation to be able to give you a good answer; time to talk with your Chapter 13 attorney.

[Barbisi]

itsjappo , I would heed shipo and definitely contact the attorney before putting your house on the market.
Per our experience, I would also suggest that if you can wait and hold out until your discharge, you will not have to deal with the trustee and creditors at all and any profit you make will be 100% yours and yours alone. But in the meantime, you might be able to line up a buyer and close almost immediately after your final payment and letter of discharge is posted. Nine months is not far away.
In our case, we already had a trusted realtor in 2022, and as soon as the discharge was recorded in early March 2022, she had a cash buyer ( i.e., an investor) ready to take our ailing 1975 two story off our hands at a more than decent profit, allowing us to relocate to a higher COL state with a better climate and more suitable lifestyle for us without the baggage of bad memories our BK13 left behind. (My husband secured a new job in April 2022, and we relocated in late May 2022.)
What kind of condition is your house in?
Will you need to repair or update anything prior to the sell? Is so, an investor might pay you enough to clear enough cash to make it worthwhile.
Are you planning to move out of state as we did? (From Colorado to Washington.) That could affect your timeline and strategy. (The housing market may improve next year.)
Please consider all your options and don't do something you may regret later. Good luck!

[itsjappo]

Thanks for the reply. We are doing our best to wait until the case is discharged. If my last payment will be in Nov 2024, when will we be able to sell the house after? Immediately or there’s a waiting period until everything is finalized?

We invested most of our money into our current house as an investment and are really eating our reserve so we might have to sell it sooner than planned. If we could, we would love to stay until the case is discharged. We have a good amount of equity we built.

Any other ideas what we can do? Just don’t want to get into financial trouble again. We have about 6 months reserve left and that’s uncomfortable for us so making sure we plan ahead.

[Barbisi]

I have a question, itsjappo .
Why would you have to sell before your discharge? Are you having trouble making the trustee payments and paying the mortgage?
If so, you must speak with the lawyer and trustee. You shouldn't have to sell your house to finance the plan payment.
We bought an awful fixer upper in 2014, spent 100k on renovations with CCs, and sold it 2016 for a loss, had enough cash left from the sale proceeds over to buy a second house in better shape in 2016 but couldn't pay the debt left behind along with the higher new mortgage and filed in early 2017.We sold it immediately after we received the discharge (about three months after the last payment posted.)
I hope this info helps.

[itsjappo]

Just our overall budget has gotten us on the risky side since we took out a heloc to reinvest in the house so now we’re at a negative each month causing us to drain our reserves month to month. Just don’t want to get in a situation where we will run out of reserve funds to supplement the overage amount of bills each month. Hope that clears it up

[Barbisi]

I am quite dense about Helocs, itsjappo, LOL ! I have no experience dealing with them.
Sorry for more questions, but did you take out this loan during your BK13 or before? If you already had this Heloc , shouldn't it have been included in your plan?
Do you already have a realtor selected?
Where will you live after the home sale?
justbroke could tell you more about the Florida real estate market since both of you live there.
We had to use CCs for our whole house gutted renovations because we had no real equity in the" investor" property we foolishly bought, and the repairs couldn't wait years until we could pay in enough to qualify for a home loan.
Once your BK13 ends, you should have a lot of freed up funds to end drawing on your reserves. You can't expect to squirrel away money when all your DMI is supposed to go to your creditors.

[Zombie13]

Hi itsjappo.
If you are approved to sell your home before the bk13 ends:
1. There is a high probability you will pay 100% of the debt, not just your bk payment. In addition, you will pay not just the principal, but accrued interest and penalties as well. This will be a painful amount of money: most likely, far more than the final 3 months worth of expenses.
2. If you sell while in a bankruptcy, it may be a shark feeding frenzy, and you are the bait. In other words, you will be perceived to be at a significant disadvantage in the transaction, so you may end up selling your home for far less than you should.
3. Reserves: You have 6 months of reserves, with a deficit of 3 months. What can you do now, for the next 9 months, in order to recover 3 months worth of expenses? Do everything, and anything you can, in order to recover the funds for those 3 months. You will be much better off once you make that final payment.
4. When to sell? Best option is to list the home as soon as you get the discharge notification from the court, versus listing/selling prior to your discharge for reasons listed above. Talk with your attorney though, as others have suggested regarding timing. They typically have a business relationship with the trustee, so they know the trustee's habits. Additionally, if you list in the early spring, house hunters are more abundant, and you should be able to get a higher, seasonal price.As Barbisi mentioned, we sold to an investor through our realtor, which worked out very well. Prior to our official discharge, we were discussing the home sale with our realtor, so when we got the discharge, we were effectively ready to list.

[itsjappo]

Thanks for your inputs. It really helps.

[vhs]

Patience always pays off.

Waiting makes more sense here.

Also, the real estate market is going to continue to rise at a steady pace of 1-3% a year, or more depending on where you live.

Also, consider getting a refinance from your mortgage company, which might be able to get you a more competitive rate. I did a modification in my Chapter 13 over a decade a ago. The bank ended up giving me 2% for 5 years, and then 3.25% for the reminder of the loan. I crushed it with my house, and don't plan to ever leave this place. I hated to have to file Chapter 13 after my corporate job loss, but it was the right move. Probably "saved" me 1M over 30 years, considering inflation, tax benefits, and other primary residence benefits. Selling a home just seems like a bad play unless you cannot afford the house or the area is crime ridden or you are flat broke and have no outs.