Question sell house under chapter 13, with second mortgage too.

[vin123]

Hello,

So my Husband I bought this house in 2020, and filed for ch 13 in 2022. I am looking at the possibility to sell the house, to pay off all debt.

Q1: so if all my equity in the house is more than enough to pay off mortgage, second mortgage, and the bankruptcy case, why is it needed in a real estate contract that it is subject to court approval if it above paying the bankruptcy off (I spoke to the attorney and he said after we get an offer it would have to be screened by the trustee, and get approval up to 30 days after submitting... my real estate agent said this will turn away lots of potential buyers because of the long drawn out process)?

Q2: what kind of language would need to be in an real estate contract purchase agreement (for the third party approval)?

Q3: would the trustee just not sign off on a fixed amount saying "you owe up to xxx$ and your case sale is approved"?

it feels that we are deadlocked against the trustee/court for up to 30 days after we already have an offer, this puts a huge rock into the road because this turns away any potential investors to view the property, and most home buyers, alot of agents will see the 30 day waiting period after submitting an offer and walk away. This system is good, but it just feels like its setup to get very far behind.

[despritfreya]

My response assumes:

1) You are in a confirmed chapter 13 plan;
2) The Order Confirming vested property back to you and;
3) Despite vesting, the Order Confirming does not have language that allows you to sell a homestead residence without further order of the court.

if all my equity in the house is more than enough to pay off mortgage, second mortgage, and the bankruptcy case, why is it needed in a real estate contract that it is subject to court approval

Because. . . a title company is not likely to close on a sale while you are in an open bk unless there is a court order.

what kind of language would need to be in an real estate contract purchase agreement

In a case where the Plan has not been Confirmed, I have the real estate agent place in the listing agreement that any contract entered into will be "subject to bankruptcy court approval". This same language is in any contract that is signed for the actual sale of the property.

If my client's Plan has been confirmed, the Order Confirming states something like "the Debtor may sell or refinance a homestead residence without further Order of the Court". This typically is enough for a title company. But, if it isn't, sometimes a letter from the Trustee will work. If that doesn't work, we get a Court Order - It's not a big deal.

As to the chilling effect of such language - I have been in this business nearly 35 years and the amount of times I have had a client have a problem selling a home due to such language is less than what I can count on one hand. It's just not an issue - at least in my experience. If the house is priced fairly and the buyer's real estate agent (or the buyer if there is no agent) understands the process, there should not be a problem. I always have my clients tell the buyer's agent (or buyer if no agent) to pick up the phone and call me if there are questions. They just need to be educated. And. . . I always tell the agents to set escrow out 45 days just to give me enough time to get a Court Order.

would the trustee just not sign off on a fixed amount saying "you owe up to xxx$ and your case sale is approved"?

If, at the close of escrow, you are going to pay off the bk, the Trustee will issue a payoff statement to the title company.

Des.