QUESTION
Can I sign a home sale contract prior to discharge, but close after?
Asked on Mar 17th, 2016 on Bankruptcy - Ohio
More details to this question:
I have just made my final Chapter 13 plan payment. I'm planning to relocate and need to sell my house ASAP. Without listing it, I lucked out and found a motivated buyer who made me an offer. They are willing to move the closing date back a few months to wait for discharge, but want a contract now. Am I legally allowed to agree to agree sell the house with closing after discharge? Can I add a contingency of discharge in case there is a processing delay? I know I can't "sell" the house prior to discharge w/out approval, but does "sell" mean closing or entering into an agreement in this case? The other relevant fact is that there may be profit above what would be exempt under the plan. Is there any exposure there should the court or creditors under the plan find out after the fact?
3 ANSWERS
Bankruptcy Attorney serving Madison, WI
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Richard B. Jacobson & Associates, LLC
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Your question shows how important it is to have a well-informed lawyer represent you in a bankruptcy case. You can probably enter into the contract before discharge. You can probably keep any profit above the exempt equity. But you should consult a lawyer who has done many bankruptcies in your federal district to be sure.
Answered on Apr 15th, 2016 at 4:23 AM
An easy answer would be to obtain court or trustee permission to sell. Should be pretty routine. I can tell you that the final audit of a Chapter 13 case can take up to a year, so taking the risk that your case will close quickly is substantial.
Answered on Apr 15th, 2016 at 4:22 AM
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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You can enter into a contract for the future sale but you can't sell it now without the possibility that the bankruptcy court will use some of the sale price to pay your creditors. I recommend that you put a contingency provision in the house contract that closing will be after the discharge.
Answered on Apr 15th, 2016 at 4:21 AM