How to Sell Your House During Bankruptcy in Wisconsin
If you own a home when you file for bankruptcy, it becomes part of what’s known as the bankruptcy estate—a legal collection of all your assets. This means the court and bankruptcy trustee gain control over many financial decisions, including what happens to your property.
In October 2022, there was a 27% increase in Chapter 13 bankruptcy filings compared to the previous year. Across all bankruptcy chapters, there was a 7% rise, closely tied to the 7% inflation surge. Many homeowners facing financial instability due to job loss, rising living costs, or medical bills find bankruptcy to be their only viable option. Fortunately, filing for bankruptcy can pause or stop a foreclosure, giving homeowners in Wisconsin a fighting chance to regroup and possibly keep or sell their home under controlled terms.
Understanding Your Options
If your debts—secured and unsecured—total less than $2,750,000, you may qualify for Chapter 13 bankruptcy. This type of filing lets you restructure and repay your debts over time, usually 3 to 5 years. In contrast, Chapter 7 bankruptcy involves liquidating assets to repay creditors and is based on your overall financial condition and income limits.
Many homeowners consider selling their property during bankruptcy to alleviate their financial burdens. But is it possible? The answer is yes—you can sell your house during bankruptcy in Wisconsin, but there are crucial legal steps and approvals you must follow.
Let’s dive deeper into the key elements of this process.
Court Permission
Before proceeding with any sale, you must file a motion with the bankruptcy court for permission to sell real estate. This motion should include:
- The proposed sale price
- Your intentions for the proceeds
- A list of any creditors or lienholders on the property
This process ensures transparency and allows any involved parties (creditors, trustees, or the court) to raise objections or impose conditions before the transaction is finalized. Without this approval, you cannot legally sell your property during bankruptcy.
Contingency Clause in the Contract
In a traditional home sale, your real estate contract should include a bankruptcy court contingency. This clause makes the sale conditional on getting the court’s approval, which protects you and the buyer from legal issues if the court denies the sale.
If you filed under Chapter 7 and your home has significant non-exempt equity, the trustee might opt to sell it. The proceeds are then used to:
- Pay off secured creditors, like your mortgage holder
- Distribute exempted funds to you (as allowed by state or federal homestead exemptions)
- Pay unsecured creditors with any remaining balance
Proceeds From the Sale
When you sell your house during bankruptcy in Wisconsin, you may wonder what happens to the proceeds after satisfying your mortgage. The answer depends on your homestead exemption and other financial details.
Generally, any surplus funds will go toward:
- Paying off unsecured debts
- Covering administrative costs tied to the bankruptcy
- Possibly returning any exempt portion back to you
It’s crucial to consult with a bankruptcy attorney or financial advisor to understand what portion, if any, of the proceeds you’re entitled to keep.
Planned Payments in Chapter 13
Selling your home during a Chapter 13 bankruptcy may allow you to adjust your repayment plan. Depending on the amount gained from the sale, you might be able to:
- Pay off your bankruptcy plan early
- Increase monthly payments to reduce the plan’s length
- Use proceeds to cover certain high-priority debts
The court must approve any changes to your repayment plan, so be prepared to submit a modified plan with updated figures.
Request an Itemized Payoff Statement
Before finalizing the sale, request an itemized payoff statement from your lender. This document outlines:
- The remaining mortgage balance
- Any prepayment penalties
- Interest and fees due at the time of sale
Having this information ensures you’re not caught off guard by unexpected costs and can accurately determine your potential net proceeds.
Stillwater Properties – Your Local Solution
Don’t wait too long! The Wisconsin housing market is still competitive, despite rising interest rates and limited inventory. Now is an ideal time to sell—especially if you’re facing bankruptcy or foreclosure.
At Stillwater Properties, we specialize in helping homeowners like you navigate difficult financial situations. Our local cash buyers can make a fair, no-obligation offer on your home, with full transparency at every step.
When you work with Stillwater Properties:
- You avoid agent commissions and closing costs
- You receive a guaranteed closing date that fits your timeline
- You don’t need to make repairs, clean, or stage your home
- You sell directly, as-is, for cash
We’ll walk you through the numbers and compare our offer against traditional listing scenarios, so you can make an informed decision with confidence.
At Stillwater Properties, we live and work in Wisconsin, and we’re committed to helping our neighbors find practical solutions during tough times. Our process is stress-free, efficient, and designed to give you peace of mind—because you deserve a second chance without added pressure.
Final Thoughts
Selling your home while going through bankruptcy in Wisconsin may seem daunting, but with the right approach and guidance, it’s absolutely achievable. Whether you’re in Chapter 7 or Chapter 13, you still have options to protect your financial future and move forward.
For a no-stress, no-strings-attached offer on your home, reach out to Stillwater Properties today.
Your fresh start could be just a phone call away. Call Stillwater Properties at (608) 523-9807.