Does a Chapter 13 Debtor Really Have to Get Court Permission to Sell Property?



By:Mike Cibik

A Chapter 13 debtor MUST get Bankruptcy Court permission to sell property while their Chapter 13 case is pending. In fact a debtor in ANY bankruptcy chapter must get court permission.

Permission to sell comes in the form of an Order from the Court, which only comes after a motion is made seeking the Order to allow the sale of the property in question. The motion to sell must attach a copy of the sales contract, and must list the purchase price, proof of the property value, and where the proceeds of the sale are to go. If an attorney and/or realtor are getting paid from the sale proceeds, they need to be specifically approved to be paid as professionals.

It takes some time to get an Order from the Bankruptcy Court approving the sale. The motion needs to be filed at least 21 days before the date the Court sets for the hearing on the matter. Sometimes the Bankruptcy Court will allow it to be made on shortened time. Selling property while in a Chapter 13 is sometimes the best was to pay the creditors the amount they are required to get without having to make huge monthly payments to the Trustee. Early in the process, even before you file your Chapter 13 case you should fully discuss the possibility with your bankruptcy lawyer.


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