Selling a Home During Chapter 7 Bankruptcy

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When you file a Chapter 7 petition, a court appointed trustee will take over all your assets and liquidate them to pay off your creditors. However certain assets are considered exempt assets under bankruptcy law and you will be allowed to keep such assets.

Claiming Exemption

When you file your Chapter 7 petition, you must list your home as an exempt asset. You must list your home on Form Schedule A and Form Schedule C. The description of your home listed on both forms should be exactly the same. After you file your petition, a meeting of the creditors is held and the creditors will be informed of the exemptions sought by you. If there are no objections from the creditors and the trustee finds that the exemptions sought by you are in order, the trustee will announce that he or she is abandoning the exempt assets. Once the trustee abandons the assets, it means that the trustee no longer has any interest in them and they no longer form a part of the bankruptcy estate. You are now free to sell or transfer them.


First of all, like with any regular home sale, you will need a buyer. Once you locate buyer, you can sell your home to the buyer. When you have filed for bankruptcy under Chapter 7 and you want to sell your home, such sale must be made through the trustee. The process is the same as with a regular sale. You show your home to prospective buyer. However as the sale must be done through the trustee, it is lengthy and time consuming. The trustee is not required to sell your home to your chosen buyer or accept your proposed sale contract with the buyer. The trustee can market your home on his or her own even if you object to it. By law, you are required to co-operate with the trustee. The trustee’s objective will be to get the maximum sale proceeds.

Sale Proceeds         

Once the sale is complete, the trustee will use the proceeds to first pay the costs of the sale, followed by the liens against the property, then the trustee’s administrative fee, and lastly your claimed exemption. The remaining balance will be disbursed to creditors.

Getting Legal Help

Consult an experienced bankruptcy attorney for specific advice on selling a property during Chapter 7 bankruptcy. An experienced bankruptcy attorney can help you avail the homestead exemption you are entitled to and co-ordinate with your bankruptcy trustee to sell your home.