When navigating through bankruptcy, understanding your options with significant assets, like your house, is crucial. If you’re contemplating selling your house during bankruptcy, there are essential considerations and steps you must follow, as this decision can significantly affect the outcome of your bankruptcy case.

• Seeking Permission: The bankruptcy court must approve the sale of your home.
• Type of Bankruptcy: Chapter 7 and Chapter 13 have different implications for selling your home.
• Equity Assessment: The amount of equity in your home can affect your ability to sell it during bankruptcy.
• Exemptions: North Carolina bankruptcy exemptions play a role in whether you can keep the proceeds from the sale.
• Proceeds from Sale: How the proceeds are handled depends on the bankruptcy chapter filed.

When you file for bankruptcy, your assets, including your house, become part of the bankruptcy estate. Filing bankruptcy doesn’t mean you lose all rights to your property, but it does mean that the trustee overseeing your bankruptcy case will have a say in what happens to it.

Selling Your House in Chapter 7 Bankruptcy

In a Chapter 7 bankruptcy, your assets may be liquidated to pay off creditors. That only happens if you cannot fully exempt and protect your property, which is rare. Here’s what you need to know:

• Trustee’s Role: The trustee will assess whether there is enough non-exempt equity in your house to sell it and use the proceeds to pay your creditors.
• Homestead Exemption: North Carolina allows you to exempt a certain amount of equity in your home. If your equity is less than the exemption limit, the trustee might not sell your house.
• Court Approval: If you wish to sell your house, you’ll need to petition the court and provide a compelling reason why it should be allowed. If you can exempt and protect all of the equity (or proceeds) on the property, then you will be able to keep the proceeds from the sale. 

Selling Your House in Chapter 13 Bankruptcy

In Chapter 13 bankruptcy, you reorganize your debts and make payments over a three- to five-year period. Selling your house in Chapter 13 is a bit different:

• Payment Plan Impact: The sale of your home can affect your payment plan. Proceeds might be used to pay creditors or could potentially shorten the length of your plan.
• Court Involvement: As with Chapter 7, you’ll need the court’s permission to sell your home, which may involve showing that the sale is necessary and that it won’t negatively affect your repayment plan.

1. Consultation: Talk to your bankruptcy attorney to discuss your reasons for selling and understand the potential consequences.
2. Motion to Sell: Your attorney will file a motion to sell the property with the bankruptcy court.
3. Trustee and Creditor Review: The trustee and creditors will have the opportunity to object to the sale.
4. Court Approval: If there are no objections, the court will typically approve the sale.

• Exemptions: In North Carolina, you can exempt up to $35,000 of equity in your primary residence ($70,000 for a married couple filing jointly).
• Proceeds: If the sale is approved, proceeds will go toward the bankruptcy estate and be distributed to creditors as per the court’s direction.

Always refer to the U.S. Bankruptcy Code and local North Carolina statutes for specific legal obligations and exemptions regarding selling a house during bankruptcy.