What if I Move after Filing for Bankruptcy but Before I Receive a Discharge?
People move for a variety of reasons, job change being one of the most common. But will moving affect your bankruptcy in any way? Although bankruptcy law is federal, you must file for bankruptcy in the district where you live. Also, bankruptcy relies on state law in certain situations, such as the list of exemptions you can use.
Generally, moving after filing for bankruptcy but before discharge is not a problem, for either a Chapter 7 or Chapter 13. But problems can often arise if you want to sell your home.
Moving and Chapter 7 Bankruptcy
This liquidation bankruptcy moves pretty quickly. Most of our clients have their debts discharged within 4-6 months of filing. If you choose to move before the discharge, you need to provide the court with an updated address. You can tell your attorney, who can file the new address with the court, or you will need to fill out a form yourself.
Because a Chapter 7 moves so quickly, problems with selling a home rarely arise.
Moving and Chapter 13 Bankruptcy
Chapter 13 takes a much longer time to complete than a Chapter 7. In particular, you will need to complete a repayment plan, which can take between three and five years. If you choose to move, then you need to notify the trustee who is overseeing your case. You make payments to the trustee, who then distributes the payment to your creditors, so the trustee needs to know how to get in touch with you.
However, you don’t have to worry about having your case transferred to a different court. Instead, you will still be in contact with the court where you initially filed your bankruptcy petition.
Moving and Selling Your Home
Homeowners who want to move must consider how the bankruptcy will affect their ability to sell their homes. This issue most often arises in the context of a Chapter 13 bankruptcy, simply because it takes so long. Chances are you will want to put your home on the market before you complete your repayment plan.
In order to sell, you will need the approval of both the bankruptcy court and the trustee. Make sure that your sale contract includes a provision that the sale is contingent on their approval.
You will also need to notify all your creditors before the sale goes through. In a Motion to Sell, you will include important information, such as:
- The sale price
- The value of the home based on an appraisal
- How you will distribute proceeds from the sale to your creditors
You will also need to create a Statement of Sale after the transfer that will include important information for your creditors. Proceeds from the sale become part of your bankruptcy estate and could go entirely to your creditors.
Should You Sell Your Home?
It is possible that moving and selling your home are not the best options for you. For this reason, you should carefully consider the best path forward if you are considering bankruptcy but envision that a move is on the horizon.
At Nowack & Olson, we have been advising consumers in Plantation for years, and we are available to meet with you, also. To schedule a free consultation, please call 888-813-4737.