If you’re in bankruptcy and thinking about selling your home in New Jersey, you’re not alone—and you’re not stuck. Whether you’re under Chapter 7 or Chapter 13, you may still be able to sell your house and walk away with cash or peace of mind. But it all depends on timing, equity, court approval, and your financial goals.
This guide explains what happens when you want to sell a house while in bankruptcy in New Jersey, and what options you have as a homeowner.
📃 First: Know Which Bankruptcy Chapter You’re In
Chapter 7 (Liquidation Bankruptcy)
- Usually lasts 4–6 months
- A court-appointed trustee may sell non-exempt assets to repay creditors
- You might lose your house if there’s significant equity
- Selling is possible, but the trustee controls the sale
Chapter 13 (Wage Earner’s Plan)
- Lasts 3–5 years
- You keep your home and repay debt through a court-approved plan
- You can sell, but court approval is required
In either case, your home becomes part of your bankruptcy estate, and the court has some level of control over what happens next.
🔓 Can You Sell a Home in Chapter 7 Bankruptcy?
Yes, but it’s more complicated.
In Chapter 7, the trustee’s job is to liquidate non-exempt assets to repay creditors. That could include your house if there is equity beyond what you’re allowed to keep.
Here’s how it usually works:
- The trustee may decide to sell your home if it has enough non-exempt equity
- You can request to sell the home yourself, but the trustee must approve
- Any proceeds above your exemptions go toward your debts
Exemption Tip: In NJ, the federal homestead exemption (as of 2025) is $27,900 per person or $55,800 for a couple—if you choose federal rules over state ones.
✅ Can You Sell a Home in Chapter 13 Bankruptcy?
Yes—and this is more common.
In Chapter 13, many homeowners stay in their house while catching up on mortgage arrears or reorganizing other debt. Selling the home can help:
- Pay off the remaining mortgage
- Settle outstanding debt more quickly
- End the bankruptcy plan early (in some cases)
Steps to Sell During Chapter 13:
- Inform your bankruptcy attorney
- Submit a motion to the court requesting permission
- Get approval from the trustee
- Work with a real estate professional to list or sell as-is
- Close—with proceeds disbursed according to the court’s orders
Important: You can’t sell your home without court permission. Doing so could jeopardize your case.
🚫 Selling Without Court Approval: Don’t Do It
Trying to sell your house without the bankruptcy court’s permission is a major legal risk. Even if you’re the legal owner, your bankruptcy filing gives the court authority over certain assets—especially your home.
This can result in:
- Your sale being reversed
- Creditors coming after you again
- Your case being dismissed entirely
🏡 Should You Sell Your Home During Bankruptcy?
That depends on your situation.
Reasons You Might Want to Sell:
- Your mortgage is too expensive
- You’re moving for work or personal reasons
- Your home has equity you’d like to protect
- You’re behind on property taxes or HOA fees
Reasons You Might Not Want to Sell:
- Your home has no equity
- You’re better off staying in your court-approved payment plan
Every situation is unique. Talk to your bankruptcy attorney and a real estate professional who understands distressed properties before deciding.
📈 What Happens to the Sale Proceeds?
In either Chapter 7 or Chapter 13, any proceeds from the sale:
- First go to pay off the mortgage and closing costs
- Then go toward trustee and creditor payments
- Any remaining exempt equity may be returned to you
You won’t walk away with the full sale price, but you might still be able to preserve some of your home’s value.
💼 How I Help Homeowners in Bankruptcy
If you’re in bankruptcy and need to sell your home in New Jersey, I can help you:
- Understand your options without pressure
- Work with your attorney and trustee
- List traditionally or sell fast for cash (as-is)
- Avoid foreclosure, protect your equity, and exit bankruptcy smoothly
I specialize in helping distressed homeowners throughout Bergen County and Northern NJ. There’s no pressure—just solutions.
🔹 Final Word: Yes, You Can Sell a House in Bankruptcy—But Get Guidance
Bankruptcy doesn’t mean you’re out of options. In fact, it may be the reset you need. With the right team and the court’s approval, you can sell your home, satisfy your obligations, and start fresh.
Reach out if you’d like a confidential consultation. No judgment—just help.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Always consult your bankruptcy attorney before making decisions about your home.