Filing for bankruptcy while owning a home in Huntsville AL can feel overwhelming, but you’re not alone. In fact, according to data from October 2022, there was a 27% increase in Chapter 13 bankruptcy filings over the previous year. Across all chapters, bankruptcy filings rose 7%, mirroring the rise in inflation. Financial hardship—often due to medical bills, job loss, or inflationary pressure—has pushed many homeowners to seek relief. For many, their most valuable asset is their home, and selling it during bankruptcy may help relieve some of the financial burden.
If you’re navigating bankruptcy in Huntsville AL and wondering whether it’s possible to sell your house, the answer is usually yes—with some legal procedures in place. The process and outcome will vary depending on whether you filed for Chapter 7 or Chapter 13, but with the right guidance and a trustworthy buyer, a successful sale is within reach.
Court Permission Is Required
To sell your home during bankruptcy, you must first obtain court permission. This involves filing a motion with the bankruptcy court for “leave to sell real property.” The motion must outline key details like the proposed sale price, your intended use of the proceeds, and any creditors with secured liens on the property.
This step gives creditors and the trustee the chance to object or provide input, and the court will decide how funds should be distributed. Without court approval, the sale cannot move forward, making this a critical part of the process when selling your house during bankruptcy in Huntsville AL.
Contingency Clauses & Chapter 7 Considerations
If you’re pursuing a traditional sale, your purchase agreement should include a contingency clause stating that the sale is subject to bankruptcy court approval. This protects all parties involved and ensures the process remains legally compliant.
In Chapter 7 bankruptcy, your assets—including your home—may be liquidated to pay off creditors. If your home has significant equity that is not protected under your bankruptcy exemption, the trustee may decide to sell the property. In such cases, the mortgage will be paid first, followed by your exempted amount, and the remainder will be used to satisfy unsecured debts.
What Happens to the Proceeds?
After the mortgage is paid off, what remains from the home sale will depend largely on your homestead exemption. In many cases, proceeds from the sale will be directed toward settling your remaining debts or covering costs related to your bankruptcy case. If you’re unsure how much equity you’re entitled to keep, speaking with a bankruptcy attorney can provide clarity.
Chapter 13: Adjusting Your Repayment Plan
In Chapter 13 bankruptcy, you commit to a court-approved repayment plan. If you sell your house during this time, your repayment plan must be modified. The proceeds will typically go toward paying off the remainder of your debt, and in some cases, this could allow you to pay off your bankruptcy early and regain financial freedom sooner.
Don’t Forget an Itemized Payoff Statement
Before finalizing the sale, always request an itemized payoff statement from your mortgage lender. This ensures transparency and prevents any unexpected fees from arising after the sale is complete. Knowing the exact balance and fees associated with your loan will help you understand how much equity you’ll walk away with.
Madison County House Buyers Can Help You Sell Your House During Bankruptcy in Huntsville AL
Selling your house during bankruptcy can be complicated, but it doesn’t have to be stressful. At Madison County House Buyers, we specialize in working with homeowners in difficult financial situations. Our cash buyers understand the bankruptcy process and offer fast, fair solutions.
With Madison County House Buyers, you won’t need to worry about repairs, showings, agent commissions, or closing costs. We buy houses in Huntsville AL as-is, with no hidden fees—making the process simple and transparent. Our goal is to help you move forward without added financial pressure.
We’ll provide a no-obligation cash offer and explain how it compares to a traditional listing. At Madison County House Buyers, we believe in complete transparency because we care about our community and want every seller to feel confident in their decision.
If you’re ready to sell your house during bankruptcy in Huntsville AL, contact Madison County House Buyers today at to schedule a free consultation. Let us help you navigate this challenging time with dignity, speed, and support.