We buy houses in Florida. Are you getting behind on bills? Receiving daily phone calls from debt collectors and creditors? Trying to handle mounting bills and living expenses can be overwhelming for anyone. Thankfully, there are available solutions out there so that you can hit a reset button on your finances. However, some of those solutions look differently based on what type of situation you are going through.
For some figuring out payment plans is the answer, for others, it may be selling their residence to an investor. Still, it’s not unusual for people to decide to file for bankruptcy as a solution to better their financial position. We are your local Florida home buyers and we can help you with your problem. If you’d rather sell your property, we offer cash for houses in Florida.
When it comes to understanding what bankruptcy means legally, the information can be hard to discern. Questions may arise like: what is bankruptcy? What is the difference between Chapter 7 and Chapter 13 bankruptcy, and can you sell your house after filing Chapter 7 in Florida?
Well, you came to the right place for all your bankruptcy info, this article will cover all those tricky bankruptcy questions and more. Continue reading to find out more about bankruptcy in Florida and how to sell a house after chapter 7 bankruptcy.
Sell A House After Filing Chapter 7 Bankruptcy
What is Bankruptcy?
Bankruptcy is a legal proceeding that gives an individual or business freedom from their debts while providing their creditors an opportunity for repayment. Bankruptcy is dealt with in court and has various types of bankruptcy options otherwise known by their “Chapter” in the U.S. bankruptcy code.
Something to remember is that bankruptcy should be considered as a last resort. For some people, It’s an escape from uncontrollable debt or if facing foreclosure of their house. Just remember it does have downsides that are worth looking into before making a decision. For example, it is damaging to your credit because bankruptcy can remain on your credit history for 7 to 10 years, based on which chapter of bankruptcy you file.
Another option is to work with your creditors and figure out a payment plan or another acceptable solution. It wouldn’t hurt to ask the creditors if they would be willing to take reduced payments over a more extended time, that way, they wouldn’t have to wait for a bankruptcy settlement and risk getting nothing at all.
In a home loan scenario, give your mortgage company a call to see what options they may be able to offer you. Some lenders can set up repayment plans, like smaller payments over a more extended period. Forbearance, which is postponing payments for a certain period or loan modification, which might, for example, lower the interest rate on the home loan. Also, you can consider selling your house to an investor that could buy your residence quickly, letting you pay off some or all your mortgage.
And if you owe taxes, the Internal Revenue Service (IRS) is often willing to work out a deal. If you qualify, the IRS may offer payment plans or agree to take a lower amount to settle things.
If you still decide to file personal bankruptcy, you will file either Chapter 7 or Chapter 13 bankruptcy. To start the Florida bankruptcy process, your first step should be to consult with an attorney specializing in bankruptcy cases.
Chapter 7 vs. Chapter 13 Bankruptcy
Now that you have an overview of what bankruptcy is and how serious filing bankruptcy can be to your credit history. Let’s look at the differences between Chapter 7 and Chapter 13 bankruptcy.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is a type of personal bankruptcy you can file. This specific chapter cashes out your assets to pay your creditors. Your assets will be grouped into two categories:
Exempt assets are items you get to keep and include the equity in your house and automobile, pensions, social security, public benefits, personal items, clothing, and tools needed for your trade.
Unlike other states, Florida has a generous homestead exemption, so if you file for bankruptcy, you will be able to keep your home. The Florida exemption laws protect the equity in your home up to an unlimited amount. So in the state of Florida, no matter how much equity you have in your property, you get to keep it if you were to file Chapter 7 bankruptcy.
But something to keep in mind that filing this chapter won’t help you if you are behind on your mortgage payments. Although Chapter 7 will stop the foreclosure process temporarily, to keep your home, you will need to be current on your monthly payments when you file and stay current going forward. Otherwise, your mortgage lender will be able to take action stated in the home loan underwriting under Florida law.
There are a few requirements you must meet before claiming the unlimited homestead exemption. For example, you can use the unlimited exemption if you’ve owned a Florida home for at least 40 months (3 years and four months). The house is your primary residence, and the property isn’t bigger than half an acre in the municipality or 160 acres elsewhere.
Before you use this or any other exemptions, it wouldn’t hurt to consult with a local bankruptcy lawyer to confirm that you meet all requirements to qualify before filing your case.
Once an inventory of the assets has been made, the left-over non-exempt assets will be sold by a trustee appointed by the Florida bankruptcy court, and the revenue will be dispensed to the creditors.
Non-exempt assets may include property (other than your primary residence), a second car, trucks or boats, other motor vehicles, collectibles, and other valuable items such as bank and investment accounts.
Once you reach the end stages of bankruptcy, most of the outstanding debt will be discharged, and you will no longer be responsible for repaying the creditors. But keep in mind that certain debts like student loans, child support, and taxes are not resolved and will still need to be repaid.
Don’t forget, Chapter 7 bankruptcy will stay on your credit report for ten years from the filing date.
Usually, Chapter 7 is selected by individuals with few assets and with little to no disposable income. However, to be a candidate for Chapter 7, you are generally asked to take a means test– which is a way to determine if someone meets the qualifications for financial assistance. Chapter 7 bankruptcy is really for bankruptcy fillers that are going through the greatest hardship. People who don’t qualify in the Chapter 7 means test will be restricted to filing Chapter 13 bankruptcy, which establishes repayment plans.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a process in which a person in debt takes on a reorganization of their finances. This reorganization system is supervised and approved by the Florida court.
Individuals, married couples, running an unincorporated business, or self-employed are eligible to file Chapter 13 bankruptcy.
The financial reform under Chapter 13 is otherwise known as the “wage earner’s plan.”, It includes the debtor presenting and fulfilling an agreed-upon method of paying the outstanding debts within three to five years.
However, the repayment plan must supply a significant payback to creditors- at least equivalent to what they would collect from other forms of bankruptcy. This means all your disposable personal income is devoted to paying unpaid debts.
Chapter 13 bankruptcy asks for a prepared list of creditors owed with all outstanding amounts, an inventory of any property owned, details about income sources and amounts, and thorough information about monthly spending.
Once those details are collected, the debt is pooled into one monthly amount, and then the debtor pays an agreed amount monthly to an appointed impartial bankruptcy trustee. The trustee’s job will be to distribute the money to the creditors. As part of Chapter 13’s protection, creditors do not have direct contact with debtors.
For people to qualify for Chapter 13, their debts must be beneath certain limits: $419,000 for unsecured debt and $1,277,000 for secured debt (as of 2020, increases are in three-year increments). Also, to file, you must undergo credit counseling to be determined eligible for Chapter 13.
If you do file for Chapter 13 bankruptcy, once it is started, any home foreclosure proceedings are ceased.
The major downside to filing Chapter 13 is that you would be paying past bills on top of current financial obligations, which can be a stressful undertaking. And keep in mind, just like with Chapter 7 bankruptcy, you are still obligated to pay alimony, child support, taxes, and student loans when filing Chapter 13.
Unfortunately, research has shown that only one-third of all Chapter 13 filers completed their repayment obligations and saw their debts settled.
Although outstanding debts are paid back over the course of three to five years, Chapter 13 bankruptcy will remain on your credit history for seven years from the date of initiation.
The Bottom Line About Bankruptcy
When filing Chapter 7 or Chapter 13 bankruptcy, you will get to keep your house. But remember, with Chapter 7, this chapter of bankruptcy will not be able to help you if you are behind on your mortgage payments. Chapter 7 only stops the foreclosure process temporarily. So to keep your home, you will need to be current on your monthly payments when you file and remain current afterward. But that is easier said than done. If you’re considering bankruptcy, money is probably tight, and keeping up with all your bills, let alone a mortgage, is perhaps a challenge.
How to Sell a House After Filing for Chapter 7 Bankruptcy
Can you sell a house after filing for Chapter 7 bankruptcy in Florida? Yes, you can. The best way to avoid foreclosure and get you in a better financial position may be to sell your Florida home. Make sure to speak to your bankruptcy attorney and to your court-appointed trustee to verify the court doesn’t need to approve the sale first and that you would be able to keep all the profits.
Even though foreclosure proceeds are usually stopped when filing Chapter 13 bankruptcy, you may be in a better financial position if you were to sell your home.
If your mortgage and home expenses make up a big part of your monthly burn, selling your home would reduce that monthly expense. And if you’re facing foreclosure, selling your house would be a better solution than losing your home.
After filing Chapter 7 or 13 bankruptcy, keep this in mind- you will need to reestablish your credit before purchasing another house. When filing for bankruptcy and buying a home, you will need to wait two years after bankruptcy before a lender will consider your loan application.
Hiring A Realtor vs. Selling By-Owner
Once you get the green light that it is okay to sell your house after filing Chapter 7 or 13, you will need to determine how you plan to list the home. But keep the cost of selling real estate in mind. Generally, people look at hiring a local agent or selling by owner, otherwise known as FSBO.
Both scenarios would likely include doing home repairs or renovations to attract potential buyers and get a clean home inspection. Typically, buyers ask for a home inspection before closing, and lenders won’t approve a loan for a property that isn’t in good condition. The only issue with that is, completing renovations can be a challenge at this particular time because finances are probably very tight while going through the bankruptcy process.
Also, don’t forget when hiring a realtor or selling by owner, there are real estate fees that will reduce the amount you will get from the sale of your house. If you were to hire a realtor, their agent fees cost anywhere from 5-6%, and if you were to sell by owner, the buyer might use an agent to purchase your home, and usually, you are obligated to pay towards the buyer’s agent fees (2.5-3%).
Whichever way you choose to sell your residence, there will also be closing costs involved.
All things to keep in mind if you’re hoping to make a profit upon the sale of your Florida home.
Another Way To Sell Your Home After Filing Chapter 7
Another way to sell a house after chapter 7 bankruptcy is by working with a local investor who purchases houses for cash, like Florida Cash Home Buyers. Florida Cash Home Buyers purchase homes as-is- eliminating the cost of expensive home repairs.
Since you would be working directly with Florida Cash Home Buyers to purchase your property, there are no realtor fees, and they even pay closing costs, saving you thousands of dollars.
On top of that, they are a cash home buyer, meaning they don’t have to wait on bank approval and financing to close on your house. They can even close on your residence in as little as 7 days, which is great if you’re looking to sell quickly. Even if you need a bit more time, they can work with you on that too.
Selling to Florida Cash Home Buyers takes the uncertainty and stress out of the whole selling process, which is extremely helpful while going through bankruptcy.
→ For more information about how selling to Florida Cash Home Buyers works, click here.
Ultimately, if you have yet to file for bankruptcy, speak to an attorney before you do, there may be other options out there for you. One of them could be selling your home quickly to an investor to get you some cash in your pocket to pay off any bills or stop the foreclosure process. This path would help prevent the years of harmful effects filing bankruptcy would have on your credit.
If you’re going to be filing for bankruptcy and sell your home before, during, or after filing for Chapter 7 or Chapter 13, consult with a bankruptcy attorney. An informed attorney will go over any requirements that Florida has about reinvestment rules and any restrictions or conditions applying to real estate purchases following a Chapter 7 or Chapter 13 bankruptcy filing.
It’s vital to get this information before selling your house and wise before deciding which type of bankruptcy you should file.
Hopefully, whichever path you end up taking provides a brighter financial future for you and your family.
Sell My House in Florida
Instead of worrying about the eviction process in Florida, sell your house in Florida to Florida Cash Home Buyers today! If you think you need to sell fast, then you may need us. We at Florida Cash Home Buyers are local homebuyers in Florida, and we’re helping local homeowners have a quick and hassle-free sale. If your Florida house qualifies, we can make you a quick and fair cash offer.