Posted by JohnBoy on October 22, 2004 at 11:07:37:
If they file BK and choose to keep the property, which means they will need to catch up all the back payments, then after the BK is discharged, they can do whatever they want with the property.
But if they file BK and include the mortgage in the BK to be discharged the lender will file for a lift of stay and proceed with the foreclosure.
If they sell before filing BK and then file BK after selling the property the court can look back for a period up to 4 years, and in most cases usually a year, they can recind the sale if they got any money from the sale of the property.
So if they sell first, then file BK, they need to wait at least a year until after selling before they file BK.
The quickest way to resolve this would be to elect to keep their property, but everything will have to be brought current if they are behind on anything. Then once the BK is discharged they can sell the property and keep anything they get from the sale.
I am working with a couple who is in foreclosure. We are attempting to market and sell the house. They will not be netting much after the sale and will still have considerable debt.
My question is, how long after the sale of their property can they file BK?
It depends on how much the property is worth vs. how much they will get vs. how much the homestead exemption for a personal residence is in their state when filing BK.
If the house sells close to what it’s market value is and any amount they get from the sale that does not exceed their homestead exemption then they could file BK any time after selling.
If the home sells for a lot less than market value and/or they get more than their homestead exemption allows, then they would need to wait a minimum of one year after selling before filing BK. Otherwise the court can look back a year and recind the sale. The court could look back as much as 4 years but usually they only look back for one year in most cases, unless their was a lot of money involved.
Homestead exemptions differ from state to state. In some states like Florida, your personal residence is exempt in BK. In my state, IL., the exemption is $7500 per person where a married couple that jointly own the home would be exempt up to $15,000. That means if the home was worth $115k and it sold for $115k and their was $15k in equity, that $15k would be exempt from any creditors being able to get. Any amount or equity above $15k would be subject to creditors being able to attach and collect those proceeds to pay towards any debt owed to them.
So it depends on the amount of the homestead exemption in your state, vs. what the property sells for, vs. what the property is worth, vs. how much equity they get from the sale.
So as long as the property sells close to it’s true market value and any amount they walk away with is within the amount allowed based on their homestead exemption, then it shouldn’t matter when they file BK after selling the property.
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im trying to find out how it works after u file and then dicharged from this can you sell property and be able to keep the money that u make off of the proerty for example if i cleared 10,000 after the sell can they get the money from me