Can I Buy a House While in Chapter 13 Bankruptcy?

Written by True Tamplin, BSc, CEPF® | Reviewed by Editorial Team

Updated on December 14, 2022

Yes, you can buy a house while in Chapter 13 bankruptcy under some restrictions. However, you must obtain approval from the court overseeing your case and you must find a willing lender.

Most loans, including FHA loans, require that you have been in the case for at least one year, and that all the payments on your repayment plan are current.

Can You Sell a House While in Chapter 13 Bankruptcy?

You can sell a house while in Chapter 13 bankruptcy under a few conditions.

First, you must receive approval from the court overseeing your case. You must also notify your creditors, who will have the option to object.

Barring any objections, you are free to sell, however the proceeds from the sale will become a part of the bankruptcy estate and will be used to pay back your creditors.

FAQs

What does bankruptcy mean?

Bankruptcy is a legal proceeding in which a debtor declares their inability to pay back their creditors.

What are the different types of bankruptcy?

There are three common types of bankruptcy known as “chapters” in the U.S. bankruptcy code, Ch. 7, Ch. 11, and Ch. 13, each with varying criteria and consequences.

What is Chapter 7 bankruptcy?

Chapter 7 is known as a liquidation bankruptcy. Most of your property will be sold to pay off your debts, then whatever debt in excess of the value of your liquidated property will be cleared.

What is Chapter 13 bankruptcy?

Chapter 13 bankruptcy is a reorganization bankruptcy. With Chapter 13, you are able to keep your personal property and reorganize your debts to a payment schedule that enables you to pay back your creditors over time (often 3 to 5 years).

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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