When homeowners file for bankruptcy, their home becomes part of the bankruptcy estate—essentially, property they own. In October 2022, chapter 13 bankruptcy filings increased by twenty-seven percent compared to the previous year. Overall bankruptcies rose by seven percent across all chapters, directly mirroring the seven percent inflation increase. Many Chicago homeowners, particularly those with older properties, find themselves overwhelmed by mounting debt. As financial pressures beyond their control affect their ability to meet obligations to creditors, bankruptcy often becomes their only viable option to halt a foreclosure on their primary residence.
Homeowners with secured and unsecured debts under $2,750,000 qualify for chapter 13 bankruptcy. Alternatively, chapter 7 involves liquidation where the trustee sells assets to pay creditors based on your income, debt level, and ability to repay. Many distressed homeowners in older Chicago properties want to sell to address their financial burdens but aren’t certain if this is possible while bankruptcy proceedings are active—especially when dealing with city code violations that further complicate their situation.
While specific rules vary depending on your bankruptcy type and several factors influence the final decision, the short answer for most homeowners is yes—selling is possible, even with challenging properties. Continue reading as we explain how to sell your house during bankruptcy in Chicago. Please note that this information is educational only, not financial or legal advice.
Court Permission
To sell your house during bankruptcy in Chicago, you’ll need to file a motion with the court requesting permission to sell real property. This filing should include the selling price, your plans for the proceeds, and names of creditors holding liens on the property. This motion allows creditors and any trustee to raise objections, with the court ultimately determining how funds will be disbursed—a process that can be especially stressful when dealing with older homes that may have structural or code compliance issues.
Contingency
With a traditional sale during bankruptcy in Chicago, you’ll need to add a contingency clause to your contract stating that the sale depends on obtaining bankruptcy court permission. Under chapter 7, the trustee may decide to sell the house themselves if your property has substantial unprotected equity exceeding your bankruptcy exemption. The trustee would then use these funds to pay secured debts like the mortgage, provide you with your exempted amount, and distribute any remaining money to unsecured creditors on a pro-rata basis—a complex process that can be simplified with a direct cash sale.
Proceeds
You might wonder what happens to proceeds after satisfying your mortgage when selling your house during bankruptcy in Chicago. The outcome largely depends on your homestead exemption. In most cases, the proceeds will go toward paying remaining unsecured creditors or covering bankruptcy case expenses—which is why working with a transparent, no-surprise buyer becomes essential to understanding exactly what you’ll receive.
Planned Payments
Under chapter 13 bankruptcy, selling your house during the process in Chicago requires modifying your repayment plan. Depending on the final sale value, you might complete your plan earlier than expected since proceeds typically go directly toward your bankruptcy obligations—providing a faster path to financial recovery, especially when you can sell quickly without addressing costly repairs or violations.
Itemized Payoff Statement
To avoid unexpected fees after selling your house during bankruptcy in Chicago, always request a detailed itemized payoff statement from all involved parties—a practice we strongly believe in at CVG Properties LLC, where transparency and clear communication are foundational to our approach.
CVG Properties LLC
Don’t delay! With competition still driven by low inventory and rising interest rates looming, now is the ideal time to sell your property—and the most straightforward approach during bankruptcy in Chicago is working directly with the bilingual team at CVG Properties LLC. Our commitment at CVG Properties LLC is complete transparency throughout the process, because we believe you should know exactly what you’ll receive with no surprises. A CVG Properties LLC specialist will clearly outline your potential costs and profits from a traditional listing versus our fair cash offer. At CVG Properties LLC, we operate this way because we’re your neighbors here in Chicago—we genuinely care about our community and helping homeowners navigate challenging situations with older properties, especially those with code violations that other buyers avoid.
The experienced team at CVG Properties LLC has helped numerous homeowners navigate bankruptcy sales and offers the solution you need—providing a guaranteed closing date with no commissions, closing costs, or unpleasant surprises. If you want to avoid the stress and expenses of preparing your older Chicago home for the Chicago real estate market, especially with potential city code violations, a direct sale to CVG Properties LLC is your answer. Our cash investors never charge commissions and have no hidden fees. You can relax knowing you won’t even need to deal with showings when you sell directly to CVG Properties LLC. For a straightforward sale during bankruptcy: we’ll buy your house directly, in as-is condition, for cash—even handling any city ordinance violations that might otherwise delay your sale. We’ll even cover your moving arrangements prior to closing for complete peace of mind. Call CVG Properties LLC at 312-625-6506.