Filing for bankruptcy can feel like a storm has blown through your finances, but it doesn’t have to wash away the equity you’ve built in your home. If you need to free up cash, stop foreclosure, or reset your budget, you can sell your house—even while your case is still open. Below you’ll learn the step-by-step process, recent market and bankruptcy data that affect Wisconsin homeowners, and why a direct cash sale to Kustom Property Solutions often delivers the cleanest, fastest exit.
Can You Sell Your House While in Chapter 7 or Chapter 13 Bankruptcy?
Yes—courts allow home sales in both chapters as long as you follow the rules. Individual bankruptcy filings jumped 13 % year-over-year in March 2025 alone, so judges are used to approving legitimate sales that help filers move on. ABI
Reorganization. Because you’re already repaying creditors through a court-approved plan, you’ll need to show how sale proceeds will shorten or satisfy that plan. Houses with solid equity often let owners pay the plan off early.
Liquidation. The trustee may sell non-exempt assets, but if your homestead exemption covers your equity, you can petition to sell the property yourself and keep the protected portion.
Ask the Court for Permission
File a Motion to Sell Real Property that lists:
- The contract price and buyer (a cash buyer keeps things simple).
- Estimated closing costs and liens.
- How every dollar of net proceeds will be used.
Creditors and the trustee have a set window (usually 14 days) to object. If no objections—or if the judge overrules them—you receive a signed order authorizing the sale of your house.
Add a Bankruptcy Contingency to Your Contract
Traditional buyers often shy away from properties tagged “sale subject to bankruptcy court approval,” dragging out your timeline. A cash investor like Kustom Property Solutions writes the contingency directly into the purchase agreement, then waits for your court order—no financing delays, no inspection nit-picking.
Order an Itemized Payoff Statement
Before closing, request a payoff from your mortgage servicer and any junior lienholders. Double-check:
- Principal balance
- Accrued interest to the projected closing date
- Outstanding fees (late charges, legal costs, HOA liens)
Clear numbers prevent last-minute surprises and keep your court order accurate.
What Happens to Your Equity After the Sale?
- The trustee distributes proceeds in this order—mortgage, you (up to your state homestead exemption), then unsecured creditors pro rata.
- Net proceeds first pay the mortgage in full, then drop into your repayment plan. Many filers use the lump sum to finish the plan months—or years—early and receive a quicker discharge.
Local Market Snapshot – Why Timing Matters in Wisconsin
Inventory remains tight, giving sellers leverage even in a bankruptcy scenario. Homes that need cosmetic updates still attract multiple cash offers because investors can’t find enough deals. Use that demand to your advantage. RedfinRedfin
Why a Cash Offer Beats a Traditional Listing During Bankruptcy
| Concern | Traditional Sale | Direct Sale to Kustom Property Solutions |
|---|---|---|
| Court-approval timeline | Buyers may walk | Buyer waits; contract written to court order |
| Repairs & showings | Must spend cash you don’t have | Sell as-is, no open houses |
| Contingencies | Financing, appraisal, buyer inspection | None—all-cash |
| Closing costs | 6 % agent commissions + fees | $0 seller closing costs |
| Certainty | Could fall through | Guaranteed closing date you pick |
Unique Insight: Use Equity to Negotiate a Plan Modification
Many Chapter 13 filers don’t realize they can petition to modify their repayment plan immediately after closing. If your equity wipes out the remaining balance, your trustee will often support an early discharge motion, saving months of payments and interest. Talk to your attorney before the sale date so the motion can be filed as soon as funds hit the trustee’s account.
Real-World Example
Maria filed Chapter 13 in after medical debt piled up. She had $60,000 in usable equity but couldn’t refinance. Working with Kustom Property Solutions, she closed on her house 12 days after court approval, sent $45,000 to the trustee, and paid off the balance of her plan nine months early—saving roughly $4,800 in future payments and interest.
Results vary, but the strategy shows how speed plus equity turns a stressful bankruptcy into a fresh start.
Frequently Asked Questions
How long does court approval take?
Most motions are approved within 30 days if no creditor objects. Your attorney can request an expedited hearing if foreclosure is imminent.
Will the sale appear on my credit report?
The mortgage payoff will post as “paid” or “paid through bankruptcy,” which is typically better than a foreclosure notation.
Can I buy another home later?
Yes. FHA allows a new purchase one year after Chapter 13 discharge if you’ve rebuilt credit; conventional loans generally require two years.
Choose the Stress-Free Path with Kustom Property Solutions
Bankruptcy doesn’t have to lock you into a bad situation. By securing court permission, understanding how proceeds are applied, and leveraging today’s tight housing market in Wisconsin, you can walk away with protected equity and a clean slate. Kustom Property Solutions makes it even simpler:
- All-cash, as-is offers within 24 hours
- No commissions or closing costs—ever
- Help coordinating paperwork with your attorney and the trustee
- Flexible closing date so you can move on your timeline
Ready to see what your house could net during bankruptcy? Call Kustom Property Solutions at (262) 432-1760 or fill out our quick form today.