How To Sell A House In Bankruptcy In Fort Worth, TX

Selling a House While in Bankruptcy in Fort Worth, TX

While the prospect of filing for bankruptcy is terrifying, all is not lost, especially if you live in Fort Worth, Texas. Why? It’s because the Lone Star State has one of the strongest homestead exemption laws. More on that later.

Depending on the type of bankruptcy you’ve filed, you have options to help you manage and alleviate whatever financial concerns you may have. Declaring bankruptcy doesn’t necessarily mean you’ll have to lose your home. In fact, many people file for bankruptcy specifically to protect their home and avoid foreclosure. 

Selling your home can still be an option, whether you’re doing so to pay off debt or due to an unexpected life change, as life goes on when things get tough. By doing your research and working with an experienced bankruptcy attorney, you can find a solution that best fits your situation.

Contact us today to explore your options and get connected with trusted professionals who can guide you through selling your home during bankruptcy in Fort Worth, Texas. We’ll help you understand your choices and protect what matters most.

Can You Sell Your Home While in Bankruptcy?

Yes, it is possible to sell your house for cash in Fort Worth and other cities in Texas, even after filing for bankruptcy, regardless of the type of bankruptcy you’ve filed. However, it’s not as simple as listing your home online. There are a few additional steps that you must follow to ensure compliance with the law. Failing to follow these steps could negatively impact your case and potentially lead to its dismissal. 

It’s essential to work closely with your bankruptcy attorney throughout this process. They can guide you through the complex procedures, assist with the necessary paperwork, and help secure the court’s approval for the sale. 

Timing is also crucial and should align with your reasons for selling. For example, if your goal is to pay off debt, selling earlier in the process may be beneficial. On the other hand, if you’re hoping to retain more of your home’s equity, waiting until after your bankruptcy is discharged might be the better option to protect your financial interest. 

Understanding the Texas Homestead Exemption 

One area where Texans have a distinct advantage is the Texas homestead exemptions, which offer some of the strongest protections for homeowners in the country. This exemption shields your primary residence from most unsecured creditors during bankruptcy, giving homeowners peace of mind.  After all, a home isn’t just a place to live: it holds memories, security, and an emotional value that deserves protection. 

What sets Texas apart is that it offers unlimited equity protection under state law. Unlike most states that cap how much home equity you can protect in bankruptcy, Texas places no dollar limit on the amount of equity you can exempt. Whether your home has an excess of $100,000 or $500,000 in equity, it’s fully protected if you meet the legal requirements. 

To qualify for the Texas homestead exemption in a bankruptcy case, you must fulfill the following conditions:

• The property must be your primary residence
• You must have lived in Texas for at least 730 days (2 years) before filing
• You must have owned the property for at least 1215 days (roughly 40 months) before filing to avoid federal equity caps.  
• The property must fall within acreage limits: up to 10 acres in an urban area or 100 acres in a rural area (which increases to 200 acres for families).

It’s essential to note that, although the exemption is exceptionally generous, it applies to all debts. For example, your mortgage lender or tax authorities can still initiate foreclosure if you default on those specific obligations. This is the reason why people file for bankruptcy to avoid foreclosure, as it places an automatic stay on their property.

What Bankruptcy Means For Your Home 

Homeowners typically file for either Chapter 7 or Chapter 13 when declaring bankruptcy. Both types offer the opportunity to keep their property, but the protections and processes differ significantly. 

Under Chapter 7, known as the liquidation chapter, you may be required to sell your property if your home equity exceeds the homestead exemption limit. In that case, the excess equity can be used to repay unsecured debts, such as credit card balances. This is unlikely to happen given the generous Texas homestead exemption laws.

In contrast, Chapter 13 allows homeowners to develop a repayment plan based on their income and total debts. This plan typically spans 3 to 5 years, allowing you to catch up on missed mortgage payments and avoid foreclosure on your home. 

Although bankruptcy can allow you to keep your home, it doesn’t give you complete control over it. Once you file, your primary residence and other assets become part of the bankruptcy estate, which a court-appointed bankruptcy trustee manages. Their job is to ensure that all assets are accurately accounted for and that creditors are paid in accordance with the law. 

This means you can’t sell your home freely during bankruptcy, as any sale must follow legal procedures and receive court approval. While homeowners file Chapter 13 specifically to keep their homes, unexpected life changes can still happen. Although your repayment plan is designed to help you retain your property, you may still choose to sell it. 

If you choose to sell your home during bankruptcy, timing matters. Depending on whether the sale occurs before or after your case is closed, the proceeds can be used to either cover necessary expenses or pay creditors directly, which could even shorten your repayment period. 

How To Sell Your House in Bankruptcy 

1. Get the Court’s Permission 

You can’t just sell your home during bankruptcy without the court’s approval. Since your property is part of the bankruptcy estate, it’s under the control of the court and trustee—even if it is your house. That’s especially true in Chapter 13, where the court ensures that creditors are paid. 

Suppose you want to sell your home while you are in bankruptcy. In that case, you’ll need to ask the court for approval by filing a formal request, which includes details like the selling price, your reason for selling, how you plan to use the money, and a list of any creditors or liens attached to the property.  

2. Notify Your Bankruptcy Trustee and Creditors 

The trustee is in charge of overseeing your case and making sure everything aligns with bankruptcy laws or your repayment plan. They’ll examine how the sale affects your payment terms, your creditors, and your overall financial situation. 

Your attorney will file a motion with the court, and both the trustee and your creditors will be notified. They’ll have a chance to review or object to the sale. The court will then decide whether the sale is in everyone’s best interest by ensuring it’s fair, transparent, and that the proceeds are used correctly. This step is key to staging compliance and protecting your case. 

3. Prepare for the Sale 

Once you’ve gotten the green light from the court and trustee, it’s time to get the house ready for sale. You can go the traditional route, listing it and waiting for the right buyer, but keep in mind that time is a significant factor. While you wait, you might still be paying housing costs, or you may need to sell the home as-is if you’re short on money for repairs or staging. 

This is why having a clear plan matters. Consult with both your bankruptcy attorney and a real estate professional to determine the best approach for your specific situation, whether it’s a quick cash sale, a traditional listing, or something in between. The goal is to sell efficiently and in a way that supports your financial recovery. 

House Buying Girls buys homes from homeowners in bankruptcy, offering fast and efficient solutions to help you move forward. Whether you need a quick cash sale or prefer a more traditional approach, we offer personalized options tailored to your financial needs, ensuring a smooth and stress-free process.

4. Determine What To Do With The Proceeds

After the sale, your proceeds are protected under the Texas homestead exemption — but only for a period of six months. If you don’t reinvest the money into another qualified homestead during that time, you could lose the protection, and the funds may be used to pay creditors. 

That’s why it’s essential to plan and think carefully about your next steps:

• Are you using the money to buy a new home?
• Will part of it go towards your repayment plan in Chapter 13?
• Do you need to update your financial plan based on the amount of equity you received?

Tips for Selling Your Home During Bankruptcy 

Consult a Bankruptcy Attorney 

First things first: get a reasonable bankruptcy attorney. Not just someone experienced, but someone you feel comfortable working with, because bankruptcy is serious both financially and emotionally. If you don’t plan things correctly, it could make your situation worse instead of helping you get through the process smoothly. Attempting to sell your home without your attorney’s guidance might even violate bankruptcy laws and put your entire case at risk.

Know Why You’re Selling 

Just because you’re in bankruptcy doesn’t mean you’re powerless. Take control by understanding why you want to sell. Are you trying to downsize to afford lower monthly payments? Are you hoping to repay some debts faster or avoid foreclosure? 

Having a clear goal helps you and your attorney determine the best course of action to move forward. It also ensures that the sale supports long-term financial recovery, not just a short-term fix. 

Consult Real Estate Professionals Before Selling

Consult with a trusted real estate professional or agent who specializes in sales involving bankruptcy. They’ll help ensure that the property is market-ready, the title is clean, and all the paperwork is legally sound. If something is missed, such as failing to disclose the bankruptcy status or a lien, it could delay the sale or even result in the transaction being reversed later, especially if the court views it as a fraudulent transfer. 

An experienced agent can also help you decide how to sell: whether through a traditional listing or a cash buyer company. Their network and expertise can connect you to a cash for houses company in Dallas, Fort Worth, and surrounding cities in Texas, helping you close quickly — which is crucial if you’re trying to meet critical deadlines, such as the six-month rule for protecting homestead sale proceeds under Texas law. Selling within that window could mean the difference between protecting your equity and losing it.

Final Thoughts: How to Sell a House in Bankruptcy in Fort Worth, Texas 

If you’re considering selling your home during bankruptcy, the good news is that it’s absolutely possible, and many people do it successfully. Your house is likely one of your most significant financial assets, and selling it can be a smart move to help pay off debt, avoid foreclosure, and work toward greater economic freedom.  It’s all about knowing your options, getting legal guidance, and taking the proper steps at the right time. 

Want to sell fast and for cash? If you’re looking to sell your house during bankruptcy, the House Buying Girls can help.  We buy homes as-is, offering fair, competitive cash prices with no repairs, no fees, and no long waits. We’ve helped many homeowners in difficult situations, including those facing bankruptcy, sell their homes quickly. In fact, we can often close in 10  days or less!  Call us at (214) 393-8026 or complete the short form below to receive your no-obligation cash offer today!