Divorce, job loss, and medical bills are some of the leading causes that prompt Coloradans to consider bankruptcy. If you’re a homeowner considering filing for bankruptcy, you may be wondering whether selling your house before bankruptcy is an option.
Our Lead Bankruptcy & Debt Resolution Attorney Liz German discusses some of the rules surrounding selling your house before bankruptcy in the following article and video.
Need Help with Mounting Debt?
If your debt has become unmanageable, bankruptcy may be an option for you. We offer a case assessment to discuss your circumstances and possible legal options, whether that’s bankruptcy or an alternative. Call 303-688-0944 to schedule your 30-minute meeting or click here to set it up online.
Tips for Selling Your House Before Bankruptcy
Know the Pre-Bankruptcy Rules
Clients often ask, “Can I sell my house to a family member or friend before I file for bankruptcy?” The answer is yes, you can. There are rules, however, that you must follow to ensure you complete a legal transaction.
Charge a Fair Price
If you are considering selling your house before bankruptcy to someone you know, be sure the property is priced fairly. A good rule of thumb is to sell the home to your friend at the same price you would a stranger.
We recommend getting a realtor involved in the process even though you know the buyer. Not only can the realtor estimate the price of your home, but they’ll also help ensure all the appropriate paperwork is completed.
Be Aware of the Pre-Bankruptcy Lookback Period
When you seek financial relief through bankruptcy, a bankruptcy court will review your previous financial records, including any transactions – or sales – you have made during the four years before you filed.
Court officials will scrutinize transactions you made with friends and family. So, selling your house before bankruptcy must be on the up and up to pass legal muster.
Avoid Fraud When Selling Your House Before Bankruptcy
People sometimes use a quitclaim deed to transfer ownership of property from one property to another. Quitclaim deeds are a good legal instrument if used appropriately. One thing you want to steer clear of is signing a quitclaim deed over to a friend or loved one and getting no money for the sale of the property.
If you transfer your house to someone and do not get paid for it, a bankruptcy court will consider this fraud. And the court can undo the transaction. If that happens you could actually lose your home and get nothing from its sale.
Prevent Mistakes with a Bankruptcy Attorney
If you are considering selling your house before bankruptcy, we recommend talking to a bankruptcy attorney first. Bankruptcy can be an avenue to put your financial problems behind you, but it must be completed properly. Our Bankruptcy & Debt Resolution Team can help you prevent costly and illegal mistakes, which will save you time and money and get you back on the right track sooner.
Call 303-688-0944 to schedule a case assessment to discuss your debt resolution options.