Can I Sell My House in Los Angeles, CA, if I Filed Chapter 13?

Chapter 13 bankruptcy gets treated like a financial dead end, where you’re locked into every decision you made before filing. That’s not really how it works, though. Your circumstances can shift during those three to five years of repayment, and selling your house is one of the bigger moves you’re still allowed to make.

The sale process looks different from what you’d normally do. Court approval is required, and your bankruptcy trustee gets involved in reviewing the deal. But it’s not some impossible task. Homeowners in Los Angeles do this regularly and move forward just fine. Check out this guide to learn more!

What Does Chapter 13 Bankruptcy Mean for Homeowners?

Chapter 13 reorganizes your debts into a repayment plan that spans 3 to 5 years. You make one monthly payment to your trustee, who then distributes the money to your creditors based on what the court approved.

For homeowners facing foreclosure, this is huge. Filing Chapter 13 stops the foreclosure process immediately and gives you breathing room to catch up on those missed mortgage payments over time instead of losing everything.

However, when you file, your house becomes part of the bankruptcy estate the moment your case gets approved. You still own it, you still live there, and you still make the mortgage payments.

The difference is that the court now has oversight over major financial decisions involving your property. You can’t sell without first getting permission, because the court needs to protect your creditors and ensure they get their fair share of any proceeds.

Can You Sell a House in Los Angeles, CA During Chapter 13 Bankruptcy?

Yes, you can sell your house in Los Angeles, CA, during bankruptcy. The catch is that you need bankruptcy court approval before you can close the deal.

Your trustee reviews everything about the proposed sale. They’ll look at the purchase price, examine your outstanding mortgage balance, and track where every dollar from the sale will go. They want to verify you’re getting fair market value and the sale actually benefits your financial situation.

The court checks the same things. They’ll review the buyer’s offer, confirm the price makes sense for current Los Angeles market conditions, and approve the distribution of proceeds.

Sale proceeds get split up in a specific order. Your mortgage lender gets paid off first. Then, closing costs and realtor commissions come out. After that, your trustee might direct some funds to your creditors, depending on your repayment plan and the amount of equity you have.

You could walk away with cash if you have equity beyond what your exemptions cover. California’s homestead exemption shields a certain amount, but anything above that typically goes toward paying your debts.

Judges in Los Angeles regularly approve these sales. They understand circumstances change, and selling sometimes makes more sense than struggling to keep a house you can’t afford or don’t want anymore.

Want to see what an approved sale could look like for you? Contact us to get a fair, court-ready offer for your home in Los Angeles, CA, and we’ll walk you through the bankruptcy approval process step by step.

Why Do Los Angeles Homeowners Sell During Chapter 13?

People sell their houses during Chapter 13 for various reasons. Your life doesn’t pause just because you filed bankruptcy, and sometimes selling makes way more sense than holding onto a property that’s not working for you anymore.

Job Relocation and Life Changes

Your company transfers you to another state, and keeping a house in LA from 2,000 miles away sounds like a logistical problem. Or your family situation shifts. You got divorced, your kids moved out, or you’re taking care of aging parents who need you closer.

These aren’t small adjustments you can ignore; that’s why selling the house becomes the most practical solution.

The Mortgage Payment Is Too Heavy

That mortgage payment looked manageable when you filed, but now, with your Chapter 13 payment stacked on top of it, you’re barely making it each month. You can’t manage the stress of juggling both payments, and you realize downsizing to something cheaper would give you actual peace.

Selling frees up hundreds of dollars every month that you could use to actually get ahead instead of constantly stressing.

You Want to Cash Out Your Equity

LA real estate has been thriving in the past few years. If your home value has jumped significantly since you filed, selling could give you a serious cash injection.

That money could help you pay off your Chapter 13 plan early or give you the financial cushion you desperately need to rebuild your life. Walking away with equity in your pocket is better than sitting on it while you struggle.

The House Is Underwater or Needs Major Repairs

Sometimes you’re dealing with negative equity, or the house needs repairs you can’t afford right now. The roof is shot, the foundation has cracks, or the plumbing is a disaster waiting to happen.

Dragging this out for another few years while the property deteriorates feels pointless. Selling lets you cut your losses and move on without the constant drain of a property that’s no longer serving you.

You Just Want a Fresh Start

Some houses carry too much baggage. You filed bankruptcy during the worst financial period of your life, and every time you walk through that front door, you’re reminded of it.

Selling means actually closing that chapter instead of living in a constant reminder of your hardest times. Moving somewhere new gives you the mental and emotional reset you need to really move forward.

Blue Wave Investments offers you a fresh start. If your home is tied to painful financial memories like bankruptcy, selling allows you to close that chapter for good. We help you move on quickly, so you can step into a new space—and a new mindset—without carrying the weight of the past.

How to Sell Your House in Los Angeles, CA, While in Chapter 13

You’ll go through more steps when selling your house during Chapter 13. You’ll also work closely with your bankruptcy attorney and trustee throughout the whole thing. Each step must be completed for the court to approve your sale.

Step 1: Consult Your Bankruptcy Attorney

Don’t list your house or talk to realtors. Don’t even mention selling to your neighbors before you sit down with your bankruptcy attorney.

This conversation needs to happen first because your attorney has to review your entire Chapter 13 plan and determine how a sale would affect it.

They’ll pull up your case files and look at your current equity position. This is how much you owe on the mortgage versus what the house is probably worth right now. They’ll also examine where you are in your repayment timeline because selling early in your plan looks different than selling in year four.

Your attorney will calculate potential proceeds from a sale and show you exactly where that money would go. They’ll explain how much would pay off the mortgage, how much would cover closing costs and realtor fees, and what might be left over after the trustee takes their cut for creditors.

This is also when they’ll tell you honestly if selling makes sense or if you’d be better off keeping the house. In some cases, the numbers just don’t work out in the client’s favor. It’s better to know that upfront before you waste time and money on the process.

They’ll start preparing the legal paperwork you’ll eventually need to file with the court, too. Getting organized early makes the actual filing process way smoother down the line.

Step 2: Notify All Required Parties About Your Intent to Sell

Once your attorney gives you the green light to move forward, they’ll send formal written notices to everyone who has a legal stake in your bankruptcy case. Your trustee gets notified first because they’re overseeing your whole Chapter 13 plan and need to know about any major financial moves.

All your creditors listed in the bankruptcy get notices, too. They have a right to know you’re planning to sell an asset that could affect the amount of money they receive.

Anyone with a lien on your property must also be notified. That includes your mortgage lender, obviously, but also any second mortgages, home equity lines of credit, or judgment liens that got attached to the house before you filed. These lien holders have a financial interest in the sale proceeds, so they get a say in the process.

This notification period is required by law and gives all these parties a chance to object if they think the sale isn’t in their best interest. Most of the time, nobody objects as long as the sale price is fair and the proceeds distribution makes sense. But the court needs this notification on record before they’ll even consider approving your motion to sell.

Your attorney handles all of this formal notification for you. They know exactly who needs to receive notices and what information those notices need to include to satisfy court requirements.

Step 3: Get Your Property Appraised

The court isn’t going to take your word for what your house is worth. You need a professional appraisal from a licensed appraiser who’ll come out and inspect your property. They’ll determine its fair market value based on recent comparable sales in your specific Los Angeles neighborhood.

This isn’t a quick online estimate. It’s a full appraisal report that breaks down your property’s condition, features, location, and how it compares to recently sold similar homes.

The appraisal protects everyone involved. It proves to the court that you’re not underselling the property to a friend or family member. It shows your creditors they’re getting a fair shake from the sale proceeds. And it gives you a neat documentation of your home’s actual value in the current market. This is needed when the judge reviews your motion.

Your attorney will recommend appraisers with experience in bankruptcy sales and who know how to format their reports for court submission. The appraisal usually costs between $400 and $600 in Los Angeles, and you’ll need to pay for it upfront. But this document becomes an important piece of your motion to sell, so it’s worth getting it done right.

Once you have the appraisal in hand, your attorney will use those numbers to structure the rest of your sale proposal for the court.

Step 4: Filing the Motion to Sell with the Bankruptcy Court

Your attorney prepares a formal motion that lays out every detail of your proposed sale.

The motion includes your professional appraisal showing the property’s current market value. It lists exactly how much you still owe on your mortgage and any other liens attached to the property.

It breaks down estimated closing costs, realtor commissions if you’re using an agent, and any other expenses that’ll come out of the sale proceeds.

The motion also explains how the remaining proceeds will be distributed after all those costs are paid. The court wants to see a clear accounting of where every dollar is going:

• How much your trustee will collect for creditor payments
• Whether you’ll receive any cash from your protected equity exemptions
• How the sale fits into your overall Chapter 13 repayment plan

If you already have a buyer lined up, you’ll attach a copy of the signed purchase agreement to your motion. If you’re still marketing the property, your attorney will explain that you’re actively seeking buyers and will update the court once you have a good offer.

Some judges prefer to approve the sale in principle first and then review the specific buyer details later. Others want to see the full deal before signing off.

Your attorney files this motion electronically with the bankruptcy court and pays the required filing fee. The court clerk then schedules a hearing date and sends out notices to all interested parties, letting them know when the judge will review your motion.

Step 5: Attend the Court Hearing

The judge schedules a hearing to review your motion to sell, and you’ll need to show up along with your bankruptcy attorney. These hearings usually aren’t dramatic courtroom scenes. They’re often pretty no-nonsense when your paperwork is prepared, and no one has filed objections.

The hearing might happen in person at the courthouse or via video conference, depending on the judge’s preference and current court procedures.

The judge will review all the documents your attorney filed and ask questions about the sale. They’ll want to verify the sale price makes sense compared to your appraisal. They’ll check that the proceeds distribution is fair and reasonable.

And they’ll make sure selling the house doesn’t mess up your ability to complete your Chapter 13 repayment plan. For instance, if you were using the house to satisfy part of your payment obligations, and selling it would leave you unable to make those payments.

Your attorney does most of the talking during the hearing. They’ll answer the judge’s questions, explain the financial breakdown, and address any concerns that come up. You might need to answer some questions directly, especially if the judge wants clarification about why you’re selling or what you plan to do after the sale goes through.

If any creditors or lien holders filed objections to the sale, the hearing is when those get addressed. Your attorney will need to address their concerns and either negotiate a resolution or argue that the objection shouldn’t block the sale.

Most objections are resolved before the hearing through negotiations, but occasionally they are hashed out in front of the judge. If everything checks out and the judge is satisfied, they’ll sign an order approving your motion to sell. You’ll get a copy of that signed order, which officially gives you permission to move forward with listing and selling your house.

Step 6: Obtain Trustee Approval for Your Sale

The court order approves the sale in general, but your trustee still needs to review and approve the specific terms once you have an actual buyer. The trustee will review the final purchase agreement to verify that the buyer is legitimate and financially capable of closing the deal.

They’ll confirm the sale price matches what the court approved and that the proceeds distribution breakdown is exactly what the judge signed off on.

Your trustee may request additional documentation at this stage. They may want to see the buyer’s proof of funds or a pre-approval letter to ensure the deal won’t fall through. They’ll review the title company’s settlement statement to verify that all the numbers add up correctly.

And they’ll make sure their portion of the proceeds for creditor distribution is properly accounted for.

If something in the final purchase agreement doesn’t match what was originally presented to the court, your trustee might require adjustments. Say the buyer negotiated a lower price after the inspection or closing costs came in higher than estimated.

Your attorney might need to file an amended motion with the court to obtain the approval of those changes before the trustee will sign off.

Once the trustee approves everything, they’ll issue written confirmation that you can proceed to closing. This trustee approval is the final hurdle before you can actually sell the house and transfer ownership to the buyer.

Step 7: List and Market Your Property

With court approval in hand, you can officially list your Los Angeles house for sale. Find a real estate agent with experience in bankruptcy sales.

They’re not drastically different from regular sales, but the timeline tends to be longer because of court involvement. Some buyers also get nervous when they hear “bankruptcy,” even though it doesn’t really affect them.

Your agent will market the property just as they would any other listing. They’ll take professional photos, write up a compelling description, post it on the MLS and popular real estate websites, hold open houses, and bring qualified buyers through for showings. In some cases, they may also target investors and cash buyers if you’re looking to sell your house for cash in Los Angeles and other cities in California, which can help speed up the process.

You don’t need to disclose your bankruptcy status in your listing, though it’ll come up during the purchase agreement phase when the buyer’s attorney reviews the title and sees the bankruptcy case.

You need to price your house competitively based on your appraisal and current market conditions in your Los Angeles neighborhood. You want to attract serious buyers quickly because every month the house sits on the market is another month of mortgage payments, property taxes, insurance, and utilities you’re paying out of pocket.

Your agent can pull recent comparable sales and help you set a price that’ll generate interest without leaving money on the table.

Be ready for the sales process to potentially take longer than a typical home sale. Some buyers get cold feet when they learn about the bankruptcy involvement, even though it really just means extra paperwork and court approval on your end. Work with your agent to address buyer concerns upfront.

Step 8: Accept an Offer and Finalize Court Approval

When you receive an offer you want to accept, your attorney reviews the purchase agreement to ensure it aligns with what the court has already approved.

If the offer price is at or above your appraised value and the terms are simple, you can usually accept it and move forward without going back to court. Your attorney will send the signed purchase agreement to your trustee for their final review and approval.

If the offer price comes in below your appraisal or includes unusual terms (like the buyer wants you to cover certain repairs or they’re asking for a longer closing timeline), your attorney might need to file an updated motion with the court.

The judge has to approve any material changes from the original motion they signed. This doesn’t mean the deal is dead; it just adds another court hearing to secure approval of the modified terms.

Buyers can also make lowball offers, hoping you’re desperate because of the bankruptcy. Don’t feel pressured to accept an offer that’s significantly under market value just because you’re in Chapter 13. The court actually protects you here. They won’t approve a sale where you’re getting ripped off, because that’s not in your creditors’ best interest either.

Once your attorney confirms the offer terms are acceptable and either match the original court approval or get updated approval for any changes, you can officially accept the buyer’s offer and proceed toward closing.

Your attorney coordinates with the buyer’s attorney and the title company to make sure everyone understands the bankruptcy requirements and timeline.

Step 9: Close the Sale and Distribute Proceeds

The closing day works almost exactly like a regular real estate transaction, except your bankruptcy trustee gets actively involved in how the money gets distributed.

You’ll sign all the closing documents at the title company or attorney’s office, and the buyer will transfer the purchase funds. The title company acts as the middleman. They will collect the money and distribute it in accordance with the court-approved plan.

First, your mortgage gets paid off in full. If you have a second mortgage or home equity line of credit, those get paid next in order of their lien priority. Then the title company deducts closing costs. These include title insurance, escrow fees, recording fees, and any prorated property taxes or HOA dues you owe.

Your realtor’s commission is deducted from the proceeds, too, if you used an agent to sell the property. Whatever money remains after all those deductions is where your trustee steps in. They’ll collect their designated portion in accordance with the court’s approval of your motion to sell. This money goes toward paying your creditors according to your Chapter 13 plan.

Depending on how much equity you have and California’s homestead exemption limits, you might receive a portion of the proceeds, too.

Your attorney will be present at closing or immediately afterward to ensure the title company distributes the funds correctly. They’ll verify your trustee receives their portion right away and that you get any protected proceeds you’re entitled to keep.

The whole distribution gets documented in a final settlement statement that shows exactly where every dollar from the sale went.

Once closing is complete and the funds are distributed, you’re done. The house is sold, and your mortgage is paid off. Your creditors got their share through the trustee, and you can move forward with whatever comes next.

Benefits of Cash Offers for Chapter 13 Sellers

Cash house buyers in Chino, Los Angeles, and other cities in California speed up the entire process. They don’t need mortgage approval, so you’re cutting out weeks of waiting for bank underwriting and appraisals.

Once you get court approval, a cash buyer can usually close in 2 to 3 weeks, compared to 45 to 60 days with traditional financing.

The reliability factor is huge, too. You don’t have to worry about the deal falling apart because someone’s loan got denied at the last minute. Cash buyers have proof of funds ready to go, and once the court approves the sale, you’re basically done.

Key Takeaways: Can I Sell My House in Los Angeles, CA, If I Filed Chapter 13?

You can sell your house during Chapter 13, but you need court approval, and your trustee has to sign off on the deal. The process involves filing a motion with the bankruptcy court, obtaining a professional appraisal, notifying all your creditors and lienholders, and attending a hearing where the judge reviews everything. If you’re ready to sell your Los Angeles home and want to skip the hassle of traditional buyers, Blue Wave Investments offers cash purchases for homeowners in Chapter 13. They understand the bankruptcy timeline and can move fast once you have court approval. Call (866) 613-3041 to get a cash offer or fill out the form below!