Can I Do A Short Sale of My House While I am in Chapter 13 Bankruptcy?

It used to be that Houston Bankruptcy Judges frowned on short sales, and would not approve them during a chapter 13 bankruptcy. Now, we are having success in having short sales approved in Bankruptcy Court. A short sale is where you cannot sell your home for what is owed on it, so the lenders agree to take what is being offered, and typically, although not always, agreeing to forgive the rest.

It can be better to have a short sale on your record than a foreclosure. While both often result in a derogatory item on your credit report, a short sale mitigates additional costs and fees, and it is said that a short sale is somewhat less damaging to your ability to buy another house than a foreclosure.

If you have a short sale arranged, have a buyer and a signed Earnest Money Contract, contact your lawyer to file a Motion to Sell, and have him or her explain to the bankruptcy court in the motion that it is a short sale, and that all parties have agreed in writing to it.