Selling a house with capital gains while in chapter 13 repayment plan

Member since 2023 · 23 posts · 5 votes

If a seller decides to sell their property with possible capital gains due to their equity while still in chapter 13 repayment plan, how does it affect the proceeds? They are scheduled to have their last payment Nov this year. Anyone know how this works. I been researching online but haven't found a clear answer to this.

I know they must have the sale approved by court first. Then they will have to pay off the plan early with the proceeds. The question is, do they pay what's left of their repayment plan? or the whole amount of debt they owe originally before the plan? What happens to the rest?

Thanks guys.

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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Christopher Eduardo:

If a seller decides to sell their property with possible capital gains due to their equity while still in chapter 13 repayment plan, how does it affect the proceeds? They are scheduled to have their last payment Nov this year. Anyone know how this works. I been researching online but haven't found a clear answer to this.
I know they must have the sale approved by court first. Then they will have to pay off the plan early with the proceeds. The question is, do they pay what's left of their repayment plan? or the whole amount of debt they owe originally before the plan? What happens to the rest?
Thanks guys.

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Bob Floss II
Attorney · Northbrook, IL · Member since 2017 · 719 posts · 549 votes
2y

@Christopher Eduardo It's hard to answer the question without knowing a lot of details on their chapter 13 plan and how much they are getting from the sale of the house. They have a few options including paying off the plan early and completing the chapter 13 and then selling the property.
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Christopher Eduardo
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Member since 2023 · 23 posts · 5 votes
2y
Quote from @Bob Floss II:

@Christopher Eduardo It's hard to answer the question without knowing a lot of details on their chapter 13 plan and how much they are getting from the sale of the house. They have a few options including paying off the plan early and completing the chapter 13 and then selling the property.

When you say pay off the plan early, do you mean pay off the remaining payment plan balance or the whole debt amount before the settled to be paid amount? The proceeds from the house sale should be able to cover the whole original debt amount. Just trying to figure out which amount is actually going to have to be repaid so they can decide if its worth doing or not for them since the completion of the case is so close. Thanks
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