Selling a Maryland house during a Chapter 7 or Chapter 13 bankruptcy: the automatic stay, the trustee, the motion to sell, and what a cash buyer needs from your attorney

People file bankruptcy to stop a foreclosure, to get out from under credit cards and medical bills, Then, a few months in, the house becomes the problem. The mortgage is still due, the plan payment is tight, or the trustee has started asking what the place is worth. Selling is often the right answer, and the law allows it, but the sale runs under rules that have nothing to do with a normal Maryland closing. This article explains what changes the moment you file, how a sale works in each chapter, what the exemption does to the money, and how a cash sale fits the court’s timeline. It builds on the short bankruptcy answer on this site.

The automatic stay, and why the house is not yours alone anymore

Filing a petition does two things at once. Section 362 of the Bankruptcy Code imposes the automatic stay, which freezes collection against you, including a scheduled foreclosure auction. Section 541 sweeps everything you own into the bankruptcy estate, and the house is the biggest item in it. From that moment a deed you sign on your own is a deed to property that belongs to the estate, and a title company that finds the case on a search will not insure the sale. Every path to settlement runs through either the trustee or an order of the United States Bankruptcy Court for the District of Maryland, which sits in Baltimore and in Greenbelt.

Chapter 7: the trustee’s house until it is abandoned

In a Chapter 7 case a trustee is appointed to liquidate whatever is not exempt and pay creditors. The trustee’s first look at your house is a math problem. Take a realistic sale price, subtract the mortgage payoff, the cost of selling, and the homestead exemption Maryland lets you keep, and ask whether anything is left for unsecured creditors. If there is, the trustee can sell the house under Section 363, with notice to creditors and a hearing if anyone objects. If there is not, the trustee abandons the house under Section 554, which returns it to you, and you can sell it yourself once the case is closed, which in a simple no asset case is usually a few months after filing. You do not choose which happens, but honest numbers early and a real buyer in hand, if there is equity, shape the trustee’s answer.

Chapter 13: your house, the court’s permission

Chapter 13 works differently. You keep possession of the house and pay creditors through a plan that runs three or five years under Section 1322. Section 1303 gives you, not the trustee, the right to sell estate property, but it is the same Section 363 right, which means notice and a court order. Your attorney files a motion to sell that names the buyer, states the price, lists the mortgage payoff and the closing costs, and says where every remaining dollar goes, whether that is to you as exempt equity, to the plan, or to the trustee to pay claims in full. The trustee and creditors get a window to object. If nobody does, the court signs an order approving the sale, and the title company settles on it. If the sale pays the plan off, the case can end early with a discharge. If you sell without the motion, the sale can be unwound and the case can be dismissed.

The homestead exemption and where the money goes

Maryland has opted out of the federal list of exemptions, so the amount of equity you can protect in an owner occupied home comes from Section 11-504 of the Courts and Judicial Proceedings Article. The figure is set by statute, is adjusted from time to time, and changed in 2026, so ask your attorney for the current number rather than trusting a website. What matters for the sale is the order of payment at settlement. The mortgage and any other liens on the house are paid first, then the costs of sale, then the exemption comes to you, and whatever is left belongs to the estate in Chapter 7 or goes into the plan in Chapter 13.

What the mortgage does after the discharge

A discharge ends your personal liability on the note. It does not touch the lender’s lien, which stays on the house until it is paid. It also explains the motion for relief from stay you may see in the docket. Under Section 362(d) a lender that is not being paid can ask the court to lift the stay as to the house, and once it is lifted the Maryland foreclosure process picks up where it stopped. If that motion is pending, the time to sell is now, before the order enters, and our foreclosure page covers what the state timeline looks like once it restarts.

When the house is worth less than the loan

Bankruptcy and negative equity often arrive together. A house that would not net anything after the mortgage is of no interest to a Chapter 7 trustee, who abandons it, and a Chapter 13 debtor can still sell it with the lender’s consent to a short payoff and the court’s order on top. The two approvals run in parallel, the lender’s loss mitigation department on one track and the motion on the other, and a cash buyer who can wait for both is the only kind that closes. Our short sale article walks through the lender side.

What the title company will ask for

A Maryland title company that finds an open or recent bankruptcy on the search will want one of three things before it records a deed. In a Chapter 7 case where the trustee sells, it wants the order approving the sale and a deed signed by the trustee. In a Chapter 7 case where the house was abandoned or the case closed, it wants the docket entry showing that. In a Chapter 13 case it wants the signed order approving the sale, and it will disburse exactly as that order says, with the trustee’s share sent by the settlement officer rather than passed through you. Judgment liens and tax liens recorded before the filing are handled the same way they are in any other sale, which our lien article explains.

How a cash sale fits the court’s timeline

The motion to sell needs a real contract behind it, and the court and trustee look at the same things a careful seller would. A written offer at a price that can be defended, proof that the buyer has the funds, no financing contingency that can fail after the order enters, and a closing date that follows the order rather than racing it. We buy houses in Chapter 7 and Chapter 13 across Maryland and work directly with your attorney and the trustee. You send us the address and the case number, we look at the house, and you have a written offer within a day with the math shown against a listing. The contract is written subject to court approval, your attorney attaches it to the motion, and a licensed Maryland title company settles two to three weeks after the order enters. The house sells as it sits, with nothing to repair and nothing to clear out, which is the point of our as-is page.

Tell your attorney before you talk to any buyer, find out whether the trustee wants the house or has let it go, and get the motion drafted around an offer that will survive the hearing. A sale inside the case runs slower than a normal closing by the length of the notice period, and it is still the fastest way out.