What Happens to the Proceeds When You Sell a Home During Bankruptcy?

Costa Karellas
Jun 19
4 min read

Updated: Sep 20

TLDR: Yes, you can sell a home during bankruptcy in Missouri or Kansas with court approval. In Chapter 7, excess equity goes to creditors. In Chapter 13, proceeds may affect your repayment plan. Riverfront Home Buyers works with your attorney to buy as-is and close quickly.

Filing for bankruptcy is never easy. If you are also trying to sell your home, the process can feel even more confusing. Whether you are going through Chapter 7 or Chapter 13, one of the biggest questions we hear from Missouri and Kansas homeowners is:

“If I sell my house, what happens to the money?”

Can You Sell a House During Bankruptcy in Missouri or Kansas?

Yes, but only with court approval.

When you file bankruptcy, your home typically becomes part of the bankruptcy estate. That means the court or trustee must approve the sale before anything moves forward.

At Riverfront Home Buyers, we have helped homeowners across Jackson, Clay, Platte, Johnson, and Wyandotte counties sell homes during bankruptcy by coordinating with their attorneys and trustees.

What Happens to the Money If You Sell Your Home in Chapter 7 Bankruptcy?

Chapter 7 is a liquidation bankruptcy. Your non-exempt assets, including home equity, may be sold to repay creditors.

Here is how it usually works:

Proceeds go into the bankruptcy estate
Your state’s homestead exemption protects some of your equity
- Missouri: $15,000 (or $30,000 if jointly owned)
- Kansas: Unlimited exemption for a primary residence (within acreage limits)
Any equity above the exemption is used to repay debts

Court approval is required, and in most cases the trustee manages the sale unless your attorney is directly involved in structuring it.

What Happens to the Proceeds If You Sell Your Home in Chapter 13 Bankruptcy?

Chapter 13 is a repayment plan that lasts three to five years.

If you sell your home during Chapter 13:

You may keep the proceeds, but they can impact your repayment plan
Court approval is required, and your attorney must file a motion to sell
Some proceeds may be applied toward debt repayment

Most homeowners have more flexibility under Chapter 13 than under Chapter 7.

Is It Better to Sell Before Filing Bankruptcy?

Sometimes selling before filing can help you preserve equity, but timing matters.

If you sell right before filing, the court will review the sale closely. Selling below market value or hiding proceeds can be treated as fraud. Transparency is critical. Always consult a bankruptcy attorney before making this move.

How Riverfront Home Buyers Helps You Sell a Home During Bankruptcy

We are not attorneys, but we work with legal teams to make the process smoother and compliant.

Here is how we help:

Buy homes as-is with no repairs or showings required
Communicate directly with trustees and attorneys when needed
Offer flexible timelines that align with the court process
Close quickly once approval is granted

For many families, bankruptcy is one part of a larger financial crisis. Our role is to simplify the sale so you can move forward with clarity and dignity.

Contact us at 816-448-8164 to start the conversation or request an offer.

Frequently Asked Questions About Selling a Home in Bankruptcy in Missouri and Kansas

Can I sell my home during bankruptcy in Kansas City?

Yes. You can sell a home in both Chapter 7 and Chapter 13, but you must first get approval from the bankruptcy court or trustee. Once your attorney secures that approval, Riverfront Home Buyers can step in to purchase the property as-is and coordinate with your legal team.

Who gets the money if I sell my house during Chapter 7 bankruptcy?

In Chapter 7, sale proceeds go into the bankruptcy estate. Missouri protects up to $15,000 in equity ($30,000 if jointly owned). Kansas allows an unlimited exemption for a qualifying primary residence. Any equity above those amounts is usually distributed to creditors.

Can I keep the proceeds if I sell during Chapter 13 bankruptcy?

Often yes. In Chapter 13, you may be allowed to keep the money from a home sale, but the court may require part of the proceeds to be applied toward your repayment plan. Your attorney must file a motion for approval before the sale can take place.

What happens if I sell my house before filing for bankruptcy?

You are allowed to sell before filing, but the court will review the transaction carefully. Selling below market value or hiding proceeds may be treated as fraud. To protect yourself, always be transparent and speak with a bankruptcy attorney before making this decision.

Will Riverfront Home Buyers purchase a home during bankruptcy?

Yes. With court approval, Riverfront buys homes as-is during bankruptcy. We work directly with your trustee or attorney, handle the paperwork, and move quickly once approval is granted. Our process is designed to be respectful, fast, and compliant.

About the Author:

Costa Karellas, co-founder of Riverfront Home Buyers, brings leadership experience as a Marine Corps Captain and later as a manager of large offshore drilling projects. Those roles shaped his calm, intentional approach. At Riverfront, he focuses on helping homeowners find a fresh start and keeping the business running smoothly, while outside of work he values time with family and remains a loyal Patriots fan who also respects the Chiefs for their consistency and preparation.

Reviews & Testimonials From Kansas City Families We Have Helped

Riverfront Home Buyers is a veteran-owned, family-run business in Kansas City and a BBB-accredited company with an A rating, trusted by local families across Missouri and Kansas. Click here to read more reviews.

“ Best experience ever regarding the sell of my house. Negotiations were done in 5 minutes. Highly recommended” - Maronda W.

“ Alex helped me with the sale of my house. He gave me a fair offer and we were able to close in less than 30 days. Alex was great to work with - I found Alex to be personable, professional, honest and trustworthy - no last minute surprises. Thank you Alex for making the sale of my house a stress free experience! ” Lynn A.