How to Sell a House During Bankruptcy in Washington
Can you sell a house during bankruptcy in Washington?
Yes, but you can't just list it. To sell a house during bankruptcy in Washington, you need the trustee's sign-off and, in most cases, a court order before you close. In Chapter 13 you generally keep your home and ask permission to sell it. In Chapter 7 the trustee controls any equity above your homestead exemption, and in King County that exemption is tied to the county median home price, so many sellers keep most or all of their equity.
By Samantha Schlegel | October 27, 2026
If you need to sell a house during bankruptcy in Washington, you're running on two clocks at once: the court's and the market's. The court moves slower than you'd like, and the market won't wait for it. That's exactly why the order of operations matters more here than almost anywhere else in real estate.
Here's the short version of what I tell sellers who ask: talk to your bankruptcy attorney first, get the approval path in writing, and only then list. Sellers in Shoreline, Edmonds, and Mountlake Terrace come to me after the filing, after a foreclosure notice, or while they're still deciding whether to file at all. The right move is different for each, so let's sort out which one you are.
Start with where you are in the process
You haven't filed yet. You have the most options, and the most room to make a costly mistake. Selling at a fair price on the open market is very different from signing the house over to a relative for a dollar. A bankruptcy trustee can review recent transfers, and a cheap handoff can be undone. Ask your attorney whether selling first, filing first, or doing neither makes the most sense.
You're in Chapter 13. You're on a three-to-five-year repayment plan, and you generally keep the house. Selling it mid-plan usually means notifying the trustee and getting court approval, and sometimes changing the plan itself. What's required depends on your confirmed plan and the local rules, so don't guess. Your attorney will tell you whether you need a motion to sell, a plan modification, or both.
You're in Chapter 7. Here the trustee looks at your equity. If there's no equity beyond what Washington lets you protect, the trustee has no reason to sell, and you usually keep the house as long as you stay current on the mortgage. If there's meaningful non-exempt equity, the trustee can sell the home, pay your exemption to you, pay off the mortgage, and distribute the rest to creditors. If you'd rather control the sale than hand it to the trustee, talk to your attorney early.
King County is in the Seattle Division of the U.S. Bankruptcy Court for the Western District of Washington, along with Snohomish County. That covers every neighborhood I work in.
What the homestead exemption means for your equity
Washington's homestead exemption (RCW 6.13.030) is the greater of $125,000 or the county median sale price for a single-family home in the preceding calendar year. That's unusually generous, and it matters a lot on this side of the state.
NWMLS reported a 2025 King County single-family median of $974,900. Because the exemption is tied to the prior year's median, a 2026 filer in King County may be able to protect equity in the neighborhood of that figure. The court uses data from the Washington Center for Real Estate Research, so the official number can differ slightly. Confirm the exact amount with your attorney.
Here's why that changes the picture. Say you sell a Shoreline home for $850,000, owe $520,000, and pay roughly $60,000 in commission, excise tax, and closing costs. That leaves about $270,000 in equity. That's an illustration, not your number, but it's well inside a median-based exemption. In a case like that, a Chapter 7 trustee usually has little reason to sell your house out from under you.
A few details to know:
You need to have lived in Washington for 730 days before filing to use Washington's exemptions. Otherwise your prior state's rules may apply.
Sale proceeds get extra protection. Under RCW 6.13.070(3), proceeds from a good-faith voluntary sale of your homestead are exempt for one year if you use them to buy a new homestead.
The exemption is for your principal residence. A rental or second home is treated differently.
How the sale actually works
Whether you're in Chapter 13 or Chapter 7, the sequence below keeps a deal from collapsing at the last minute.
Call your bankruptcy attorney before you call an agent. Ask what approval you need, who files it, and how long it typically takes.
Get the approval path in writing. Trustee consent and a court order are two different things. A trustee not objecting doesn't replace an order when one is required.
Price it to sell, with a realistic timeline. Approval often hinges on a specific buyer, price, and contract. If that buyer walks, you may need a new motion and new notice to creditors.
Write approval into the contract. Make the purchase agreement contingent on court or trustee approval, and tell the buyer's agent up front. Buyers can handle a longer timeline. They can't handle a surprise.
Reconcile every payoff. Your mortgage servicer, the trustee, and the title and escrow company will each have numbers. They need to match before closing so nothing gets paid twice.
Close only after the order is effective. Funds should be distributed the way the order says, not the way you'd like. If you plan to buy another home, talk to your attorney first about whether your sale proceeds can be used.
Co-owners matter here, too. Every titled owner generally has to take part in the sale, even if only one spouse filed. If a divorce is part of your story, our guide on selling a house during divorce in Washington covers how those two timelines overlap.
You also still owe buyers the same honesty as any other seller. Form 17 doesn't go away because of a bankruptcy. Here's what Washington sellers must disclose on Form 17. If your home also has deferred maintenance, read our take on selling as-is or fixing it first before you spend money the trustee may care about, and note that unpermitted work can slow things down even more.
Mistakes that cost sellers the most
Listing before approval is in place. You can end up with an accepted offer you aren't allowed to close.
Moving the house to a family member to "protect" it. That's the transfer a trustee is most likely to question.
Spending the proceeds early. Until the order says what you keep, treat the money as spoken for.
Hiding the filing from your agent or the buyer. The title search will find it, and surprises kill deals.
Waiting too long when a foreclosure sale date is set. Filing triggers an automatic stay that halts a foreclosure sale, but a lender can ask the court to lift it. Get legal advice quickly.
Every situation here is different, and I'm not a lawyer, so this isn't legal advice. What I can do is the real estate side: pricing, timing, a contract your attorney is comfortable with, and a buyer pool that won't flinch at a court-approval contingency. That's exactly the kind of sale I walk my clients through, and I'm happy to work alongside your attorney from day one.
Frequently Asked Questions
Can I sell my house while I'm in Chapter 13 in Washington?
Usually yes, with permission. You generally need to notify the Chapter 13 trustee and get court approval, and sometimes modify your plan. Don't sign a purchase agreement without confirming the approval path with your bankruptcy attorney.
Will a Chapter 7 trustee take my house in King County?
Only if you have equity above your homestead exemption that's worth selling after costs. Washington's exemption is the greater of $125,000 or the prior year's county median single-family price, which was $974,900 for King County in 2025. Many owners are fully protected, but confirm your numbers with an attorney.
Do I keep the money from the sale?
You keep what the law and the court order let you keep. Proceeds from a voluntary sale of your homestead can stay exempt for one year if you reinvest in a new homestead (RCW 6.13.070(3)). Anything above the exemption may go to creditors through the trustee.
Can I sell my house before filing for bankruptcy?
Sometimes, and it can be a smart move if the house has lots of equity or you're facing foreclosure. A fair-market sale to an unrelated buyer is very different from a below-value transfer, which a trustee can challenge. Ask a bankruptcy attorney before you list.
Where to go from here
To sell a house during bankruptcy in Washington, the order matters: attorney, approval, then listing. Get that right and a sale can protect your equity and give you a clean start. If you're thinking through this for your own situation, I'm happy to walk you through the numbers and the timeline, alongside your attorney. Reach out anytime.
If you're facing foreclosure, the Washington Homeownership Resource Center and the Northwest Justice Project's Foreclosure Prevention Unit offer free help to Washington homeowners.
About Samantha Schlegel
Samantha Schlegel is a residential listing specialist serving Shoreline and the greater Seattle area, with a focus on sellers navigating complex situations like probate, inherited homes, divorce, and relocation. She believes every seller deserves a strategy tailored to their real circumstances, not a one size fits all approach. Samantha works with Compass Real Estate and is known for guiding clients through tough transitions with clarity and care.
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