OK, so I am selling a home contract for deed. I am considering entering into a contract with a great couple who are currently in a Chapter 13 bankruptcy & really trying hard to re-establish themselves. My questions is this: because they are in a chapter 13, if they default on our contract ~ how am I legally protected? Do they get to stay in the house because of the Chapter 13?

Thanks!

Chapter 13 is to reorganize debt - not to discharge debt that would be a Chapter 7 proceeding.

If you really want to get a good contract for deed contract go to a good real estate attorney and have him draw it up. It's not that expensive (probably less than $200) and it will be done so that it properly protects you against them. Well worth the few dollars if you value your home's safety. I paid a friend of mine who was a real estate attorney to draw up such a contract for me years ago that spelled out everything in minute detail. Well worth the money spent as I ended up owning the home in much less time as I got my own loan through the same lender that the homeowner had the house in.

If you properly write up your "contract" if they default, it merely turns into a month to month rental and then you are allowed to merely evict them as a renter.

You also understand that as a person in a chapter 13 they are not suppose to purchase any large items like homes or cars while in a chapter 13 without permission of the court.
So their entering into this contract could well be a violatoin of the chapter 13 proceedings but that is their issue not yours.

Next be sure to get enough down payment so if they default and live there a few months before you get them evicted it does not hurt you.

Also enough down payment if they run off with the air conditioner unit, ruin the carpet and holes in the walls, you can afford to fix it.
*** had it happen several times in some of my contract for deed homes.

Next don't be so close that you have to have their payment to make your house payment, since you may have to evict them, and go several months with no house payment from them, and take a couple months to fix it back up. So always be prepared to be 5 or 6 months with no payments that you can still afford your payments

Thank you. They have already rec'd permission from the courts, I have a copy of the letter granting permission. I just want to make sure that this contract is protected by the laws of their bankruptcy as are their debts that were included in their bankruptcy. For example, bank cannot reposses their car while in a chapter 13... if they default on this arrangement (made outside of their plan) do I have the right to pursue legal action if they default or are they protected by their bankruptcy?

Thank you. They have already rec'd permission from the courts, I have a copy of the letter granting permission. I just want to make sure that this contract is protected by the laws of their bankruptcy as are their debts that were included in their bankruptcy. For example, bank cannot reposses their car while in a chapter 13... if they default on this arrangement (made outside of their plan) do I have the right to pursue legal action if they default or are they protected by their bankruptcy?

Thank you. They have already rec'd permission from the courts, I have a copy of the letter granting permission. I just want to make sure that this contract is protected by the laws of their bankruptcy as are their debts that were included in their bankruptcy. For example, bank cannot reposses their car while in a chapter 13...if they default on this arrangement (made outside of their plan) do I have the right to persue legal action if they default or are they protected by their bankruptcy?

If your contract is not part of their Chapter 13 proceedings but only permitted by the Trustee then no, they are not protected under their Chapter 13. If they default on the contract you can proceed with any legal remedies that are available to them. They cannot just "add" you into their original Chapter 13 creditors as their case has already been determined by the Trustee.