Since I wear two hats, one as a bankruptcy paralegal and the other as a Real Estate Agent I have clients coming to the office to file bankruptcy who have their home on the market for a potential "short sale". They are being told that you can still sell your home while in Bankruptcy or Bankruptcy will not have anything to do with the sale by their RE Agent. In Virginia, if you file Bankruptcy then the listing agreement as all agreements and contracts are voidable and you cannot continue the sale until motions are filed and orders are signed by a Judge stating that you can continue this sale especially if there is a contract being reviewed by the "third party, BANK". If your seller is considering bankruptcy, you need to refer them to an attorney for the advice and the proper procedures that will need to take place so they can make a more informative decision on "when" or "if" to file their bankruptcy.
*I am not an Attorney and not giving advice but opinion on previous experience.