Bankruptcy & Rental Property
Occasionally, I get asked “so what if I own rental houses and need to file bankruptcy?” While this may seem like an oddly specific topic, certain types of assets and holdings may dictate what type of bankruptcy you should file.
Many people are surprised that they need not liquidate all of their assets. There are exemptions for property, cars, retirement accounts, and even some personal property. A rental property may be an exemption also, but this is not always the case.
For example, let’s say you have a rental home in Wyandotte valued at $150,000, but you have a mortgage for $150,000 on the home. The court wouldn’t be concerned with this, as the house is technically not even an asset. You owe what it is worth.
Another factor to consider would be if the property is profitable. If the property is losing a significant amount of money, it will be viewed as a liability, and your trustee will most likely tell you to liquidate it, in order to ensure you’re able to pay your debts. If the property is breaking even, you may be able to keep it.
Another consideration would be to consider a Chapter 13 bankruptcy. Chapter 7 bankruptcies liquidate your assets, but Chapter 13 allows for negotiation of a payment plan. Your rental properties would most likely not be affected by a Chapter 13 bankruptcy, unless you are unable to pay for the properties themselves. If that is the case, then a Chapter 7 might be your best course of action.
Keep in mind, that when you are able to keep property, you may be asked to reaffirm your debt. Some creditors may not allow this, as your financial situation may have changed significantly. If you hold a mortgage on a rental property, you may want to contact the lender to see if they will continue to work with you.
As always, no bankruptcy case is like another. One thing is for sure: I will fight for you and help you through the process. Contact The Mitten Law Firm today for a free bankruptcy consultation.
- Challenges in Estate Planning For The LGBTQAI+ Community
- Bankruptcy & Inheritance
- 4 Ways You Can Help Your Divorce Case
- What If My Spouse Leaves With The Kids?
- Important Estate Planning Terms
- Student Loan Debt & Bankruptcy in Michigan
- Do You Need an Attorney For Divorce Mediation?
- What If My Ex & I Disagree About Education?
- Online Wills: The Pros & Cons
- Bankruptcy Discrimination At Work