Can I keep investment property when filing bankruptcy?

Can i keep investments property when filing bankruptcy is an important question. Whether or not you are able to keep an investment property during the bankruptcy process largely depends on what chapter of bankruptcy you file and the rules in the state where you live:

• If you file a chapter 7, you may not be able to keep the equity in an investment property you own. While the federal government and most states provide you with an exemption for the value of home equity, this exception is for a primary residence. If you own an investment property and you are expecting the court to discharge your debts in chapter 7, you may have to turn over the property as it is considered an asset that can be used to pay back the creditors to whom you owe money
• If you file a chapter 13, you can keep the investment property, as long as you can afford to pay for it. In some instances, depending on the type of mortgage or mortgage(s) you have and the type of investment property, you may be able to have a mortgage cram down. This means that the value of the loan that you owe can be reduced to the actual value of the property and the remaining balance can be viewed as unsecured debt and thus become part of your chapter 13 repayment plan.

As a general matter, although not in every instance, this means that chapter 13 is often a better option for those who own investment properties. To determine whether this is the case in your situation and for specific advice on how your investment property will be impacted by your bankruptcy, you should strongly consider speaking with a lawyer.