What will happen to investment property if I file for bankruptcy?

In bankruptcy investment property is treated as any other type of asset you own. As you consider if you should file bankruptcy, as well as what type, consider first the type of assets you own as well as the amount of debt you have. In some cases, it may be best to work through other forms of bankruptcy or to avoid bankruptcy altogether if you wish to keep your investment property. Investment property may be rental real estate, for example. It may also be assets you own in businesses.

Investment Property and Bankruptcy

When it comes to bankruptcy investment property is an important factor. In most cases, it is treated like any other asset. If there is an exemption that may protect it, then this may be applied and the property is protected. However, this is rarely the case. Rather, one of the following circumstances may occur.

• The investment property becomes part of the bankruptcy estate. If the equity in the property is high, the court may seize it, sell it and use the funds to repay creditors.
• If the property’s value is low, the bankruptcy court may allow the property owner to keep the property if the debt is current and the debt is reaffirmed by both the lender and the property owner (this assumes there is a loan on the asset.)

If the property is not protected under these rules, it may be best to file Chapter 13 bankruptcy while may protect your investment property.

Hire an Attorney

To determine what could happen if you file bankruptcy, hire a bankruptcy attorney. The attorney will work through your property, including your investment property and determine the best course of action or protecting it.