Rental Property Under ANY Bankruptcy | FilingForBankruptcyOnline.com

If you are considering bankruptcy because of problems with your financial situation, you may have concerns about whether or not you will be able to keep rental property under bankruptcy that you currently own and operate if you proceed with the claim. There are a number of different ways to handle assets in a bankruptcy proceeding, and depending on the type of proceeding, these assets will be handled differently. So, under what circumstances will you not be able to keep your rental properties, if any, and under what circumstances will you be able to keep them in a bankruptcy proceeding? The answers may surprise you.

Keeping Rental Property Under Bankruptcy

During a Chapter 7, or total liquidation bankruptcy, you would not be able to keep your rental properties, because your assets will be seized and liquidated to repay outstanding debts which you have incurred prior to the bankruptcy.

Despite the fact that these rental properties may be generating income for you, and may serve as a positive cash flow or reliable revenue stream, the court will look at the value of these properties and the equity you have in them and determine that this equity would be better used to repay your creditors money that is owed to them.

In a Chapter 13 bankruptcy, sometimes called a wage earner’s bankruptcy because it is used to allow people who have income but are swamped by debt to continue to work and repay their debts over a period of three to five years, you would be able to keep your rental properties.

In this case, as long as the properties are able to generate income and/or have their mortgages modified so that you can continue to pay for them and support them, you will be able to keep the properties and the income that they generate will help you with your court-ordered repayment plan for your other debts.

In either case, your rental property may be subject to sale if it is found that you are unable to properly pay for the rental property, such as if you have a rental property that is vacant and that cannot be modified or maintained under the terms of your Chapter 13 bankruptcy agreement.

Getting Help

If you are facing bankruptcy and have specific questions about whether or not you will be able to keep your rental properties through the process, you would be wise to contact a lawyer in your state who specializes in bankruptcy law. He can assist you in determining how best to handle your bankruptcy so you can preserve your property and equity.

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