Is My Rental Property Exempt from My Bankruptcy?
You’ve finally hit your limit with your debt, and you’re ready to file for bankruptcy. You’re ready to give up all that credit card debt, those medical bills, and those personal loans. You’re ready to free up the money you need to pay your bills every month – no longer worrying about whether you’ll be able to pay the mortgage or make the car payment.
But you may be worried about what’s going to happen to your assets. You may have a rental property that is bringing you some income, and you don’t want to lose that. You’ll need to consult with a Gilbert bankruptcy lawyer to examine your particular circumstances and understand how bankruptcy law applies to you, but here’s a general overview of what you’re likely to find out:
Chapter 7 Bankruptcy
Most people who are thinking about filing for bankruptcy want to file for Chapter 7 bankruptcy in Gilbert. That’s because it liquidates your unsecured debt and let’s you walk away with a clean slate. You can start again, financially.
Before you can liquidate your debts though, you need to show that you are unable to pay them. That includes showing that you don’t have any assets that can be sold to pay your debts. Your assets include your home, your vehicle, your retirement accounts, and yes, your business properties.
Chapter 7 bankruptcy includes some exemptions. If you don’t have much equity in your home, you’ll be able to keep it. Unfortunately, a rental property would not be exempt from your bankruptcy proceedings. However, you may still be able to keep it if the equity is low because it just wouldn’t be worth the cost of claiming it and selling it to your creditors.
Chapter 13 Bankruptcy
With a Chapter 13 bankruptcy, you don’t have to worry about exemptions. None of your assets are considered to be seized or sold in this type of bankruptcy. Instead, your debts are reorganized under a new repayment plan that lasts three to five years. The plan will include one monthly payment based on your ability to pay. At the end of the repayment terms, you may even be able to discharge some of your debt.
Your rental property will be evaluated when determining your repayment plan. What you end up paying your creditors has to be equal to the equity you have in the property, as well as other assets you may have. Essentially, the bankruptcy court wants to make sure you are truly paying what you can to your creditors.
If your rental property has little equity – either because you haven’t paid much on it or because the value of the property dropped – you may come out ahead with a Gilbert Chapter 13 bankruptcy. You may be able to strip down the value of the loan, meaning that you can discharge the amount of the loan that exceeds the value of the property. You can pay what’s fair for your property. If you have fallen behind on your payments, you can also use Chapter 13 bankruptcy to catch up by including your missed payments in the repayment plan.
Filing for bankruptcy in Gilbert doesn’t have to mean losing all that you have built. There are mechanisms in place to protect your assets while giving you a chance to get the debt relief you need. If you own a business property, your bankruptcy attorney will work with you to show you how you can protect the business. You may even be able to save the business from foreclosure or get the mortgage to better reflect its value. Talk with an experienced bankruptcy lawyer serving Gilbert about your financial specifics to learn more.
Call Gilbert Bankruptcy Lawyers today to learn how bankruptcy protection can help you get the debt relief you need. Our bankruptcy lawyers represent clients for Chapter 7 bankruptcy and Chapter 13 bankruptcy. We also represent business clients seeking bankruptcy protection. Schedule a consultation with a bankruptcy attorney, who will closely review your finances and help you better understand your options. Our goal is to help you get the maximum debt relief possible under the law while also protecting your assets. We want to help you get a new financial future.
Gilbert Bankruptcy Lawyers