When you were in a financially comfortable position, you may have purchased a secondary property to rent out to tenants. However, times and circumstances may have changed. You may now find yourself in a financial pinch where you can barely keep up with the monthly mortgage payments for your primary, family home, let alone your secondary, rental property. This is when pivoting toward a bankruptcy filing may become more and more of a reality. Continue reading to learn whether you can keep your rental property and how an experienced Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq. can fight to ensure assets like these are carefully protected.
Is it possible to keep my rental property in Chapter 7 bankruptcy?
For Chapter 7 bankruptcy, there is something known as the homestead exemption. This essentially protects equity in your real property. With this, you may choose between the federal and New York homestead exemption. The federal amount is $27,900 or $55,800 if you and your spouse co-own the property. And the state amount is $179,950 for property in Rockland County. This is to say that the homestead exemption may prevent your rental property from being sold to pay off your debts in your bankruptcy proceedings, depending on how much equity it holds. However, with New York State’s bankruptcy laws, it may be more difficult to apply this exemption to your rental property than it would be for your home which you use as a residence.
On the other hand, there is something known as the wildcard exemption. This may allow you to keep the property you love or that is essential to you in some way. Specifically, you may protect any personal property of your choice or cash of up to $1,175 if you do not opt for the homestead exemption. Unfortunately, in New York State, real estate property in general, especially your rental property, may not qualify for this exemption.
Can I keep my rental property in Chapter 13 bankruptcy?
If keeping your rental property is a top concern of yours, then you may be better off pursuing Chapter 13 bankruptcy. This is because this bankruptcy type does not involve surrendering any of your property. Rather, it requires you to pay off your property debts in a court-ordered, three- to five-year repayment plan.
Ultimately, you may use this plan to catch up on your past-due rental property mortgage payments. An added perk is, all the while, you may cram down the amount you owe to the value of the rental property at the time of your Chapter 13 bankruptcy filing. This is something that you may not be able to do with the mortgage of your main residence, though.
You must deeply reflect on the gravity of the matter at hand. Once you do, you must drop everything and reach out to a skilled Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq.