Can I rent/lease out my house?..

[fiats3]

Bottom line me here: If I own a house, can I lease/rent it out during bankruptcy (Chap13 in my case, but even if this was a Chap7 I'd like to know what the answer woudl be in that instance). I know what you pros are going to start off saying: It's added income and therefore may mean the trustee will want more more money in the BK plan, but if the rent I charge is equal to the mortage and I end up renting another place for myself (say in another state), it's a wash...right? What would be the trustee's objection?...

[HHM]

First off, is there any equity in the house you intend to rent?

If yes, then you have some problems...In a chapter 7, you could not likely exempt the property (becasue generally you can only exempt equity in the house you live in as your primary residence), therefore it will be sold and the equity paid to the chapter 7 trustee. In a chapter 13, it could effect the amount you must pay to your unsecured creditors in the Chapter 13 plan. In a chapter 13, the plan must at least provide payment to unsecured creditors up to what they would get in a chapter 7 (this is known as the liquidation value). So, if you don't have a enough disposible income over the course of your payment plan to pay your unsecured's the liquidation value plus whatever debts your are including in your chapter 13 plan, your chapter 13 plan will not be confirmed and your case dismissed.

If there is no equity in the house...then you will probably be ok...however, it can still be complicated and the property can still be seized in a chapter 7 if the trustee thinks you are undercharging for rent.

Generally, it probably does not make any financial sense anyway. Unless you have a solid tenant, you will incur costs getting it rented, managing it, and taking care of the house, plus the possible legal issues of doing an eviction if needed. Thus, if you are not going to make any profit, its really isn't worth it in the first place.