I own a rental property and Chapter 7

[JustDo]

Please help
I am partners with my brother in a rental property that breaks even at best and there is no equity in the property. I am looking to file Chapter 7 as an indiviual.
1.) Are we going to be able to keep the rental property?
2.) Will the money we take in for rents count towards income in regards to the means test?

Thank you

[HHM]

1. If there is no equity in the rental property, then by default, you can keep it. But it is risky because there is no asset exemption to cover this kind of property. So if there is even any doubt as to the value of the property, the trustee will probably look into whether the home has value and can be sold in a chapter 7.
2. Yes. ALL SOURCES of income count.

However, if most of your debt is non-consumer debt, you don't need to take the means test.

[Ugh07]

would rental income count if he was forced to surrender the property? I don't see how they can count that as income if it is a FACT that he will no longer be receiving it.

[HHM]

For purposes of the means tests, the test for income looks "back" to the prior 6 months.

[Ugh07]

so for instance:

-guy makes 2k/month at his job and 1k/month in rental income

-rental cost 1k/month for mortgage, insurance, etc. he basically breaks even.

So even though that income will disappear, he will be treated as if he makes 3k per month? since the property will be surrendered the liabilites will wipe away, so instantly this guy will have 1k in disposable income(not really). So he will be forced into a 13? How many months will he have to wait to convert to a 7 since he wont be able to afford a plan payment based on income that doesnt exist?

[Ugh07]

OK, after looking at the means test, my example would play out like this:

Part 2, Section 5, lines A,B and C

Line A: 1k/month
Line B: 1k/month
Line C: Zero

So that makes sense they allow you to count the expenses on the means test.

[outofluck07]

Means Test and soon to be gone rental income

I am in the same boat. I currently receive $1250 a month rent for a home that I could not sell. The mortgage is $1265, plus about $400/mo for taxes and insurance. Can this rental income cancel itself out in the income portion of the means test? (expenses), or do I have to count the income, but not receive any exemption for the mortgage if I'm giving the property up? This will make a huge difference to me - it will determine if I can file Ch. 7 or have to go with Ch. 13.

First post - Talking to an attorney tomorrow.