Good afternoon! Due to several things happening at once (wife's health, pay cuts at work and a surprisingly big income tax bill) my wife and I are considering a Ch 13 bankruptcy. We work professionally, and we also own several rental homes. In other words, we make pretty decent money, so it's a matter of restructuring and paying off.
Based on what I've looked at, using the Federal bankruptcy exemptions will cover most (if not all) of our personal property. There is still equity in the rentals and in our home. We have three cars that are negative equity. Based on the IRS guidelines, our new budget will allow us to pay our unsecured creditors about 80%.
But a couple of things are nagging me and I would like to ask questions, please.
First, about the rentals. The rentals are managed through a single-member LLC (which is legal in Arkansas.) The LLC has a separate EIN number (not my SSN or my wife's.) The checking account for the rental company, plus the savings account for the tenant security deposits are under the EIN of the LLC.
Given an industry average vacancy/repair allowance of 25%, my rentals break even. I bought them in areas that will gain in value once the economy straightens up (I know... years away...) but for right now they pay their own way. But just. There is little spare income from them. (On taxes, they always generate a paper loss.)
So my question: will a bankruptcy trustee understand that I need to keep money in reserve for repairs or vacancy? Or will the trustee decide that every penny from the rentals should be included in a payment plan? And the reverse... if I have a "good year" with no vacancies or major repairs, can the LLC sit on the cash?
My second question: my family has three cars: my wife drives to work with hers, I have a small truck for working at the rentals and my son has a Yaris at college. All three vehicles are financed and are upside down in equity. All are younger than the cramdown allows. I plan to reaffirm the debts for them... but will a trustee let me keep three vehicles and make payments on them?
Thank you VERY much for your help!
Based on what I've looked at, using the Federal bankruptcy exemptions will cover most (if not all) of our personal property. There is still equity in the rentals and in our home. We have three cars that are negative equity. Based on the IRS guidelines, our new budget will allow us to pay our unsecured creditors about 80%.
But a couple of things are nagging me and I would like to ask questions, please.
First, about the rentals. The rentals are managed through a single-member LLC (which is legal in Arkansas.) The LLC has a separate EIN number (not my SSN or my wife's.) The checking account for the rental company, plus the savings account for the tenant security deposits are under the EIN of the LLC.
Given an industry average vacancy/repair allowance of 25%, my rentals break even. I bought them in areas that will gain in value once the economy straightens up (I know... years away...) but for right now they pay their own way. But just. There is little spare income from them. (On taxes, they always generate a paper loss.)
So my question: will a bankruptcy trustee understand that I need to keep money in reserve for repairs or vacancy? Or will the trustee decide that every penny from the rentals should be included in a payment plan? And the reverse... if I have a "good year" with no vacancies or major repairs, can the LLC sit on the cash?
My second question: my family has three cars: my wife drives to work with hers, I have a small truck for working at the rentals and my son has a Yaris at college. All three vehicles are financed and are upside down in equity. All are younger than the cramdown allows. I plan to reaffirm the debts for them... but will a trustee let me keep three vehicles and make payments on them?
Thank you VERY much for your help!