New here and a question about investment property

[rachinpa]

Hi,

I have been lurking for a few days here. DH & I are considering BK and I had a phone consultation with an intake counselor-type yesterday. We have a consult with the lawyer next week to see what our options are. But she said something that really worries me: she said that because of the property we own, we may not qualify for chapter 7.

We are well below the income guidelines for the means test (PA), but we have our house, as well as a rental house. We are upside-down on the rental and currently have no tenants in it, which makes it a major money-sucking liability. We only have about $6000 equity in our own house (the one we live in). I wouldn't think either of those would disqualify us for chapter 7, but could it???

Does anyone here have experience with doing ch 7 while owning an investment property, and is there any way to get rid of it besides "walking away" and letting the bank foreclose? I was under the impression that we could just "surrender" it and have it be part of the BK. Maybe I don't understand.

And for the record, it is totally surreal to me that I'm even on this forum in the first place. Never in my wildest nightmares did I think that we'd ever be at the point where BK was an actual realistic consideration.

TIA for your help.

[AngelinaCatHub]

One of the question will be, how are you making the payment on the second house? You are exempt in your homestead as you have to pay rent or mortgage as an essential. But you don’t have to have a second house. It isn’t its value or non value, but what will be your net income if you did not have that house. If you are below the means even with the house, you may get it abandoned in bk. But then, if you rent it, any monies go to your creditors, and you best not keep that a secret from your Trustee until your bk is not only discharged, but closed. ‘Hub

P.S. OP, please don't use your real name just for safety as you are on the Internet. Edit it gone is my advice.

[outofluck07]

Same situation - Going for Ch.7

I also have a residence with little equity, and a rental property (former residence that I could not sell) that I am upside down on. I met with three differnet lawyers, all of whom told me to "let it go". I will surrender the rental, keep my residence, and even being a bit above the means test, should still be able to file chapter 7. If you do not have tenants, that will help you as you don't have rent to include as income. If you pass the means test including your income and expenses minus whatever the rental is costing you, you should be fine. Some people have even stated that they could use the payment on the surrendered property as an expense to qualify, but this is not so in Wisconsin. Good luck!

[outofluck07]

Forgot to mention...

When you surrender the property, it will still go through the foreclosure process. The BK will halt the process, then the stay will be lifted to allow the foreclosure. Essentially surrendering ties the foreclosure and bk together. Please see a couple more attorneys.

[StartingOver08]

I also have a primary residence and a rental property. The tenants stopped paying rent even before the foreclosure notice was filed so I am giving up both my primary residence and the rental property in the Ch 7 I just filed two weeks ago. (By the way, I am upside down on my primary house by $200k and upside down on the rental by about $70k so the properties will not be missed) I am over the median income and the attorney is able to file a Ch 7 for me. It sounds like you need to interview a few more BK attorney's.