If you have real estate investments and you are facing bankruptcy you may be wondering if you could be facing a chance of losing extra property you own if you file for Chapter 7 bankruptcy. Filing for chapter 7 could target a number of the properties that you own that are not being used as your primary residence.
When you file for Chapter 7 bankruptcy claim or a chapter 13 bankruptcy claim if you own any type of investment property you could face significant consequences with your investment in real estate. If you have a series of significant equity in a property, trustees can easily take that property and sell it and then distribute the various proceeds throughout your creditors.
With a chapter 13 bankruptcy case you could keep all of the property but you will have to pay off a portion of your debts within a 3 to 5 year repayment plan. Your extra properties can also be used as collateral if you deviate from the repayment plan at any time.
Under Chapter 7
Some property will be protected under exemption and is dependent on state law. Typically you can choose exemptions for needed items like your car, your equity in your primary residence or items that are related to your business. Property exemptions will only apply to your main residence is often beneficial to let go of your main residence if you are in deep with owing more than your property is worth.
Under Chapter 13
Keeping your property as an investment is a possibility under Chapter 13. You will have to repay a portion of your debts within the given time period within your repayment plan. Choosing to keep your investment property through a bankruptcy case could increase your required claimants and make sure that you have to pay off arrearages throughout your plan.
If you need legal advice on managing your property if you plan on filing for bankruptcy contact our professionals today.
This post was written by Trey Wright, a bankruptcy lawyer in Tallahassee. Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, which specializes in areas related to bankruptcy law, estate planning, and business litigation.