You do not necessarily have to give up all of your property when you file for bankruptcy. However, trying to keep something like a rental property can be difficult. Before you file or make any major decisions, you should talk to a Bergen County Chapter 13 bankruptcy lawyer about what can be done.
So Can I Keep My Rental Property When I File For Bankruptcy?
Many people think that going through bankruptcy means giving up all of their possessions. That’s simply not how it works. Even in Chapter 7 bankruptcy, often called liquidation bankruptcy, there are some exemptions that allow you to keep some of your properties.
There is an issue though. There is an exemption for your home, but your rental property does not get the same treatment. We’ll get to what that means in a moment.
Can Chapter 7 Bankruptcy Help Me Keep My Rental Property?
In Chapter 7 bankruptcy, you sell off as much as you can to satisfy creditors and get your slate wiped clean. Many people who go through this type of bankruptcy can keep their homes and even their cars, among other things. However, it can be difficult to keep a rental property when you use this type of bankruptcy.
There is what is known as a “wildcard” exemption that can be used to protect other properties, but New Jersey’s exemption is only $1,000. If you are using federal exemptions, you may be able to get a more generous wildcard exemption, but it’s rarely enough to save a rental property.
Will My Chapter 13 Bankruptcy Plan Allow Me to Keep a Rental Property?
Chapter 13 bankruptcy does not require liquidation. It requires you to make a payment plan that would last three to five years. Now this type of bankruptcy can save your rental property. If you are behind on your payments on this property, they can be satisfied through your debt repayment plan. Then you just need to continue to make all remaining monthly payments on time.
This type of bankruptcy is often called a “wage earner’s” plan. If you have enough money to make a payment plan and stick to it, you can save a lot of your assets.
Should I Hire a Bankruptcy Lawyer?
A bankruptcy is a paperwork-intensive process and you want to be sure that everything is being done correctly. This is why it’s hard to recommend filing for bankruptcy on your own. Our experienced attorneys can guide you through this process and help you get a fresh financial start.
Schedule a Consultation Today
Now that you know a bit more about the bankruptcy process and the protections it can offer, you can make a more informed decision. We still recommend contacting the Law Office of Boyd & Squitieri to schedule a consultation though. Our attorneys can take a closer look at your situation and help you figure out the best course of action.
