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St Louis Bankruptcy: Can I File Bankruptcy If I Own Rental Properties?

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Yes, you can. And so long as there is no real equity issue involved with the rental properties, then you can keep them too. But it will come down to what the Fair Market Value (FMV) of the properties are. This will in turn determine if the properties can be protected (depending on which chapter of bankruptcy you file).

When you file a St Louis bankruptcy, you have a duty to disclose to the court everything you own (in other words, it is necessary to tell the court about all of your property). This would include both personal property (clothes, bank accounts, jewelry, etc.), and real property (houses, rental properties, time shares, land, etc.). And if you do not disclose to the court all of the items you have an ownership interest in, the court regards this as an act of fraud.

The next you’ll have to do is let the court know what the fair market value is of each rental property. This will let the court know if there is any equity in the building. For instance, if you have an outstanding balance on your mortgage of $100,000 and the value of the property (i.e. what you think you could get for it if you were to try and sell it) is $75,000. In this kind of situation, the house is “upside down,” meaning there is no equity.

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But if you owe $100,000 and the value of the home is $150,000, then there is equity of about $50,000. This changes things quite a bit. In this kind of situation, the equity in the home is large. If you were to file a St Louis Chapter 7, the bankruptcy trustee would absolutely want to sell the property (and use the proceeds to pay off your unsecured creditors, such as your credit cards and medical bills).

The best way to ensure that you do not lose any of your rental properties would be to instead file a St Louis Chapter 13. A Ch13 allows you to keep your property regardless of how much equity exists in the house.

But the best way to determine which chapter you should file is to visit with an experienced St Louis bankruptcy lawyer!! We want to make sure you fully understand your options and rights, and answer all of your questions.

The affordable St. Louis bankruptcy attorneys at The Bankruptcy Company have been saving and protecting people’s assets for years. Our goal is to make sure that you keep the assets and property you want, discharge the debts that you want to get rid of, and do it all at an affordable cost to you. All phone conversations and office consultations are free of charge.

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