Can I rent out my home and file Chapter 7 bankruptcy?
I filing for chapter 7 bankruptcy and I own a home that is worth less that what is owed but I wanted to keep it and was thinking that I could rent it out to a family as I am single and I could rent a studio apt for myself giving me enough to live on until I can get a better job hopefully in the future. I have to file bankruptcy but was hoping in the future I would have a job that pays enough for me to make the mortage payments on the house and still have enough money left over for living expenses, but right now I dont. Is it possbile to rent out the house and still declalre bankruptcy?
Posted August 6th, 2010 in File Bankruptcy Yourself. Tagged: chapter 7 bankruptcy, enough money, job, living expenses, mortage payments.
Depends upon your state laws. The home may be viewed as an investment vehicle and must be included in your assets. Any income you get from that rental must also be declared. You would be better off living in the home and claiming the homestead exemption from BK filing. You would still be liable for making the mortgage payments – you don’t get to keep the home free and clear. It’s called reaffirming the debt. Since the home is worth less than what is owed, there’s no point in liquidating the home (BK court may see it that way). See the site below. Your state may have different laws.
http://www.bankruptcyformprocessing.com/ch-7/chapter-7-bankruptcy-exemptions/
August 6th, 2010 at 2:20 pmMost likely not – Chapter 7 is a liquidation bankruptcy which allows you to keep only those assets that you need to live – renting out the house makes it investment property, not a residence, and most likely not exempt. Check with your bankruptcy lawyer for more info on this.
August 6th, 2010 at 2:20 pmNo because your house is not really yours until you pay it off. So the bank is still the owner of that property which means that if you file for bankruptcy the bank has the right to take away your home. And you can’t get no money back from whatever you have paid for such property. Its just like renting a property when you stop making payments you may loose that property.
August 6th, 2010 at 2:20 pm