Will You Lose Investment Property in Bankruptcy?

Will You Lose Investment Property in Bankruptcy?Many people in the state of Florida are interested in holding onto their investment properties, it’s extremely popular to carry investment properties such as cottages, rental homes, business complexes and more. Many people also hold onto homes that they may have inherited in order to rent them out. If you’re facing debts however it can be difficult to know whether or not the investment properties or extra properties that you have on hand are going to be protected in the event of bankruptcy.

If you’re choosing to file for bankruptcy and you’re worried that you could lose out on investment property during the filing process it is important to consider that you could face difficulty as you file for bankruptcy protection with regards to your extra investments.

Is it Possible to Add An Exemption On My Investment Property

The Homestead exemption is a process that can protect your residence or the property where you’re going to live. This will not protect various properties such as an apartment building or rental homes. This type of exemption will also not protect any type of inherited homes unless you are going to be living in them as your primary residence. If you have any type of extra property, you may want to consider selling it off before you file for bankruptcy or working towards a strategy for that additional property.

Will Bankruptcy Prevent Foreclosure?

Bankruptcy can work at preventing a foreclosure event. Many people file for bankruptcy initially to stop a foreclosure action. Under bankruptcy code it is possible to establish an automatic stay that will go into effect as soon as a person files for bankruptcy. Automatic stays ensure that any creditor contacting you to recover debt will be blocked. Filing for bankruptcy can help to prevent harassment from your creditors and make sure that you are not contacted on a consistent basis for debt recovery efforts.

If your investment property is close to foreclosure and you’d like to stop the sale or foreclosure of that property you could consider filing for bankruptcy. A creditor can ask for a bankruptcy and lift a stay so that it’s possible to proceed with foreclosure. Many judges will work with creditors in order to grant a request for foreclosure as well. In these cases, bankruptcy may only act as a temporary protection for property. After creditors in a court of law are able to sort out the plan for your property, this can lead to a more permanent solution with your home or debts.

Is it Possible to Save An Investment Property With a Different Type of Bankruptcy?

It is possible to avoid losing your investment property under Chapter 13 bankruptcy but it’s much less likely if you file with chapter 7. Under Chapter 13 you will be responsible for a repayment plan that takes place over 3 to 5 years. By using your expendable budget and disposable income, you make regular contributions into your debt with the remainder of your debt being discharged at the end of the bankruptcy process. Chapter 13 bankruptcy often takes much longer than Chapter 7 and many people find it difficult to stick with a repayment plan over 3 to 5 years. Many people also end up paying their creditors much more over the process of chapter 13 bankruptcy then they would over Chapter 7 bankruptcy. Not everyone will qualify for Chapter 7 bankruptcy and if you have investment property it’s often wiser to consider chapter 13 bankruptcy to save your property.

Looking at your own individual case and considering the type or property that you own should be a main consideration when you are working to file for bankruptcy. You’ll need to include the profits from your rental property in calculating what needs to be paid back to creditors and you should consider working with a lawyer to determine the types of protections that could be in place for your investment properties. Before filing for bankruptcy it is wise to consult with a lawyer and work at making sure you don’t lose your property in the process.

If you have questions about the process of calculating your bankruptcy or you would like to know more about what you may be responsible for paying in the event of a bankruptcy, you should speak to a bankruptcy attorney today. Our knowledgeable and skilled attorneys can walk you through the process of protecting your property in choosing the type of bankruptcy that will suit your needs best. Contact us today to learn more about your bankruptcy options!