Here at Curry, Pearson & Wooten, our Phoenix consumer bankruptcy lawyers often speak to people who own rental property and are facing bankruptcy. While many people “on the outside” might think the easy way out is to sell your rental property, those with occupied properties would think that option is crazy. What, then, is the best thing to do?
In the valley surrounding Phoenix, a huge portion of residences are rental properties, both apartment buildings and traditional single homes. From Arizona State University to Luke Air Force base, there is a huge demographic with a demand for rentals; this means that the owners of these rental properties typically see steady income from each unit.
With reliable income from your rental property, it may not make much sense to sell your property in the face of financial trouble—so what options do you have?
Filing for a Chapter 7 bankruptcy is not likely to work out in your favor. In a liquidation-style bankruptcy, only your primary residence is protected. This means that your rental property would likely be taken by the trustee and used to pay off your creditors. This leaves you with one other option if you are still considering bankruptcy—a reorganization, or Chapter 13, bankruptcy.
In a Chapter 13 bankruptcy, you can keep your rental property, but it will be at a cost. Your payment plan will likely include larger payments over time to accommodate the additional value your rental property brings to your nonexempt property. Additionally, if you have fallen behind on mortgage payments, you may be able to include the back payments into your payment plan along with your current payments, which would increase the overall amount you would pay during your plan, but would also prevent you from facing foreclosure.
While you face a difficult decision, the decision is ultimately yours to make, but our experienced Arizona bankruptcy attorneys are available to help you navigate your options. Call us today at 602-258-1000, and let us assist you in protecting what is yours while you get a fresh financial start.