Thank you very much for getting back to me. I will now address your concerns. If i filed bankruptcy would i be able to keep my investment property? I am trying to figure out what would be better to get rid of all the credit card debt (by filing bk) or walking away from the investment property... Response: Unfortunately, you cannot keep your rental property if you file for bankruptcy relief unless you make payments on the mortgage and keep the mortgage payments current. Since the mortgage is upside down--you owe more on it than the property securing it is worth, it may not be such a good idea to keep paying on it--pouring money down the drain. If you walk away and the property is foreclosed the lender may come after you for the deficiency after the foreclosure sale depending on the type of foreclosure method used: judicial or non judicial foreclosure. In a judicial foreclosure, the foreclosure sale is accomplished through the Courts and the lender may file for deficiency judgment. On the other hand, in a non judicial foreclosure the lender relies on the power of sale contained in the mortgage or deed of trust for authority to foreclose. In this type of foreclosure, the lender cannot come after you for deficiency after the foreclosure sale. You may also consider bankruptcy to get rid off your credit card debts.
You might be eligible to file for a Chapter 7 bankruptcy relief if you meet the income guidelines for your household size in your state. If your income is equal to or less than the current income guidelines for your household size in your state, you may be eligible to file for a Chapter 7 bankruptcy all things being equal. In Chapter 7, if the Court grants you a discharge your debts will be wiped out. You would get a clean state, a fresh start.
These are the current income guidelines for the State of California: Household of one person $49,182.00 Household of two persons $65,097.00 Household of three persons $70,684.00 Household of four persons $79,971.00 Add $6,900.00 for each additional individual
If you are not eligible for a Chapter 7, you may be able to file a Chapter 13 if you have disposable income —extra income after your necessary expenses every month to fund a Chapter 13 plan and you must also meet the debt limit requirement. You may able to file for Chapter 13 if your unsecured debts are less than $336,900.00 and secured debts are less than $1,010,650.00. In Chapter 13, you prepare a payment plan and make payments to your creditors on 3 or 5-year plan. If your income is equal to or less than the current income guidelines for your household size in your state, you would do a 3 year plan. However, if your income is more than the current income guidelines for your household size in your state, you would do a 5 year plan.
You must receive budget and credit counseling from an approved credit counseling agency within 180 days before your bankruptcy case is filed. This means that if you are filing your bankruptcy case on Monday, you need to do the credit counseling on Sunday, the day before, not on Monday the day that you are filing for bankruptcy relief, and if you are filing your bankruptcy on Tuesday, you need to do your credit counseling by Monday and not on Tuesday, which is the day that you are for the bankruptcy relief. You cannot do the credit counseling the same day that you are filing for bankruptcy protection. The agency will review possible options available to you in credit counseling and assist you in reviewing your budget. Different agencies provide the counseling in-person, by telephone, or over the Internet.
It is usually a good idea for you to meet with an attorney before you receive the required credit counseling. Unlike a credit counselor, who cannot give legal advice, an attorney can provide counseling on whether bankruptcy is the best option. If bankruptcy is not the right answer for you, a good attorney will offer a range of other suggestions. The attorney can also provide you with a list of approved credit counseling agencies, or you can check the website for the United States Trustee Program office at http://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm
After your case is filed, you must complete an approved course in personal finances. This course will take approximately two hours to complete. Your attorney can give you a list of organizations that provide approved courses, or you can check the website for the United States Trustee Program office at http://www.usdoj.gov/ust/eo/bapcpa/ccde/de_approved.htm
Consult a local bankruptcy attorney for further explanations of your rights and responsibilities.
The sites below are good resources for finding bankruptcy attorneys in your area:
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