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socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 37846
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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I have a primary residence and 3 rentals. I wish to keep the

Customer Question

I have a primary residence and 3 rentals. I wish to keep the primary and let the rentals go to foreclosure. I have had a drop in income as of 4/09. What can I do? I have just started not paying my 3 mortgages on my rentals(since April), and I'm current on my primary.
Income gross: $10,240/mo Income net(after taxes): $5,850
Primary residence: 1st loan balance $568,000, 2nd loan $171,000
Rental A: 1st loan $407,000 2nd loan $99,000
Rental B: 1st loan $429,000 2nd loan $93,000
Rental C: 1st loan $346,000 2nd loan $59,000
1. Does the definition of secured and unsecured debt apply to all 4 properties for chap 13? Or just the ones you wish to get rid of? Do I qualify based on this?
2. I have been told my income is too much for Chap 7. But I can qualify with the means test. A lawyer told me I need to reduce my income and maybe get a car note (I own my car). Should I?
3. Advised not to short sell, b/c tax liens would disqualify me for chap 7. true?
4. What if I can't do either?
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 7 years ago.

1. You can strip all of your junior loans, if the value of the collateral does not exceed the balance on the first.


2. I can't tell you what you "should" do. Only your lawyer can provide legal advice. However, I think last-minute gamesmanship draws the attention of the bankruptcy trustee, who will try to avoid the modification or have the entire case dismissed.


3. Tax on "cancellation of debt" income would be nondischargable for three years. Doesn't seem like a great option to me.


4. You could lose your job. Then you would qualify. Not being sarcastic here. You asked for another option.


Hope this helps.


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