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WALLSTREETESQ
WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 16407
Experience:  14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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If I had an office building with a 420,000 mortgage with P

Customer Question

If I had an office building with a 420,000 mortgage with P and I payments of 3500 a month and If I used the rental income of 5,000 a month on an office building to pay down my principal balance on my personal residence or just keep those rental funds to pay for living expenses and thus default on the first mortgage. Will those funds, say 12 months worth ( $60,000)until the bank takes the building back, be required to be paid back in bankruptcy if one then files ...say 6 months to a year after the lender obtains a deficiency judgement??
Submitted: 2 years ago.
Category: Bankruptcy Law
Expert:  WALLSTREETESQ replied 2 years ago.

WALLSTREETESQ :

Hello I am a licensed attorney here to help you with your question, please review my response and do not hesitate to ask for clarification

WALLSTREETESQ :

Is the office building in a corporation or in your personal name?

WALLSTREETESQ :

You will be defaulting on the office building and letting it go to foreclosure?

Customer:

personal name

Customer:

I think that I will have no choice in the default becausr of my 300k 2nd mtg

WALLSTREETESQ :

The income from the investment property is your personal income,

WALLSTREETESQ :

so you can use it for personal expenses,

Customer:

I will never have enough equity to repay any of the 300k on the 2nd mortgage now

WALLSTREETESQ :

Once the building goes into foreclosure, and sold, then the rental income cannot be used for personal use,

Customer:

personal expenses are then pre payment of principal on the residence a

WALLSTREETESQ :

When you file bankruptcy, you should only do so, when the office builiding is sold and the rental income is not a factor anymore,

Customer:

so until the bank takes the building in the forclusure i can use the rental income to pay personal expenses? and those personal expenses can be prepayment of principal on my personal residence??

WALLSTREETESQ :

yes

WALLSTREETESQ :

it is your income,

WALLSTREETESQ :

their is no law requiring you to pay the rent into the office building,

WALLSTREETESQ :

if it was a corporation, then the Court or a creditor, could state that

Customer:

also my long term IRS capital gains will be about 70,000 will I be able to get that discharged from the IRS

Customer:

in the bankruptcy

WALLSTREETESQ :

you have a $70,000 gain?

Customer:

my cpa says that my basis would be based on the total debt which is 700,000 and my basis is about 150,000 so 15% of the difference would be my tax obligation if the building is forclosed.

WALLSTREETESQ :

Bankruptcy is an exclusion to the debt cancellation income that you would incur on this rental property.

Customer:

If I sign up for unlimited questions with this site is that an additional 40.00 on top of the 30 I just paid? or is it just 40.00?

WALLSTREETESQ :

My understanding is you would pay for a monthly service plan, once and you can use the current payment, but customer service will deal with that,

WALLSTREETESQ :

If you have any further questions please do not hesitate to ask

WALLSTREETESQ :

If satisfied with our service please press the accept button so we can receive credit

WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 16407
Experience: 14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
WALLSTREETESQ and 2 other Bankruptcy Law Specialists are ready to help you

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WALLSTREETESQ
WALLSTREETESQ
Attorney
2748 Satisfied Customers
14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS