Bankruptcy Law Questions? Ask a Bankruptcy Lawyer.
Hello and thank you for allowing me the opportunity to assist you.
Question: “can you own and keep a second home if you file bankrupcy”
Answer: Generally speaking, no. However, under certain limited circumstances you may be able to keep the second home. The circumstances would be if you file for Chapter 13 and you pay an amount equal to your interest in the house into the plan. For example, if your interest in the house is $100k, then you’d have to pay $100k into the plan during the 3 to 5 year period of the plan. More than likely, your second home would have to be sold.
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You can certainly modify the mortgage on your primary residence and still file for bankruptcy. If you have zero equity in the second house, but the rent you receive covers the vast majority of your expenses, then a judge may allow you to reaffirm the mortgage if it appears that you can handle the HOA fees. It’s not a sure thing, but it’s possible. The judge generally won’t let you reaffirm a mortgage that you can’t afford, however, because it defeats the purpose of giving you the "fresh start" that a bankruptcy is designed to do.