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Roger, Attorney
Category: Bankruptcy Law
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Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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If we were to file for a chapter 13 bankruptcy, how are investment

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If we were to file for a chapter 13 bankruptcy, how are investment properties typically handled? The properties are in both our names and we are wage earners, my spouse being part-time.

Background: We have had to move for work and the houses have decreased in value so we rented them out - at a loss. Our savings is now gone. We would consider keeping them and not loosing our 20+% down on the two houses only if we could lower the payments. Loan modifications aren't available for us for these properties at the current time. One property, after being 90 days late at this point, will be at foreclosure auction in January 2012. This moved much faster than we anticipated.

Hi - my name is XXXXX XXXXX I'm a Bankruptcy litigation attorney here to assist you.


In a Chapter 13, you must repay your debts under an approved plan. The plan is subject to objections from the trustee and the creditors.


However, one good feature of a Chapter 13 is that you have the right to "cram down" the mortgage on second homes, rental properties (non-homestead properties) and repay only that amount.


For example, if you owe $200,000 on a home and it is now only worth $100,000, you will be allowed to repay only the $100,000 and discharge the other $100,000.


Also, you can allow property to be foreclosed with court approval, and if that occurs, the unpaid balance will be an unsecured debt that will likely go unpaid.

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