How to File Chapter 7 With a Rental Property
Rental property can be a complicated subject in Chapter 7 bankruptcy because rental property does not qualify for a homestead exemption as a primary residence. Some people may be able to keep rental property if their state has a wild-card exemption and the equity in the house is below that amount. However, if there is enough equity in the house, the court will likely seize it, sell it and distribute the proceeds to your creditors. The court will examine your bankruptcy petition to determine whether you can keep the property, so you must include full information about the home in the petition paperwork to avoid dismissal of your case or criminal charges for fraud.
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Instructions
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Complete court-approved credit counseling no more than 180 days before you file bankruptcy. You can take the 60-to-90-minute courses online, over the phone or in-person. The U.S. Trustee website provides a list of credit counselors allowed to give pre-bankruptcy counseling certificates.
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Request the bankruptcy petition paperwork form your lawyer, or download the petition from your state's bankruptcy court website.
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Take the means test included in the bankruptcy petition paperwork to verify that you qualify for Chapter 7 bankruptcy. Include your monthly income from all sources, including wages from a job, profit from a business and the income your rental property generates. Your income must be below the median in your state to file Chapter 7 bankruptcy.
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Fill out Schedule A, in which you list real estate property, the rental property's address and a brief description, including the square footage, number of floors and number of bedrooms and bathrooms. Also include what your interest is in the property by saying whether you are the sole owner or own it jointly with a spouse, another person or a group of people. If anyone else has ownership interest in the property, indicate their relationship to you. Write "H" for husband, "W" for wife, "J" for joint ownership or "C" for community-owned, such as by an investment group. Include the current value of the property and the amount you owe on the mortgage.
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Fill out Schedule I, which asks for information about your income. As with the means test, provide your monthly income from wages, business and rental property. Rental income goes on Line 8 of Schedule I.
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Complete the remaining petition worksheets. Include information about your other property, assets, expenses, creditors and contracts.
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Give the petition to your attorney so he can file it and pay the Chapter 7 filing fee, which is $299 at the time of publication. Most lawyers include the cost of filing in their attorney fee. You can also file it at the courthouse in your bankruptcy district. People without an attorney must pay by cash or money order.
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