Sunday, August 4, 2013
Rental Property In Bankruptcy: Can I Get Rid Of It?
Most people that file bankruptcy are trying to keep everything they have, while relieving themselves of the burden of being responsible to creditors for their debts. A simpler way of stating that is, how can I keep my stuff and not have to pay my debts?
Sometimes, however, a debtor actually wants to give property back. I know what you are thinking, why would someone want to give there things away? Well, sometimes people acquire things they later do not want. For example, if you purchased a car on a note, and repairs to vehicle cost more than just getting another car, you may want to just buy another car. It sure would be nice to be able to give the car to the note holder and not owe them any more money, and not be responsible for insurance, tags, etc.
A similar example would be under performing rental property. That is, rental property, with a mortgage, that cost more to maintain it (repairs, taxes, and insurance) and pay mortgage payments than what the landlord received in rent. Again, I know what you are thinking; this could not be. But, wouldn't it be nice to be able to give the property to the mortgage holder. And yes, this actually does happen.
Well, through bankruptcy, you can absolve yourself of being personally liable for the debt. I have never heard of the giving back of a car to be a problem in bankruptcy, however, real property could be a different story.
The owner of real property could be responsible for ongoing debts associated with the ownership of the property after the filing of the bankruptcy. Sometimes the debtor does not want the property, and the mortgagee also does not want the property. The mortgagee could get stuck with unmarketable property, such as contaminated property, or be subjected to high association fees.
So, can you make a creditor take the property. The simple answer is NO. The giving back of property associated with the filing of a bankruptcy takes planing. Although the giving back of a car is usually simple, when it comes to real property, I highly suggest you seek the advise of competent bankruptcy attorney in your area.
You should keep in mind the bankruptcy law is not necessarily logical. Trying to plan for bankruptcy without consulting an attorney could easily and unintentionally cause you to be put into a situation you do not want to be in. Seeking advise from a bankruptcy attorney early is highly advised.