Can I rent my home out while I am in a Chapter 13 bankruptcy? 11 Answers as of April 02, 2015

I am currently involved in a Chapter 13 bankruptcy that does not include my house. It did, however, wipe out a second lien on the house. Thank you.

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GARCIA & GONZALES, P.C.
GARCIA & GONZALES, P.C. | Richard N. Gonzales
Your quick question can not be answered with a quick response. You need to meet with an experienced BK lawyer for advice. They will have to look at your BK schedules / file to advise you properly. Any attorney worth his or her salt is going to charge you for the consultation. Be careful - you do not want to be "penny wise but pound foolish!". Good luck.
Answer Applies to: Colorado
Replied: 4/2/2015
The Orantes Law Firm
The Orantes Law Firm | Giovanni Orantes
Well, using the word "include" leads to inaccuracies in the bankruptcy context. Your house was disclosed as an asset and you're required to make the mortgage payments for at least loans with some collateral. As to renting out your house, you should be able to do it. You are supposed to keep operating in the ordinary course of business. However, if you break even, there should be no change to your plan payments. If you make a profit off it, you may need to increase your plan payments at least next year after you have to submit your tax return to the Chapter 13 trustee and he or she realizes your income has gone up. However, they don't usually ask for an increase in the plan payments if your income has not gone up by at least about 10%. If renting your house leads you to have a deficit because the expenses of renting the house (and getting replacement housing for you) exceed the rent you receive, you cannot expect to modify your plan unless you can explain why it made sense to rent the property.
Answer Applies to: California
Replied: 4/2/2015
EDWARD P RUSSELL | EDWARD P RUSSELL
Complications; it will no longer be your homestead so that it may affect your exemptions and you will have more income so that you may have to pay more into the plan.
Answer Applies to: Minnesota
Replied: 4/2/2015
Grasso Law Group
Grasso Law Group | Charles Grasso, Esq.
I'm not sure what you mean when you say your home was not included in your Chapter 13 because as you said it was involved with a lien avoidance. Generally, there isn't a restriction on renting your property. If you rent your property you will need to include that income in an amended schedule I, which could also affect your Chapter 13 plan.
Answer Applies to: California
Replied: 4/2/2015
Garner Law Office
Garner Law Office | Daniel Garner
Be aware that the second lien is not officially "wiped out" until you get your chapter 13 discharge after you have completed your plan. But meanwhile, you must report any rental income to the trustee and if you move, you have to file a change of address with the court. Depending on the rental income and your other expenses, an increase in your plan payment may or may not be required. If you do not have a bankruptcy attorney helping you, it would be a very good idea to retain one. Chapter 13 is quite complicated, even for lawyers.
Answer Applies to: Oregon
Replied: 4/1/2015
    Tokarska Law Center
    Tokarska Law Center | Kathryn U. Tokarska
    I'm assuming that you are in California, as this is where your question was posted. Answer relates to CA only. You have not YET wiped out the 2nd lien because the lien strip order, read it carefully, states that the second will be removed ONLY upon the successful completion of the chapter 13. If your case ends up in dismissal that second loan is not stripped off. I'm unsure about renting the place. In order to wipe out the 2nd, there are some requirements, one of which is that the property be a primary residence of the debtor. While I assume the property is or was a primary residence at the time you filed your case I haven't seen any case law about what happens if the property is a primary residence upon filing of the case but then later during the pendency of the case becomes a rental. This doesn't mean that there isn't a case out there on point. If there isn't a case it doesn't mean that a creditor might not want to bring such a case to court as a case of first impression. If you were the creditor, subject to a lien strip order that will cause you to lose significant money, and got wind of the fact that the house is no longer a primary residence of the debtor, you might consider seeking some legal recourse like maybe bringing action to court to vacate the order, arguing that the property is no longer a primary residence and under these circumstances a lien strip can no longer be granted. How that would play out, I'm not sure. It is incorrect to say that your house is not included in the bankruptcy. All of your assets are the estate of the bankruptcy and all debts must be disclosed in your bankruptcy case. If you have received a lien strip order, most certainly the debts and the property is listed in the petition. This is a common confusion among petitioners in that they think that just because they get to keep an asset, neither the debt nor the asset is part of the bankruptcy.
    Answer Applies to: California
    Replied: 4/1/2015
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    You can do that. Some jurisdictions might require court permission. Check with your lawyer.
    Answer Applies to: California
    Replied: 4/1/2015
    Richard B. Jacobson & Associates, LLC | Richard B. Jacobson
    It sounds like your Ch. 13 did ' include your home: you are just keeping it. As to renting it out, there is no rule as such prohibiting your doing so, but you should consult your lawyer about the likely need to amend your Schedules I and J to show the change in income and change in expenses (including the cost of your new lodgings, which might offset the increased income). Good Luck.
    Answer Applies to: Wisconsin
    Replied: 4/1/2015
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    Please stop saying things like does not include my house about your chapter 13 bankruptcy. Any bankruptcy must include all property if if someone fails to include any asset, they subject themselves to criminal prosecution in the federal courts for a very long time. You and the attorneys responding to your question are not the only ones who see this information ? it is possible that hundreds or even thousands of others may review this question, including federal investigators. Nothing in Chapter 13 prevents you from renting out property you own, but any increase in income needs to be reported to the bankruptcy court.
    Answer Applies to: Nevada
    Replied: 4/1/2015
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    The "wiping out:" of the 2nd mortgage is contingent on completing your bankruptcy. It is also based on the house being your primary residence, not a rental. You also have to report the rent as additional income and show it on your tax returns. I would not do it as you risk losing everything you have worked for but ask your attorney he/she will know the details of your case better.
    Answer Applies to: New York
    Replied: 4/1/2015
    Musilli Brennan Associates PLLC
    Musilli Brennan Associates PLLC | John F Brennan
    See your attorney but generally, as long as you make the an payments, you can do as you wish.
    Answer Applies to: Michigan
    Replied: 4/1/2015
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