Is bankruptcy the best option? 14 Answers as of June 09, 2011

We have 8 rental properties that we can no longer sustain. We do not have any other on-going debt besides this secured debt and associated expenses (prop. taxes, HOA fees, insurance) since we do pay off our credit cards monthly. Out of the 8, 3, if sold, we may have enough to pay off the loans, the other 5, we guess, will have to be short-saled/deed in lieu/foreclosed since we will owe a lot more than what it will sell for. Is bankruptcy the best option in our case?

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Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
I have filed bankruptcy cases for people with facts similar to yours. Make sure you get an experienced bankruptcy lawyer.
Answer Applies to: California
Replied: 6/9/2011
Law Office of Maureen O' Malley
Law Office of Maureen O' Malley | Maureen O'Malley
Bankruptcy would be the fastest and easiest, I think. If 3 could be sold, the Trustee would do it for you. You would also need to let your credit cards go, unless the properties are owned under a corporate name, as credit cards close accounts when a bankruptcy is involved. A short sale has the same negative effect on your credit report, and you would either get a 1099 for the difference or the lender would require you to assume the debt for the balance. This is if they even agree to a short sale in the first place.
Answer Applies to: Virginia
Replied: 6/9/2011
Burnham & Associates
Burnham & Associates | Stephanie K. Burnham
Not necessarily. Since the only dischargeable debt that you mention is mortgages, you may be better off trying to sell the property even if at short sale. You should consult with a Bankruptcy Attorney in your area to look at your options and you should stay mindful of changes in the tax law. Right now, selling at short sale is not a tax problem as the government is forgiving the tax liability for those sales, however, this may change and then Bankruptcy may be a better option to prevent a nasty tax surprise.
Answer Applies to: New Hampshire
Replied: 6/9/2011
Bird & VanDyke, Inc.
Bird & VanDyke, Inc. | David VanDyke
Your question is very broad. To answer it I would need to know where the rental are located. eg. California, Florida, etc. Also I would need to know whether any of the rentals have 2nd loans on them. Depending on the answer to these questions would determine if BK is necessary. My advice is to seek the advice of a bk attorney as your situation exceeds the normal consumer questions on this forum.
Answer Applies to: California
Replied: 6/8/2011
Indianapolis Bankruptcy Law Office of Eric C. Lewis
Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
You may wish to try and exhaust the short sale option but if that doesn't seem feasible in a timely manner, bankruptcy may be your best option.
Answer Applies to: Indiana
Replied: 6/8/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    Bankruptcy prior to foreclosure may well be the best option. For one thing, there could be negative tax consequences of foreclosure, short sale or deed in lieu. Consult with an accountant first and then a bankruptcy attorney.
    Answer Applies to: California
    Replied: 6/8/2011
    Daniel Hoarfrost, Attorney at Law
    Daniel Hoarfrost, Attorney at Law | Daniel Hoarfrost
    At some point, you may have no other choice.For the time being, you might as well continue to work with the mortgage lenders.
    Answer Applies to: Oregon
    Replied: 6/8/2011
    Law Offices of Joseph A. Mannis
    Law Offices of Joseph A. Mannis | Todd Mannis
    Seems like the ultimate question depends upon the laws of your state with respect to deficiencies on real estate. If you are likely to get hit with substantial deficiencies on those mortgages, then yes, bankruptcy is probably the way.
    Answer Applies to: California
    Replied: 6/8/2011
    Law Office of Harry L Styron
    Law Office of Harry L Styron | Harry L Styron
    Probably bankruptcy is your only option, since if the properties are foreclosed upon and the lenders do not realize the full amount of the encumbrances, (a) they can seek repayment of the deficiency from you and (b) the IRS can seek to tax the deficiency as "forgiveness of debt" income..
    Answer Applies to: California
    Replied: 6/8/2011
    Law Office of L. Paul Zahn
    Law Office of L. Paul Zahn | Paul Zahn
    Perhaps. Filing for chapter 7 relief will protect you from deficiency judgments for short sold property. If you are in my area and are looking for an attorney, please contact me for a free consultation.
    Answer Applies to: California
    Replied: 6/8/2011
    The Law Office of Mark J. Markus
    The Law Office of Mark J. Markus | Mark Markus
    It might be, but there are way too many factors to consider to be able to answer a question like that in this forum. You need to consult with a bankruptcy attorney in your area to go over all the specifics of your situation.
    Answer Applies to: California
    Replied: 6/8/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    Bankruptcy can be a very effective way (if you qualify to file) to deal with bad real estate deals, and sometimes works far better than things like short sales, which often fall apart and have serious pitfalls. Short sales rarely work out and many banks will not accept deeds in lieu. It's important to sit down with a bankruptcy lawyer as soon as possible to evaluate all options (and the best timing).
    Answer Applies to: Georgia
    Replied: 6/8/2011
    Bankruptcy Law Office of Robert Weed
    Bankruptcy Law Office of Robert Weed | Robert Weed
    If you short sale investment property you have to pay 1099-C taxes on the amount that's "short." If you file bankruptcy, you don't. Don't know enough about your situation other than that to know what's your best option.
    Answer Applies to: Virginia
    Replied: 6/8/2011
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