Rental property question...

[trader19]

hey guys, new here. first post.

i am sure this has been asked before... but i have a rental property with a business partner. there is no formal partnership agreement, we just collect rent, put it into a joint account, pay bills, and whatever is left over is split. the property is worth about $155k and we owe $125k on it. if i am figuring this out right.. they would take 10% off the top, leaving a new total of $139k. that means that there is $16k of equity in the property. my first question... does the trustee count that as $8k for me? and can i use a WC to protect that $8k?

next, the property is a college rental house.... so after paying mortgage/taxes, it drums up about $1500 a month in profit. $750/month for each me and my business partner. how is this all handled in the months leading up to filing and while in chapter 7.

thanks for any insight on what i might expect from this

[SMinGA2]

It will depend at least somewhat on how the property is titled. Is it in your name? Your partners name? Or both? Since you mentioned there is no formal agreement - that is why I'm asking.

If jointly owned, then 1/2 the equity should be attributed to you. If you have a WC exemption available, you should be able to use it. Consult with a local attorney to determine how to value the property. I imagine your share of the profit is going to count on the means test & on your income schedule.

[tobee43]

welcome to the forum!!!

are you filing nj or federal. nj is extremely creditor friendly and allows few exemptions. (that's MOST people in nj file federally, but your atty will advise which is best for you). nj was so terrible we actually left the state waited out our residency limit in our new state and filed in our new state!

there may be a chance depending on how much debt you have that the trustee will force the sale of that property to obtain any equity that you may have from your share. the "general" course taken in these situations is the trustee can and many times asks the partner or co-owner to buy back your share first. if that is not possible many trustees will sell the property, first pay your partner their share and then keep the rest of your share for distribution. however, if the trustee is interested most likely they will sent someone out to do their own assessment and make a determination of it's value. ( and believe me many times they are WAY off!)

i would definitely go to at least a few free consults to get an idea what to expect since this is not your primary residence etc.