Rental Home Foreclosure also Filing Chp 7

[BD33]

I wanted to clear up a question I had about filing for Chapter 7 before or after a foreclosure. I have a rental home in foreclosure and I plan on filing chapter 7 in a few months, due to all the debt I have occured becuase of this home. But should I file before or after the foreclosure?

Thank you

[lrprn]

Often bk lawyers will advise that it's best to file before the foreclosure and surrender the property inside the bankruptcy so the two events (bankruptcy and the rental's foreclosure) are in close proximity and are considered like one event rather than two. They say it makes rebuilding after the bankruptcy a bit easier.

Be sure to ask your lawyer what's best in your situation.

[BD33]

I also was wondering what the thought was on how a second home foreclosure was considered versus your main home? Would a lender look at that different since it was a flip house and not where I live? I am looking toward the future here and just wanted some opinions.
Thank you

[lrprn]

I also was wondering what the thought was on how a second home foreclosure was considered versus your main home? Would a lender look at that different since it was a flip house and not where I live? I am looking toward the future here and just wanted some opinions.
Thank you

Given the steeply rising numbers of foreclosures due to the banks' own greediness over the last six years, my guess is that in the coming years foreclosures won't have quite the impact on future lending that they have up to now. Otherwise there won't be much of a housing market!

[Ishith]

Hey! Irprn,

Thanks for your suggestion.I think we can go with bk lawyers, it is quite easy if we follow such things!

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[MJamesB80]

Is it possible to allow foreclosure, then when tax season comes around you see that you owe a lot of taxes because of the rental property foreclosure and then file for chapter 7 to wipe out the taxes owed if they are too much to handle? Just wondering if that is possible.

[lrprn]

Is it possible to allow foreclosure, then when tax season comes around you see that you owe a lot of taxes because of the rental property foreclosure and then file for chapter 7 to wipe out the taxes owed if they are too much to handle? Just wondering if that is possible.

Sorry - no can do.

Bankruptcy can wipe out income taxes owed, but only if you can meet five very specific conditions:
- The due date for filing a tax return is at least three years ago.
- The tax return was filed at least two years ago.
- The tax assessment is at least 240 days old.
- The tax return was not fraudulent.
- The taxpayer is not guilty of tax evasion.

Given the situation you suggest, you are going to fail the first three requirements.

[screwedupbyRE]

BD33 - I'm in the same boat as you. I met with an attorney yesterday and he asked me the file for chapter 7 before foreclosing my investment property.

On the other hand, he also mention that if I want to retain my current home (where I live), I'll have to sign a re-affirmation with the lender.

I though once chapter 7 is settled, I'll try to negotiate with lender to get better interest rate, but once I sign re-affirmation document - there's no likelihood of any negotiations. And I can't miss any payments in it.

I'm loosing 55% on investment property and 20% on my residential property.

Not sure what to do - shall I prepare myself to sign reaffirmation or let both homes go.... and rent.