Do we keep the money from rental property and let banks foreclose?

[LostNFound]

This feels like an extremely fraudulent question, but I'm going to ask it here before I dare ask an attorney.

We own 6 rental properties and we've been taking money from our personal income to pay the mortgages due to loss of rental income (people losing jobs etc.). We've been doing this since Jan 09.

At this point, we are almost fully decided that we will file bankruptcy--we have to sit down with an attorney to determine what is best for our situation. Hoping to get the paperwork filled out by next week so we can set up our appointment.

My husband wants to skip making the mortgage payment on a couple of our properties and pocket the money so we can afford to pay for our bankruptcy and living expenses. A couple of our tenants pay in cash--we wouldn't deposit it into a bank (just keep it). This feels SOOOOOOO WRONG to me, I can't begin to tell ya! But my husband says that we can hardly afford to eat, much less afford a bankruptcy and he wants to start this process as soon as possible.

What do you do during a foreclosure? Do we just stop making the mortgage payments all together? Do we continue to take the rent? We are bringing in about $2500-3500 in rental income per month and it's usually all gone and THEN some by the time we pay the mortgages on the places. Most people aren't paying rent in full or even paying at all.

Thanks

[awayalways]

I have a rental property in pre-foreclosure that I am renting on a month to month basis. I have been upfront with my tenants telling them it is a short term lease and is in pre-foreclosure and that I would give them 30 days notice to vacate if/when the time comes. This has been going on for several years now. Nothing illegal about it because I still hold title. And if my tenants dont pay the rent, I could evict them too. And it doesnt matter how people pay you, just be sure to claim all income/losses on your taxes.

[AngelinaCatHub]

This feels like an extremely fraudulent question, but I'm going to ask it here before I dare ask an attorney. You're better off asking a pro.

We own 6 rental properties and we've been taking money from our personal income to pay the mortgages due to loss of rental income (people losing jobs etc.). We've been doing this since Jan 09.

At this point, we are almost fully decided that we will file bankruptcy--we have to sit down with an attorney to determine what is best for our situation. Hoping to get the paperwork filled out by next week so we can set up our appointment. Try to file before the new year.

My husband wants to skip making the mortgage payment on a couple of our properties and pocket the money so we can afford to pay for our bankruptcy and living expenses. A couple of our tenants pay in cash--we wouldn't deposit it into a bank (just keep it). This feels SOOOOOOO WRONG to me, I can't begin to tell ya! But my husband says that we can hardly afford to eat, much less afford a bankruptcy and he wants to start this process as soon as possible. Not a thing wrong with them paying in cash. It is the fact that if you do not reveal it to your bk papers or IRS, then it is fraud and tax evasion.

What do you do during a foreclosure? Do we just stop making the mortgage payments all together? Do we continue to take the rent? Of course you take the rent. You are a business so to speak. We are bringing in about $2500-3500 in rental income per month and it's usually all gone and THEN some by the time we pay the mortgages on the places. Most people aren't paying rent in full or even paying at all. What are you going to do about them? They are in the same boat you are? Getting half of something is better than all of nothing. Go to those who aren't paying and with a nice attitude, tell them things are rough and to pay SOMETHING as they can.

Thanks

As the "awayalways" said, take the rent but don't lie. The bk Court is kind but they can be hell on those who attempt to fool them. Remember, they have seen everything before. 'Hub

[LostNFound]

We did go to our tenants nicely (we do every month) and ask for them to pay what they can afford. We know, due to our own situation, that you can't squeeze more money out of them when they don't have it. However, we've been paying for the rental mortgages out of our personal money for a long time. I know that sound silly, but my family is the one that is suffering. We have no emergency fund, no credit cards and no ability to get a loan in the event that anything should happen to one of us. That's why my husband wants to keep back a couple of mortgage payments. I suppose that doesn't look good.

Man, this bankruptcy stuff feels so hard to me right now. I feel like I just want to put it behind me but this really forces a person to think about EVERYTHING they've bought and sold in the last year.

Why file before the first of the year?

[Tom_Mi]

My atty suggested that rents collected after filing would probably need to go to the trustee. ...so I emptied my apartments.

I'm thinking I could have kept people there longer and recouped some of my wrecked savings.

Check with your atty and see if you have options to let people stay longer.

[AngelinaCatHub]

We did go to our tenants nicely (we do every month) and ask for them to pay what they can afford. We know, due to our own situation, that you can't squeeze more money out of them when they don't have it. However, we've been paying for the rental mortgages out of our personal money for a long time. I know that sound silly, but my family is the one that is suffering. We have no emergency fund, no credit cards and no ability to get a loan in the event that anything should happen to one of us. That's why my husband wants to keep back a couple of mortgage payments. I suppose that doesn't look good.

Man, this bankruptcy stuff feels so hard to me right now. I feel like I just want to put it behind me but this really forces a person to think about EVERYTHING they've bought and sold in the last year.

Why file before the first of the year?

It is only my opinion about filing before the first. New start, new life, new year. I understand your feelings about being overwhelmed. We all have. It only gets better, trust me. If you are going to default on the mortgage do it immediately and yes hold back the monies for emergency. Purchase storable food items. Why? Because it is a real savings account. First you hedge on inflation, next you can't eat money. Also it is exempt. Purchase things you know you will need in the future. Toilet paper, fuel (if it is a storable option) and other expendables that you can get at today's prices. The dollar store is good for soaps and the like.

I would keep your renters not informed of your bk as long as practical or your kindness of letting them stay and pay what they can, could be abused. You want them to pay as much as they can but not give them license to not pay at all. When you get notice of impending foreclosure would be a fair time to let your renters know. I doubt you would have to pay the Trustee your rental money if your income is very low. After all, it too is income. As a landlord, you are running a business of sorts.

Once you take that first step and file, there will be a noticeable relief in your life. You passed the first step in understanding your need to bk and that it is a business decision you had to make that is not a choice but a need. You will do fine. Read this forum. Read other peoples successes with bk. We lost more than most make in a lifetime, and are on SS and a small pension, but we have never been happier. We know now what real wealth is. It is peace of mind. 'Hub