What happens to my renters?

[jefferino]

I'm new here and I will be reading this board in greater depth but thought I'd post some burning questions about my rentals first:

I will be consulting an atty for chapter 7
$70,000+ in credit card debt
unemployed since 2006
started real estate company in 2006
currently getting about $2300 per month in rents on 2 duplexes.
I bought 3rd fixer-upper duplex in 2009 on credit cards for $27,000
No mortgage on 3rd duplex. Claiming as residence since 3/2010.
Rented upper unit on 3rd duplex for only 3 months.
I want to keep 3rd duplex as personal home. Tax Assess: $57,000
I am way upside down on other 2 dupes:
1st: mortgage is $83000. homes in area selling for $20,000 and under
2nd: mortgage is $64,000. homes in area selling for $20,000 and way under

1. I want out of my rentals even though I am able to afford the mortgage with renters. Can I? I still owe prop taxes on both. I will pay prop taxes on my own personal home. Do I just not pay the bank and pocket the money to force a foreclosure on the rentals?

2. If bank sells my rentals for less, will I get taxed by IRS on the difference if I file bankruptcy?

3. Should I bother paying the prop taxes on the rentals if I want to foreclose on them?

4. What happens to my tenants. They are all on month-to-month. How long can they stay once a foreclosure is started. I will be entering my 2nd month of non-payment as of 9/2010. The rentals are in Wisconsin.

[tknj99]

Hi there,
I was a landlord as well and in a similar boat. If you wanna unload the properties, then do not pay the property taxes.. The lender will have to pay the taxes and asses your mortgage for the deficiency. You can keep receiving rent from the tenant but once foreclosure starts, they will most likely vamoos.. Also.. make sure your not collecting rent within 6months or so of filing as it will count as income...
If the bank foreclosesy you will get a 1099-c sometime the following year after Junuary 1 which you would be responsible for paying tax deficiency amount to IRS unless you include the rental in your bankruptcy filing or can claim insolvency..
My properties took at least 1 yr to foreclose and i didnt collect rent during the foreclosure period nor pay insurance, taxes, or maintenece fees on the rentals.
Hope that helps,
-tk