Investment Property Foreclosure Implications and Chapter 7

[olafmagee]

My question involves bankruptcy in the state of: I live in CA. I own my primary residence there with equity of about $50K. I have an investment property in NV. I am upside down about $80K. I can't find a renter. I am considering just letting the bank foreclose on it. I have researched Chap 7. My income (family of four) is under the median income so it appears that I qualify. As well, it appears I can exempt my primary residence given the limited amount of equity. I don't have much more in terms of assets. If I file a chapter 7, can I discharge: 1) the deficiency judgment? 2) any capital gain from the sale (my basis is low bc I have depreciated the property for 8 years so this is a possibility)? 3) the taxes owed for recapture of the depreciation for 8 years? If a chapter 7 is the best option? When should I file it?? Can I wait until the vultures (bank, IRS) start circling down the road? Or should I do it before the foreclosure. I need some advice regarding the timing. I'd just as soon wait to see if they pursue me before filing; however, I don't want to miss a deadline.