Can I keep my primary residence?

[sf120]

Does anyone know if I can file on my rental property, but keep my primary residence? I haven't been able to rent it out and I can't make 2 house payments!

[keepinitreal]

Yes, you can surrender one property and retain another.

[angles]

In most cases filers are able to keep their personal residence but that depends on the exemptions and the worth of your property.

Assuming you plan to file under chapter 7, consider if you will be pushed into a 13 or even consider if you want to file under a 13 to keep your rental. But let me back up a second because you should review the totality of your financial circumstances before going head first into filing for BK. You may be able to give up the rental and keep you house without filing.

A few questions to consider:

1) Is the state that your rental is located in a non-recourse state? If it is, do the banks normally pursue a deficiency or is it really difficult for them to do so?
2) Have you talked to the Bank about performing a short sale or DIL? You may have some negotiating power in those cases to have the deficiency forgiven
3) Is the second mortgage your only debt that you cannot keep up with? In other words, could you comfortably pay your other debts without it?

These are just starter questions and obviously you want to begin with the least damaging approach before proceeding to the next step. Filing for BK should be the last step, but should be planned for from the beginning so you will be in the best position possible should the bank be uncooperative and force you down that road.

If you feel comfortable posting more details about your situation then perhaps we can provide some better information for you.