[VA] If I file bankruptcy in Virginia, will I need to sell my rental properties?

Lexi, Chatbot

I'm sorry to hear about the challenges you're facing. Have you already filed for bankruptcy due to your divorce and medical bills?

Lexi, Chatbot

How many rental properties do you currently own?

Lexi, Chatbot

Is there anything else the Bankruptcy Lawyer should know before I connect you? Rest assured they'll be able to help with your rental properties.

Craig

Hey there! Welcome to AskaLawyer. I'm Craig, an attorney with many years of experience, and I'm here to help you. Could you let me know which state you're in?

Craig

Thanks for letting me know. Are your rental properties currently generating income, or are they vacant?

Craig

Great, thanks for that. Could you tell me if there are any mortgages or liens on these rental properties?

Craig

Based on your situation, there are several legal considerations in Virginia that could potentially impact your case:

In a Chapter 7 bankruptcy, non-exempt assets can be sold to pay creditors. However, Virginia allows certain exemptions that might protect some of your property. The homestead exemption, for example, may apply to your primary residence but not necessarily to rental properties.

Rental properties are generally considered non-exempt assets, which means they could be sold to satisfy debts unless you can exempt them under specific provisions. The income generated from these properties might also be considered when determining your ability to repay debts under a Chapter 13 bankruptcy.

The presence of a mortgage on one property could affect its treatment in bankruptcy. Secured creditors have rights to the collateral (the property) if payments are not maintained.

Let me know if you have any questions or need clarifications, if not I'll move forward with additional information.

Craig

Here's a detailed guide on how you might approach your situation:

1. Understand Bankruptcy Types

• Chapter 7: This involves liquidating non-exempt assets to pay off debts. Your rental properties could be at risk unless they are exempt.
• Chapter 13: This allows you to keep your properties while reorganizing your debt into a repayment plan. The income from your rentals will be considered in this plan.

2. Evaluate Exemptions

• Virginia has specific exemptions that might protect some of your assets (VA Code § 34). Consult with a local attorney to see if any apply to your rental properties.

3. Consider the Mortgage

• The property with a mortgage is a secured debt. If you file for Chapter 7, you may need to continue payments or risk foreclosure. In Chapter 13, the mortgage can be included in the repayment plan.

4. Consult a Bankruptcy Attorney

• Given the complexity of your situation, it's wise to consult with a bankruptcy attorney in Virginia. They can provide personalized advice and help you understand the best course of action.

5. Prepare Financial Documentation

• Gather all relevant financial documents, including income statements from your rental properties, mortgage details, and medical bills. This will be crucial for any bankruptcy filing.

6. Explore Alternatives

• Before filing for bankruptcy, consider alternatives like negotiating with creditors or exploring debt consolidation options.