Expert: Mark J. Markus- California Bankruptcy Attorney - 9/19/2009

Question
Hello, my partner and I own two properties.  We live in one and rent out the other.  My partner's only income is social security disability, and I'm a sole proprietor.  The economy has been disintegrating my business over the past nine months, and we are getting worried.  We have around 100,000.00 in credit card debt between the two of us.  We might have 30-70 thousand in equity at the rental property but don't really know in this market.  No one will let us tap it though because it's not primary residence.  If we have to lose a property we don't want it to be the rental because we could move back there ourselves.  Is there any way of keeping two properties when you file 7 or 13, or can we pretty much expect that we'd lose one or both?  We still have significant income at the moment, but don't know if one of us can file and not the other, where both of us have our names on both properties.

Answer
Your options, and whether you can retain the equity in your properties depends on the exemption laws of whatever state's laws are applicable to your case.   To see more on exemptions, visit http://www.bklaw.com/exemptions.html

Assuming you qualify for Chapter 13 (unlikely if you have two properties with mortgages, but it's possible), you can retain both properties there, but may have to pay out a certain amount if there is non-exempt equity in either of the properties.

You need to consult with a bankruptcy attorney in your area regarding your options.