Can the courts take our rental income?

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Can the courts take our rental income?

We currently own the house we live in and our rental. We’ve already gone through the meeting of creditors. We get to keep both (owe more than they are worth). The trustee wants the income from the rental. My husband is a general and doesn’t make much. We use that income to help pay for our home mortgage and bills. She might be forcing us into foreclosure on both houses. If they can take it,  do we pay until our debts are paid off? If so why did we even file for bankruptcy?

Asked on August 19, 2011 Washington

Answers:

Mark J. Markus / Mark J. Markus, Law Offices of

Answered 10 years ago | Contributor

There's no way to answer your question without a lot more facts.  What bankruptcy chapter did you file?  Is the rental income more than the debt service on the rental property?  Are you showing a surplus in your budget?   etc. etc.   If this is a Chapter 7 the Trustee can take the rental income but would have to pay the mortgages and other debts on the property.  The leases you have with the tenants in your rental property are assets of the bankruptcy estate, so if it is a surplus situation (i.e. the rents exceed the amounts owed) then the Trustee can take those for the remainder of the existing leases.

I suggest you consult with a bankruptcy attorney in your area because there may be some local patterns and practice involved there.    What you are describing is unusual, but not impossible.

Mark J. Markus, Attorney at Law

Handling exclusively bankruptcy law cases in California since 1991.

http://www.bklaw.com/

Follow Me on Twitter:  @bklawr

Mark J. Markus / Mark J. Markus, Law Offices of

Answered 10 years ago | Contributor

There's no way to answer your question without a lot more facts.  What bankruptcy chapter did you file?  Is the rental income more than the debt service on the rental property?  Are you showing a surplus in your budget?   etc. etc.   If this is a Chapter 7 the Trustee can take the rental income but would have to pay the mortgages and other debts on the property.  The leases you have with the tenants in your rental property are assets of the bankruptcy estate, so if it is a surplus situation (i.e. the rents exceed the amounts owed) then the Trustee can take those for the remainder of the existing leases.

I suggest you consult with a bankruptcy attorney in your area because there may be some local patterns and practice involved there.    What you are describing is unusual, but not impossible.

Mark J. Markus, Attorney at Law

Handling exclusively bankruptcy law cases in California since 1991.

http://www.bklaw.com/

Follow Me on Twitter:  @bklawr


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