Can I exempt rental property if I file Chapter 13

Yes, you can keep rental property in the context of a reorganization bk, not because it is exempt but because you, based upon your post, have a positive cash flow from this investment property.

1. So long as the property is either break-even or producing net income there is typically no issue with keeping it.

2. Since this property is not your primary residence you can do a “cram down” meaning you can modify the lender’s rights by reducing the secured portion of its claim to the value of the property ($64k in your example).

In the context of a Chapter 13 you would have to pay off the secured claim with appropriate interest over the life of your Plan (no greater than 60 months). Your monthly payment to the mortgage company would jump to somewhere around $1,200.00 in a 60 month plan depending upon the interest rate. If, somehow, you can generate enough rents to cover the payment, the 13 is the way to go. . . but I doubt you can get that kind of rent.

In the context of a Chapter 11 you can pay off the secured claim (with appropriate interest) over whatever period you want (we typically set the term at 30 years). Sounds great doesn’t it? Unfortunately there is this little thing call the 1111b election and if the lender takes it, you will either have to negotiate a higher secured claim to “by back the election” (which may still work for you) or you will have to leave the mortgage the way it was and continue to service it based upon the full amount owed.

As Soaplady points out, you really need to consult with an attny in your area. These “cram down” issues can be quite complicated.

Des.