Will chapter 11 work for reorganizing the 18 over leveraged rental properties that I own?

First, I am sorry you are having this difficulty, but rest assured you are not alone. I am not a bankruptcy professional, but I do pre-bankruptcy workouts for lenders and commercial real estate clients.

To help you out, an attorney will need much more information. Here are a few questions to get you started thinking about some of the considerations.

*Are all or some of the properties owned by you personally? By one or more LLCs, corporations or limited partnerships?

*Are you or the ownership entities the sole borrower and sole guarantor?

*How many of the houses are vacant or under-servicing the debt and why? Are you unable to rent at any rental amount? Or are you unable to get rents sufficient to cover the monthly payments?

*What shape are the properties in? On what are you basing the value to determine that you have 10% equity (appraisal, history, guess)?

Answers to questions like these and others are going to change the analysis and advice. You may have to consider multiple bankruptcies. Bankruptcy may not even help much if there are co-owners or co-borrowers or co-guarantors who may be liable for the debts. And a reorganization may not be a viable option depending on some of the answers to these and other, similar questions.

Next, I would ask "what would be your plan?" Chapter 11 bankruptcy allows the debtor to submit a plan of reorganization. Think of this as if it was an "if/then" question: if I could get the lenders to do X, then I could repay the lenders because Y. So what would you like the lenders to do and how would that help assure you would then be able to make the payments? Lower the monthly payments? Forgive some of the debt and re-amortize? A bankruptcy attorney will then take you through a lot of detailed analysis to see if an 11 would be a viable option or if another kind of bankruptcy (a liquidation) or even a non-bankruptcy solution would be more appropriate. In this regard, have you tried discussing a workout with your lenders?

A loan workout can save the parties a lot of time and costs. If you have a reasonable plan that you think you can improve the lender's situation, a workout can be a more viable and cost-effective way to handle your situation. For example, you may be able to pledge the equity in the stable properties to secure the deficiencies in the others. You may be willing to provide personal guarantees in exchange for a debt restructure that solves the negative cash flow problem. You may even be willing to give a lender a profit participation if you can stabilize the properties, hang on for a market turn-around and then sell the properties for a profit. Alternatively, you may be able to discuss a plan to deed some of the properties to the lender in exchange for limiting your exposure for any personal liability. Remember, as a guarantor you have a right to demand a "fair value determination" after a foreclosure and possibly reduce the deficiency for which you are liable (RCW 61.24.100(5)). Also, to recover a deficiency against a borrower, a lender must conduct a lengthy and costly judicial foreclosure and wait out a long redemption period. So the lenders have incentive to talk to you.

A Chapter 11 bankruptcy may be a good solution for you, but it may not be the first thing to try. A restructuring or workout out offer plentiful opportunities. Think over some of the questions above and then contact a good bankruptcy attorney to see if a workout may be a better option for you to try. Please be sure to hire a bankruptcy specialist if you do decide to go forward. Check out any attorney on AVVO, at the state bar website, www.WSBA.org, and by getting recommendations.

Oh, and speaking of attorneys, you should not expect your attorney to work for free. A Chapter 11 bankruptcy can command some very large fees. If you do not have some cash available, you may have to consider a different route altogether.

Best of luck!