Hopefully one of our many experts in bankruptcy law here in Denver will chime in. My understanding is that the homestead exemption only applies to the home in which you actually reside. It normally does not apply to a second home or to rental property.
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There is much information you do not mention. Is the rental property free and clear? Is there a tenant ther currently? What other income do you have? How much debt are you struggling with?
The homestead exemption only applies to your home - the property in which you reside. If you have a debt load that you cannot manage you should consult with an experienced bankruptcy attorney who files both chapter 7 and chapter 13 cases. Such a lawyer will be able to review your situation and help you determine what your options are. Bankruptcy is a very complex area of law and with what is at stake it will well worth your while to hire a lawyer to help you do it right.
There is no homestead exemption for rental property. If you want to protect the equity in your rental property, you or a family member have to live there.
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My collegues raise good points, the most important one of which is that we don't have enough information. The homestead exemption is intended to protect your primariy residence, but you can chose which property is your primary residence. You should seek counsel before you make any decisions and while you still have time to do what little planning is left under the new bankruptcy code. Good luck!
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