Legal Question in Bankruptcy in California

I'll address 2 relevant issues (there are always more) to consider: 1) rental income counts as income for the purpose of determining chapter 7 filing-eligibility and alternatively for determining the amount of the monthly chapter 13 payment; though, you'd factor in certain costs of maintaining and leasing the property when determining the resulting rental income. The corresponding mortgage costs for the rental, for example, are handled differently from the costs related to leasing it; so you can't simply state that the income and mortgage are a wash and then move on, in terms of the income-expense analysis. 2) with regard to property in general, the main controlling factor is equity, not the number of assets: the amount of equity you can protect is limited. However, if real property is upside down or has relatively limited equity, then it won't be subject to liquidation. There is no rule against having rental properties. On a side note, sometimes allocating money to frivolous vacation homes is frowned upon as an unnecessary expense that would unfairly deprive creditors.

Disclaimer: the above is not legal advice and should not be relied upon. It does not create an attorney-client relationship. Unilateral communications may be misconstrued as they do not address all facets, nuances, and particulars. This is strictly my opinion provided for general informational purposes and it pertains to California law. Seek legal and other professional counsel before acting in relation to bankruptcy. It's worth the cost.