Tenant Files Bankruptcy. What Now?
If a tenant files bankruptcy is the property owner still able to collect rent or does the property owner get listed as a creditor and is thus "SOL"? If so, how long? Can the property owner file eviction?
Textbook? Real World?
Does anyone have any experience with this?
TYIA,
JohnCl
We had a bankruptcy attorney speak at one of our landlord meetings. The bottom line is that he had never heard of a bankruptcy affecting rents. If your house gets included in the bankruptcy you petition to get your house excluded from the bankruptcy (maybe not the right legalise words).
Brenda
Several years ago, we had a tenant do the same thing. Their attorney tried to stop the eviction. The Judge overruled and continued the process. Needless to say they were out a few hours before the Police arrived. We did loss one months rent. But they did have an eviction on their credit report.
In Oklahoma the fastest eviction we have done was 20 days.
JohnCI,
I just went through this recently. If your tenant owes you back rent and they listed you as a creditor, the bankruptcy filing puts a hold on the collection process. It's called a Stay. You cannot even begin the eviction process. The local justice will pick this up on the system as a bankruptcy filing and halt everything. If the bankruptcy is approved by the court, providing the tenant pays the fees, shows cause, paperwork etc. you must forgive the back rent. This is the process with Chapter 7 Bankruptcy in PA.
However, with Chapter 7, the tenant must continue to pay their obligations after the point of filing. So they still must pay the rent from that point on. This means that you can then start the eviction process if they become delinquint. But you may need to file a Relief From the Automatic Stay.
If they become late with rent due, it's CRUCIAL that you get a specialized Bankruptcy attorney. A RE attorney will not know enough. A local judge will not know enough...most do not have a law degree or even college. So if they don't know what to do...they will deny you the judgement. You and your lawyer need to know more than they do.
I had a tenant that was a professional deadbeat and they know how to work the system with back to back filings etc., etc. I eventually got her out because her bankruptcy was never granted. Your lawyer will track their filing status.
Good luck