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What Do I Do If My Tenant Files for Bankruptcy?

What Do I Do If My Tenant Files for Bankruptcy?

Renting a property can be a great way to create another source of income and put you on the path to building some long lasting wealth.  However, being landlord can be a complicated job.  Along with the normal pitfalls and obstacles that come with being a landlord, this year has presented many new challenges that can be difficult to navigate and resolve.  One of the things that Nikolaus & Hohenadel can help you through is how to deal with a tenant who files for bankruptcy.  While this is obviously a delicate matter that can affect many people negatively, it remains a situation that can benefit from having an experienced bankruptcy attorney on your side. 

Let’s take a deeper look at how this can unfold.

To better understand the situation, we should take a look at things from both sides, so let’s begin with a brief overview from the tenant’s perspective. 

If a tenant files for bankruptcy, it can temporarily stop an eviction.  This isn’t a long term solution, however.  It will only buy a tenant time to make their next move.  Tenants can use that time to make other living arrangements, pay backed rent to a landlord or come to some new agreement with their current landlord.  Eventually if a tenant fails to do those things, they can still be evicted.  Generally speaking, a tenant may have the right to stay in their home while their bankruptcy case is active.  This obviously varies, but bankruptcy proceedings can last several months or possible up to five years, depending on the bankruptcy.  The kind of bankruptcy a tenant files for may have an impact on how long they can stay in a property as well.  Bankruptcy filings may allow a tenant to pay back rent over a period of time.

As a landlord, you do have certain rights that may help you in these matters.  Knowing what they are and how you can deal with a tenant who files for bankruptcy is a battle that you shouldn’t go through on your own.  Our team of knowledgeable bankruptcy lawyers can help you through this and set you up to have the best possible outcome in these difficult circumstances.  As a landlord, you cannot immediately evict a tenant once they have filed for bankruptcy.  Unfortunately, even if you have started the eviction process before a tenant files for bankruptcy, it may be put on hold.  That does not necessarily mean that there is nothing you can do.  Landlords can file a Motion for Relief that will request that the provisions put in place to block an eviction be lifted.  The court may be persuaded to side with a landlord if a tenant is severely behind on rent, or is causing damage to a property while still living there.  If your tenant has filed for bankruptcy that allows them to make payments on their backed rent over a period of time, there are still options.  If you are receiving payments from a bankruptcy trustee through a repayment plan for backed rent, your tenant still needs to pay their current rent on time and in full.  If not, this could be grounds to evict the tenant.  There is a small window of time that a landlord has to file an objection against a repayment plan as well.  Our team can help ensure the best chance of success.

While it may seem like a difficult and uphill struggle dealing with a tenant who is filing for bankruptcy, the skilled and qualified bankruptcy attorneys at Nikolaus & Hohenadel can make it easier for you.  Don’t fight this battle alone. 

Contact us today to find out what your options are.