Real Estate Investor · Member since 2011 · 56 posts · 9 votes
I need your help guys,
I live in Las Vegas NV and this month, my tenant was late on her payment. So, I served her with a 5 day pay or quit.
Today, I just got an email from her attorney saying that she just filed for BK and that I can't do anything about it because of this automatic stay.
Has anyone ever tried to file for a motion for relief from automatic stay?
What happens when I get a court date to meet with the judge?
My lease says that if she defaults in her lease, that forfeits her security deposit, however, her attorney is telling me that I have to pay it back due to the forfeiture clause!?!?
Couples points: (1) the attorney for the tenant is correct that you are barred from pursuing your eviction action due to the imposition of the automatic stay. The remedy would be to enter the case and file a motion for relief from stay. This process is not pro se friendly and I am not sure you can even get your motion argued so the issue with appearing in front of the court may never happen. You most definitely should get BK creditor advice if you want to continue with your eviction.
(2) as for your security deposit, the attorney has no right to tell you that it must be forfeited. However, the bankruptcy trustee can claim the deposit as an asset of the debtor's estate if the debtor does not exempt it. This would then make you a creditor and you may be able to recover the deposit back based on your claim. You should make a distinction who you are talking to and who they actually represent.
Couples points: (1) the attorney for the tenant is correct that you are barred from pursuing your eviction action due to the imposition of the automatic stay. The remedy would be to enter the case and file a motion for relief from stay. This process is not pro se friendly and I am not sure you can even get your motion argued so the issue with appearing in front of the court may never happen. You most definitely should get BK creditor advice if you want to continue with your eviction.
(2) as for your security deposit, the attorney has no right to tell you that it must be forfeited. However, the bankruptcy trustee can claim the deposit as an asset of the debtor's estate if the debtor does not exempt it. This would then make you a creditor and you may be able to recover the deposit back based on your claim. You should make a distinction who you are talking to and who they actually represent.
Real Estate Investor · Member since 2011 · 56 posts · 9 votes
15y
Thanks for the feedback guys.
I just got another letter from her attorney, stating that she expects her security deposit back. WTF?
The lease is for 1 year and it's only been 6 months.
My lease clearly says.
"EARLY TERMINATION OR ABANDONMENT: Should Tenant decide to terminate lease early or defaults, Tenant will automatically surrender all deposits made to Lessor. "
Are contracts voided when you file for a BK?
This is some BS.
Lender · Riverside, CA · Member since 2011 · 17 posts · 2 votes
15y
When someone files for BK all of their assets become frozen pending examination by the court to determine if there is any equity in each of the assets. A lease hold estate is considered an asset.
Upon filing a motion for relief from stay, the court will be looking to determine if the lease hold estate has any value, i.e. the lease agreement is for $1000 per month/ the fair market rent for your property is $2000 per month/ there are twelve months remaining in the lease. This "asset" would have a value of $12,000.
So . . . upon filing a motion for relief from stay, you'd want to provide evidence to the court that the lease hold estate carries no value, and is of no use to the court in administering repayment to the creditors which are subject to the BK filing.
If you use an attorney to represent you in court this would typically cost you between 3-5k.
Wholesaler · Dallas, TX · Member since 2009 · 308 posts · 92 votes
15y
You didn't state what form of BK she filed.
At this point, it seems obvious that you should contact a BK Attorney to find out what your options are. The initial visit is usually free, so if you organize your questions you can get all of your answers. Do be shy about interviewing 4 or 5 attorney's.
Also, timing on your pay or vacate notice means something on getting your relief from stay approved. BK automatic stay does not mean a "Free Ride" on not keeping the rent current. It only prevents taking further legal action.