I just received Chapter 13 paperwork from one of my tenants

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I just received Chapter 13 paperwork from one of my tenants

Matthew Otero
Rental Property Investor · Brentwood, NY · Member since 2018 · 47 posts · 3 votes

So I just received a Notice of bankruptcy. One of my tenants has filed for Chapter 13 bankruptcy. I’ve forwarded the information to a lawyer but does anyone have experience with what may happen next?

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  • Chris SeveneyBusiness Member
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    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y
    Quote from @Matthew Otero:

    So I just received a Notice of bankruptcy. One of my tenants has filed for Chapter 13 bankruptcy. I’ve forwarded the information to a lawyer but does anyone have experience with what may happen next?


     As others mentioned - depends on if they are past due rents owed or rents are current. If they are current then you most likely would not need to file a proof of claim. If they are behind, you would have the attorney review a proof of claim to file for the past due amounts.

    You did the right thing, you contacted an attorney.

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  • Nathan GesnerBusiness Member
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    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    2y

    Here's a legal article that explains what your involvement is and what the process may look like: https://www.paletzlaw.com/2020/01/28/tenants-and-bankruptcy-...

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  • Doug Smith
    Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
    2y

    Don't knee-jerk and think it's necessarily a terrible thing. We have a company that buys Non-Performing Loans and, as a secured creditor, we love seeing BK paperwork. Get a creditor rights attorney and file a claim. Once the plan is in place, which admittedly might take some time, they will pull your money (usually plus a bit more the eat away at the past-due amount) from the debtor's paycheck and the court will send the money to you. If you're an unsecured creditor, you're kinda screwed as you might only get 10% or your money, but since you're providing their housing, you're likely going to come out OK. The attorney can help, but don't panic. Good luck to you. 

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