Tenants Filing Bankruptcy to Avoid Eviction Repayment?

17 Replies

I just had to evict some tenants, and they told me that if I get a judgment against them, they'll "just file bankruptcy so [I] never see a dime."

My first instinct was to laugh out loud, but then I thought, "Hold on--these people really don't have anything to lose. And they're stupid enough that they just might try something any sane person would realize was idiotic. I wonder if..."

Anybody have tenants try that before? I'm in Indianapolis if you happen to have local experience, but if not, still love to hear your story. Or, for that matter, any other story that made you wonder what on earth your tenants were thinking!

Even if you never see a dime from them, others will see that judgment...like future landlords and other creditors. The long term repercussions are far worse for them. I say go for it!

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You're most likely to never see a dime whether you file a judgment or not, especially if they have no money and no assets.   However, you're more likely to get paid if you do file the judgment, especially if you can garnish wages, which I haven't done so no idea how.  If they then decide to file bankruptcy, which isn't free to do so will cost them money to do it, you'll know you cost them money, too, along with damaging their own credit which will cost them a fortune in higher interest rates and insurance premiums, deposits on utilities, etc., so while you may not ever see the money, they'll be paying for it. 

One of them works, but I've already overheard him saying he knows enough that, in Indiana, if he just changes jobs, I'd have to find him before I could sue to garnish wages at his new employer.

Fortunately, in the long run, since I get to keep their security deposit, it's probably not going to end up being a terrible amount of money for me. I'd certainly like to get it back, and I'll certainly try, but I'll survive if they don't pay it.

I agree you shouldn't expect to see a dime of that money. I too have had a tenant say the same thing to me, that they'll just file bankruptcy and I will never see my money. My sole reason for filing for judgement was to create a record for the next person to see. If I do ever get paid it'll just be a bonus.

And you never know when they might pop up in the future even if they try to change jobs to avoid garnishment.  I had my deadbeat pop up a couple weeks ago.  Facebook recommended that I Friend him for some reason and I saw he had moved back into the area.

Getting them out with minimal damage to the property is the most important aspect of dealing with a deadbeat in my opinion - ie.. Don't make it personal.  They have nothing to lose and you have a building they happen to live in.  The good news = since you are local to Indy you can use these guys to file your eviction.  They have an in-house collection agency and produce the best results Ive seen.   But... their success rate is still under 25% so I definitely wouldn't count on getting any money.    

Not worth it. You will expend effort, money and psychic energy on a long shot chance of recovery.

It would seriously not surprise me if spending the same money on scratch tickets would have a higher expected value.

Don't personalize it. Banks that have to write off losses do not "chase" anyone. Investmentfirms that take a haircut on bonds they hold do not base decisions on "f them." . This is business.

At this point, I'm thanking my lucky stars all they left me with was some gross furniture. I should be able to have the place cleaned up by this weekend.

While I was at the courthouse filing for an emergency possession hearing because they weren't letting me in to fix a leaky sink they said was leaking on an electrical box (I checked--it isn't), they dropped their keys in my mailbox. I called the courthouse today to update them and tell them it's not actually an emergency anymore, but they said I just have to wait and see if the judge grants it anyway. I wouldn't hate having an earlier hearing.

My immediate plan is to try to get the place leased before it gets cold, 'cause that's my best way to cut my losses. That takes so much priority over chasing the money. I got in writing that they don't want their belongings back, so I'm I'm full-on flip mode tomorrow morning!

I rarely ever try to chase the money because you'll rarely ever get it but I do always get the judgment on their record because then I know that the next landlord will see it and be warned. I've had tenants apply with rental judgments on their record and I will only accept them if they pay the judgment... one actually did a few years back. So my 2 cents is, please get the judgment and if the tenant happens to come to me... I will chase your money for you, right back to you. This should be an industry standard!

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If you don't mind me asking, what was the amount you won in judgment?  Only you can make the call, but is THAT about months and moths of aggravation.  Or can you just move on and use is as a cost of doing business lesson?

If the award was sizeable, go after them.  And if they toy with bankruptcy courts, don't be afraid to show up at the creditors meeting during the BK proceeding.  Take the judgment to the local marshals office and let them do their job - find them and get your money (garnish, et).  They are obviously scammers who lived for free on your hard earned dime.  You have options - USE THEM.

That's what I would do.  Good luck.

I will always go after debtors for a money judgment in an eviction. In Georgia, if they aren't personally served (tack and mail) you can get an eviction, but no money judgment. If they are personally served, and don't show up, you have a default judgment. It's the same cost, and you can make a decision on what to do. Filing bankruptcy is not cheap, and a total wipe-out of debt (chapter 7) is harder to do these days.  If they do a 13, you'll get less but at least you'll have the court to collect! If you have a good rental application, you should have car info, job info and ss#'s. You can use that information to try to collect, especially if they have a good job history. One garnishment of mine got only one payment-the deadbeat quit and disappeared!  In another, I got full payment from the employer, who failed to answer the garnishment before the deadline. You "pays your money, you takes your chances"!


Eviction and bankruptcy and completely two different things.

Eviction rules are typically state or even local.

On the other had, bankruptcy is FEDERAL; it's trumps all.

But if you simply got an eviction, no money award, sue them again for the back rent.  That is all they can 'claim to toy with' in the bankruptcy court.  And in ANY BK court there is a debtor meeting.  Anyone they owe money to can show up.  If they owe you money (not just an eviction - an actual award/judgment of money/repairs/back rent, etc) - GO AFTER THEM.  With a money judgment, the federal BK court will listen to you - doesn't matter what chapter filing they use.


Was in law off/on 13 years.  I have some experience.  Educated in finance and aerospace.  I invest regularly.  Your situation is frustration - but stand up for yourself!!!!!  Don't let them run over you.


What is the cost to file the judgment and what could you potentially recover?

I would recommend filling out the form and then throwing it in the trash.  You did get lucky in that they did not trash your place.