Tenant in Bankruptcy, can I DIY (Do It Yourself) and get paid?

Tenant in Bankruptcy, can I DIY (Do It Yourself) and get paid?

Real Estate Investor · Minneapolis, MN · Member since 2011 · 49 posts · 19 votes

My tenant is 2 months behind on rent, and I just received in the mail a B9I Notice of Chapter 13 Bankruptcy Case, Meeting of Creditors, & Deadlines.

The tenant has listed our lease, and the 2 months he is behind, with a proposal to pay the amount over 60 months ($43.33 per month!).  The "Other Provisions" of the plan says " Debtor shall commence their monthly rent beginning 12/1/2015" which I interpret as full rent will be paid going forward.

The Bankruptcy form is a little confusing, in the standard explanations section it says "To be paid, you must file a Proof of Claim even if your claim is listed in the schedules filed by the debtor."

I found the B10 (Official Form 10) (04/13) UNITED STATES BANKRUPTCY COURT Proof of Claim form on the web, and it seems doable.

Has anyone done a tenant bankruptcy before?  There are also dates, times, and locations for "Meeting of Creditors" and "Hearing on Confirmation of Plan" on different dates, did you/should I go to these meetings?

Any way I can get the plan changed to pay me over fewer months?

Any curve balls or issues to look out for?  This tenant has been ok and it is difficult to find tenants this time of year, so I wasn't planning to evict unless absolutely necessary. It sounds like the Bankruptcy filing would put a halt to the Unlawful Detainer/eviction anyway.

Thanks in advance for sharing your experience.

0Reply
39 views

2 Replies

Jump to latestLatest
  • Rental Property Investor · Cleveland, OH · Member since 2015 · 1k+ posts · 880 votes
    10y

    You need to get an attorney involved. Any time you collect funds from a debtor in the bankruptcy process you risk having to repay those funds over to the bankruptcy trustee. It can get sticky and gross in a hurry. I'm not an attorney, so best to consult with one, but I have seen this stuff go south fast with my business dealings when a company I do business with goes under. 

  • Investor · Erie, PA · Member since 2014 · 128 posts · 65 votes
    10y

    I went thru similar situation. Filed everything myself at court house. Tenant then lost job and refiled for chapter 7 asking courts to discharge all debt. Court said OK as long as they go to financial planning seminar. They did not so Court reversed decision and the debts are NOT discharged , Tomorrow I will go to JP and file claim and garnish future wages I hope.

    Good luck and stay unemotional! its just business.

Join the conversationCreate a free account to reply, vote on answers and follow this thread.