How long does eviction (with Tenant bankruptcy) take in Memphis?

33 Replies

I have an investment property in Memphis. It's my first out-of-state investment property. Unfortunately, the tenant (who is the first tenant for my first out-of-state property) stopped paying rent after 3 months. He actually never paid on time in that 3 months.  So we started the eviction process on Dec 6th last year. 1.5 months later, we got the judgement that we could get the possession of the house. Just two days before we could get the possession, the tenant filed bankruptcy. He timed everything very well. Either he is a professional tenant or an attorney was helping him. So we had to stop eviction and wait for the next rent due date - Feb 5th. 

Early Feb, my PM said he asked his attorney to ask the bankruptcy court to lift the automatic stay. Now it's March. The attorney still say that they haven't heard back from the court but see the bankruptcy to be dismissed completely on that March 21st. My PM said we might need to wait until then to start another eviction process. At first, they were saying this bankruptcy court will take up to 30 days. 

I feel it's been really dragging on. Assuming that we have to wait until 21st, it will take our PM's attorney 4 months to start another eviction process, which can easily take another 1.5 month. So the whole process will be about 6 months. 

Have you had eviction experience with tenants filing bankruptcy? How long did it take you to complete the process? 

This is the typical "professional tenant" tactic, and its the nightmare scenario for landlords. Best you can do is to interface with your PM's attorney directly to make sure you have all the information correct. Getting the BK stay lifted can take tons of time and be pretty unpredictable just because of the logistics of dealing with 2 different court schedules - AND savvy tenants can sometimes request more time in each venue. 

Hi, @Sam Liu .

I am so sorry that your first out-of-state property now has a tenant who is in bankruptcy. As you know, bankruptcy is almost always a terrible situation for the landlord. @Curt Davis and I spent a little time during his podcast last year talking about that very subject.

Below is the written information that our eviction attorney provides to our owners about bankruptcy.

(I sure hope your out-of-state experience goes up from here.)

Bankruptcy

If the tenant files bankruptcy, the eviction process is subject to the automatic stay in the bankruptcy case, and if an eviction action has been filed, it will be dropped from the State Court’s docket to be reset if the tenant’s bankruptcy case is dismissed.

When a bankruptcy case is filed, we usually negotiate a Consent Order Conditionally Terminating the Automatic Stay. In that instance, any rent that was due prior to the filing of the bankruptcy petition is put into the tenant’s bankruptcy plan and is treated as a secured claim to be paid at 100%. The Consent Order also provides that, if the tenant is late in paying rent for the month following the month in which the bankruptcy petition is filed, the automatic stay is lifted and the eviction case can be reset in State Court or filed, if the tenant files bankruptcy prior to the filing of the eviction action.

In some instances, we can file a Motion to Lift the Automatic Stay. This is only used in a few instances primarily because of the amount of time it takes to get the Motion before a Judge. The Motion is first set for a 9:00am hearing, which is not before the Judge, to see if the parties can resolve the matter. If the matter is resolved, it is most likely by a Consent Order similar to the one described hereinabove. If the matter is not resolved at the 9:00am setting, the case is reset for a 10:00am setting which is before the Judge. It usually takes four weeks to get the Motion in front of a Judge. The cost to file the Motion for Stay Relief is at least $176.00.

The Consent Order is more time efficient and more economical than filing the Motion. It also provides a means for the owner to continue receiving ongoing rent during the bankruptcy case.

Originally posted by @Michael Cooper :

This is the typical "professional tenant" tactic, and its the nightmare scenario for landlords. Best you can do is to interface with your PM's attorney directly to make sure you have all the information correct. Getting the BK stay lifted can take tons of time and be pretty unpredictable just because of the logistics of dealing with 2 different court schedules - AND savvy tenants can sometimes request more time in each venue. 

Yeah, I've tried hard to avoid this scenario but it finally happened. The strange thing with this attorney is that she said we need to have our PM contact her directly. 

Originally posted by @Douglas Skipworth :

Hi, @Sam Liu.

I am so sorry that your first out-of-state property now has a tenant who is in bankruptcy.  As you know, bankruptcy is almost always a terrible situation for the landlord. @Curt Davis and I spent a little time during his podcast last year talking about that very subject.

Below is the written information that our eviction attorney provides to our owners about bankruptcy.

(I sure hope your out-of-state experience goes up from here.)

Bankruptcy

If the tenant files bankruptcy, the eviction process is subject to the automatic stay in the bankruptcy case, and if an eviction action has been filed, it will be dropped from the State Court’s docket to be reset if the tenant’s bankruptcy case is dismissed.

When a bankruptcy case is filed, we usually negotiate a Consent Order Conditionally Terminating the Automatic Stay. In that instance, any rent that was due prior to the filing of the bankruptcy petition is put into the tenant’s bankruptcy plan and is treated as a secured claim to be paid at 100%. The Consent Order also provides that, if the tenant is late in paying rent for the month following the month in which the bankruptcy petition is filed, the automatic stay is lifted and the eviction case can be reset in State Court or filed, if the tenant files bankruptcy prior to the filing of the eviction action.

In some instances, we can file a Motion to Lift the Automatic Stay. This is only used in a few instances primarily because of the amount of time it takes to get the Motion before a Judge. The Motion is first set for a 9:00am hearing, which is not before the Judge, to see if the parties can resolve the matter. If the matter is resolved, it is most likely by a Consent Order similar to the one described hereinabove. If the matter is not resolved at the 9:00am setting, the case is reset for a 10:00am setting which is before the Judge. It usually takes four weeks to get the Motion in front of a Judge. The cost to file the Motion for Stay Relief is at least $176.00.

The Consent Order is more time efficient and more economical than filing the Motion. It also provides a means for the owner to continue receiving ongoing rent during the bankruptcy case.

 Douglas, Thank you for all the information. I think the attorney tried to get the Consent Order signed by the court judge. Although she said it usually take 5-10 days, she submitted the document 13 days ago but hasn't gotten the signed document from the judge. 

@Sam Liu , I know how frustrating this can be.

I am not saying that it's your attorney's fault because our courts and judges can sometimes be slow, but if you want some other eviction attorney names, please just let us know and the local BP members will be more than happy to give you their recommendations.

Thanks for all your advice. Some updates: I found my attorney was really not doing her job. I searched bankruptcy court records. The tenant filed bankruptcy on 11/28 and 12/12. But my PM said our attorney couldn't find tenant's filing bankruptcy around the middle of January. And two days away from the date that we could get the possession of the house, our attorney said the tenant did file bankruptcy. Why my attorney lied about the filing. This first eviction was totally unnecessary.  She just try to make more money?

Then she submitted the consent order. I saw the court record showing "3/7  Agreed/ consent order", but my PM told me on 3/8 that she still didn't receive anything. And said the bankruptcy case to be dismissed on 21st. But there is no dismiss history shown in the court record around that timeframe. I only saw the bankruptcy hearing will be on 4/4. 

If I couldn't access bankruptcy record, I wouldn't find these details and really start wondering my attorney's motive. 

Is she just incompetent, or actually lying to slow down this process, so they can make more money? I tried to challenge her today, but couldn't get hold of her in office. 

Doing out-of-state investment seems a very bad idea. 

@Sam Liu

Out of stat e investing is, of course, a very bad idea... I found that out 1st hand 10 years ago... sorry you had to go thru this..

Hi, @Sam Liu .

Out-of-state can be very good if you're partnered with the right team.  Your experience sounds unusual from what I've seen.

There's no need to give your property management company's name, but are they active on BiggerPockets?  I will be shocked if you say they are.

@Sam Liu

be glad that you only had 1 OOS property... there are so many disastrous stories about OOS on BP that it is funny that people keep going at it....

Originally posted by @Douglas Skipworth :

Hi, @Sam Liu.

Out-of-state can be very good if you're partnered with the right team.  Your experience sounds unusual from what I've seen.

There's no need to give your property management company's name, but are they active on BiggerPockets?  I will be shocked if you say they are.

 I don't think they are. It's a small PM company recommended by a friend. 

Originally posted by @Diane G. :

@Sam Liu

be glad that you only had 1 OOS property... there are so many disastrous stories about OOS on BP that it is funny that people keep going at it....

 Yeah, saw some stories but didn't know that it's this bad. Can't resist the low price and potentially high return. Of course, it ends up with low return and a waste of time. 

@Sam Liu

Yeap, that is exactly what I concluded 10 years ago - low return and a waste of time....

Glad I was gutty enough to cut loss right away and came back to CA, and had more than recovered all the OOS loss...

Originally posted by @Sam Liu :
Originally posted by @Douglas Skipworth:

Hi, @Sam Liu.

Out-of-state can be very good if you're partnered with the right team.  Your experience sounds unusual from what I've seen.

There's no need to give your property management company's name, but are they active on BiggerPockets?  I will be shocked if you say they are.

 I don't think they are. It's a small PM company recommended by a friend. 

 @Sam Liu, I'm sure you've already come to this conclusion yourself, but just as you are using BP to help with this eviction/bankruptcy situation, I would highly recommend you search and vet your local team (eg, realtors, contractors, property managers, attorneys, etc.) via BiggerPockets. 

I am sorry to hear about your story and i believe it is a nightmare.

I am a foreign investor (i live in Israel) and have my real estate business running in the states.

At the beginning i was advised by friends to use certain brokers and contractors which i found out are really bad (lost more than 20K for thier mistakes) instead of giving up i decided to do my own due diligence and set a team of experts (people i interviewed and searched).

Today i have a great and very experience team and we are doing great. I am writing this just to say that out of state investment properties is a challenge but once you build a great team it is great.

i am writing this just to let our BP fellows that if they want to invest in out of state properties they should do their homework. i learned it the hard way but i am glad i did.

My friend offered to help me find another attorney because she felt bad getting me into this situation. but not sure if it's easy to switch attorney....