Chapter 13 Bankruptcy and tenant not paying

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Chapter 13 Bankruptcy and tenant not paying

Edwin Brown
Real Estate Investor · Chattanooga, TN · Member since 2010 · 151 posts · 59 votes

So my tenant is 3 months behind in rent. She files chapter 13. 30 days later a new month rolls around and she is still not paying rent. Now, i'm pretty sure i can't pursue her for the back rent, but can i evict or do i have to go through the court system?

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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
16y

You have to go thru bankruptcy court and get the "stay" lifted. This will probably entail an attorney licensed to practice in Federal Court.

Realalistically, the tenant will have to come up with a plan that includes paying your rent or the stay will be lifted and you will be able to evict.

Some tenant are practiced at using the legal system to their unfair advantage. I have a tenant that has challenged our eviction, lost, appealed it to county court, lost, appealed it to appeals court, lost, tryed appealing to Texas Supreme Court, rejected appeal. All without an attorney! He was required to post bonds equal to the rent. He posted pledged real estate owned by other people who signed affadavids allowing their property to be pledged.

Now the fun begins. We have filed lis pedens against the properties, and are asking court to allow us to lien said properties. We fully expect that these 2 property owners will claim that their notarized signatures were forged.

Whenyou have dealt in a large number of properties, you experience some crazy things!

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  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    16y

    Right now, you go ahead as if she is not in bankruptcy, with the eviction process, that is not in bankruptcy court. You also file for judgment for past rents. You now become a creditor, get in line. Bankruptcy judges do not take kindly to people who incur debt in the contemplation of bankruptcy, in other words, setting people up, accepting goods or services with a financing arrangement or future payment being required and filing for bankruptcy knowing they were not going to pay for such goods or services. FIle your claim and get in line, you'll probably go to the head of the line. Good luck, Bill

    2Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    16y

    You have to go thru bankruptcy court and get the "stay" lifted. This will probably entail an attorney licensed to practice in Federal Court.

    Realalistically, the tenant will have to come up with a plan that includes paying your rent or the stay will be lifted and you will be able to evict.

    Some tenant are practiced at using the legal system to their unfair advantage. I have a tenant that has challenged our eviction, lost, appealed it to county court, lost, appealed it to appeals court, lost, tryed appealing to Texas Supreme Court, rejected appeal. All without an attorney! He was required to post bonds equal to the rent. He posted pledged real estate owned by other people who signed affadavids allowing their property to be pledged.

    Now the fun begins. We have filed lis pedens against the properties, and are asking court to allow us to lien said properties. We fully expect that these 2 property owners will claim that their notarized signatures were forged.

    Whenyou have dealt in a large number of properties, you experience some crazy things!

    Private Mortgage Financing Partners, LLC
    WebsiteView Page
    5Reply
  • Edwin Brown
    OP
    Real Estate Investor · Chattanooga, TN · Member since 2010 · 151 posts · 59 votes
    16y

    That's two completely opposite lines of advice. I've also asked this question to other investors in my area and got the same answers. Some say i have to get a stay lifted and others saying that this is a new obligation that is no under the repayment plan.

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  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    16y

    Ack! Now that is a professional tenant, Don. Where did this take place?

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  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    16y

    Dallas, Texas

    Private Mortgage Financing Partners, LLC
    WebsiteView Page
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  • Account Closed
    Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
    16y

    I've run across professional tenants, but that is the most accomplished one I have heard of. Landlords definitely need to know and stay on top of the Landlord Tenant laws and it does hurt to understand these other laws that can impact the Landlord tenant relationship.

    Often tenants can also get a free attorney.

    0Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    16y

    Edwin, I read that as in 30 days she was taking bankruptcy, after the second reading I see where you are, sorry. Don is correct. You can go to the bankruptcy court yourself. They will ask, when the case is brought up, if there are any other creditors, stand up and tell your tale! This also catches her attorney off guard as most don't show up, he will not give much of a fight as rents are pretty clear cut, they ask did you pay it and she says no. If she says yes, where is the receipt? So, there you go! You can ask for the stay and proceed with eviction. If they backlog is several months away, as I hear they are now, you can still file for the evection in circuit court, since that is a civil action for possession and not ask for rents as a creditor, or obtain the stay and proceed. As Don pointed out you can obtain a stay and you may not need an attorney, check as a creditor's filing at the bankruptcy court clerk/ Trustee. The reason I suggest going for the evection is that most tenants never show up. Notice will be sent and you might get a call from her attorney. If you tell that attorney that you are not seeking rents as a collection, at this time, but only possession! I have seen that done. Tenants are not homeowners with an equity available to pay creditors. Might check on your state law as well, better yet, ask your attorney. What goes on in one place is not always what goes on somewhere else. As a registered creditor's representative in Bankruptcy Court, I never represented a tenant, but I did go after a few.

    Don, do you often rent to con artists? lol, that's a good one, I have never heard of a tenant going that far on their own...never!

    Good night all!

    1Reply
  • Edwin Brown
    OP
    Real Estate Investor · Chattanooga, TN · Member since 2010 · 151 posts · 59 votes
    16y

    Quick update.
    I just got off the phone with the debtor's attorney and he told me that as a landlord i am not involved in the bankrupcty. He said I could go ahead with the eviction without any additional paperwork.
    Maybe this is just MS law, although i thought bankrupcty was more of a federal law issue.
    Anyways, i figure if my tenants attorney advised me to go ahead with the eviction I'm probably ok.

    1Reply
  • Andy J.
    Wholesaler · Colorado Springs, CO · Member since 2009 · 286 posts · 255 votes
    16y

    That's probably the best answer you're going to hear. If it were me I would want to get that in writing from the lawyer, just in case.

    0Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    16y

    Hi, thanks, Bankruptcy is Federal, how it effects other issues that have nothing to do with the petition is a matter of state laws. Just because you filed for bankruptcy does not mean you won't get a speeding ticket, If you are tresspassing, bankruptcy won't keep you from being removed from the property or arrested.

    I doubt your tenant's attorney will tell you to evict his client, he'll likely give you a few lines of why you can't. Talk to YOUR attorney. What I meant was notify that attorney and "inform" what you are doing, not really ask for permission.

    I have also seen tenants that have stayed in rentals a few months before the court allowed the landlord to proceed. It depends on the Trustee and the circumstances and the attorney. But I would move forward quickly.

    BTW, what does the tenant say, does she think she gets a free ride? Did you just ask her for the keys? She might move on too.

    1Reply
  • Edwin Brown
    OP
    Real Estate Investor · Chattanooga, TN · Member since 2010 · 151 posts · 59 votes
    16y
    Originally posted by Financexaminer:
    Hi, thanks, Bankruptcy is Federal, how it effects other issues that have nothing to do with the petition is a matter of state laws. Just because you filed for bankruptcy does not mean you won't get a speeding ticket, If you are tresspassing, bankruptcy won't keep you from being removed from the property or arrested.

    I doubt your tenant's attorney will tell you to evict his client, he'll likely give you a few lines of why you can't. Talk to YOUR attorney. What I meant was notify that attorney and "inform" what you are doing, not really ask for permission.

    I have also seen tenants that have stayed in rentals a few months before the court allowed the landlord to proceed. It depends on the Trustee and the circumstances and the attorney. But I would move forward quickly.

    BTW, what does the tenant say, does she think she gets a free ride? Did you just ask her for the keys? She might move on too.


    The tenant has changed her number and refuses to communicate in any way. I've tried everything short of kicking down her door and demanding that she talk to me.

    Her attorney actually told me that I can go ahead and evict. I was a little surprised, but he didn't think it had anything to do with his case.

    Thanks for the help

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  • Account Closed
    Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
    16y

    edwin, ive seen you post several times that you sell on lease options. this tenant doesn't happen to be a lease option buyer, does it??

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  • Edwin Brown
    OP
    Real Estate Investor · Chattanooga, TN · Member since 2010 · 151 posts · 59 votes
    16y

    great question. Fortunately not. I'm not sure how that would mess things up but i think the "equitable interest" would have made things more interesting

    0Reply
  • Cheryl Miller
    Virtual Assistant · Columbia, MO · Member since 2008 · 1 post · 1 vote
    16y

    Hi Edwin,

    Just came across your post and my primary profession is a Freelance Paralegal, but I am also interested in investing in real estate also. One of the services I offer to my attorney-clients are Virtual Bankruptcy Assistance. I've worked in the bankruptcy field for 15 years. Without knowing all the details, I was a little surprise to hear that your tenant's (or the debtor's) attorney informed you to go ahead with the eviction. I'm just curious as to where you were at in this process prior to her filing for Bankruptcy protection. Bankruptcy law is pretty much uniformed, there are some local rules of the Courts in the various states, but overall, its pretty much standardized.

    Had you obtained a judgement against the debtor prior to the filing? Then that would explain why the attorney informed you to take such action. In my experience, once the petitioner had filed for protection, the automatic stayed went into effect. And could automatically ceased within 30 days, depending upon the circumstances and Chapter, to allow the landlord to proceed with eviction. It's such a complex issue which will need further elaboration, so feel free to contact me and I will attempt to answer your questions based upon my experience.

    1Reply
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