Memphis Rentals: Eviction and now Bankruptcy

14 Replies

A tenant is almost $4,000 late with rent.Through my property manager, we were awarded judgement and possession after an eviction proceeding. Since then, the tenant has filed for bankruptcy, which has ceased all action to gain possession and evict through general session court. Now my property management is filing a Motion to Lift Stay Order in Bankruptcy court. 

Hello Rebecca,

Not sure how many months behind they are but it seems like they were planning to file prior to the eviction notice.  Good luck...hopefully the bankruptcy court will lift the stay order 

@Rebecca K. - I’m so very sorry! Please let us know how it all plays out and any advice or lessons learned!

From what you’ve posted you should be fine with getting them out in a timely matter. It seems you have a knowledgeable management company working on your behalf. It’s unfortunate that this has happened to you, but nothing to panic about. It’s all part of investing in real estate. I’m sure your have great news for us soon!

Originally posted by @James Martin :

From what you’ve posted you should be fine with getting them out in a timely matter. It seems you have a knowledgeable management company working on your behalf. It’s unfortunate that this has happened to you, but nothing to panic about. It’s all part of investing in real estate. I’m sure your have great news for us soon!

 Hi James,

I can't be as quick as you to say the OP has a "knowledgeable management company" working on her behalf, or that the PM got the matter handled in a "timely manner".  I'm guessing a little here, but I'd assume that as an out-of-state investor, she bought in TN because of cheaper houses and better cashflow.  Further guessing, based on other posts at BP from landlords in the Memphis area regarding such buyers and the properties marketed to them, would have me assume the rent for her property is probably $700-$900/month.  

If the tenants are $4000 behind in rent, that means they are 4 or 5 months behind in rent.  For a PM to allow a tenant to get so far behind before filing and getting a judgement  is not my definition of "knowledgeable" or "timely."  I'd go further and say it's a sign of incompetence.  

Yes, missed rent payments, evictions, and unexpected events are all part of being a landlord.  However, waiting that long to initiate eviction is part of being incompetent.  If the PM did indeed wait that long, my first order of business after the tenant was actually evicted would be to fire that PM company and hire a new one.

I can definitely see your point, but in my experience most out of state clients have great hearts and really want to work with their tenant client. Against our advisement owners may hold off on eviction due to the upfront cost and delay the inevitable. I’m not saying this is the case for Rebecca, but someone has to pay for the filing of the eviction. Even more I find that some owners just can’t stomach putting out a single parent with kids. This has cause us to delay eviction until the owners has come to their wits end. I was not In any way approving of nonpayment, but depending on circumstances it can happen. All I was saying is that from her post she’s has to be working with with a knowable team that’s helping her navigate through the bankruptcy courts because It can be over-cumbersome! 

Originally posted by @Randy E. :
Originally posted by @James Martin:

From what you’ve posted you should be fine with getting them out in a timely matter. It seems you have a knowledgeable management company working on your behalf. It’s unfortunate that this has happened to you, but nothing to panic about. It’s all part of investing in real estate. I’m sure your have great news for us soon!

 Hi James,

I can't be as quick as you to say the OP has a "knowledgeable management company" working on her behalf, or that the PM got the matter handled in a "timely manner".  I'm guessing a little here, but I'd assume that as an out-of-state investor, she bought in TN because of cheaper houses and better cashflow.  Further guessing, based on other posts at BP from landlords in the Memphis area regarding such buyers and the properties marketed to them, would have me assume the rent for her property is probably $700-$900/month.  

If the tenants are $4000 behind in rent, that means they are 4 or 5 months behind in rent.  For a PM to allow a tenant to get so far behind before filing and getting a judgement  is not my definition of "knowledgeable" or "timely."  I'd go further and say it's a sign of incompetence.  

Yes, missed rent payments, evictions, and unexpected events are all part of being a landlord.  However, waiting that long to initiate eviction is part of being incompetent.  If the PM did indeed wait that long, my first order of business after the tenant was actually evicted would be to fire that PM company and hire a new one.

Randy, that’s what I’m thinking as now, if I’m understanding correctly, the past rent is a part of their bankruptcy and they only have to pay future rent. I have a property in California and my PM said they file eviction notices within days Of missed rent or some other kind of warning.

Originally posted by @Rebecca K. :

Randy, that’s what I’m thinking as now, if I’m understanding correctly, the past rent is a part of their bankruptcy and they only have to pay future rent. I have a property in California and my PM said they file eviction notices within days Of missed rent or some other kind of warning.

You are correct their past rent is part of their bankruptcy and they must stay current for future rental payments. If they fall behind you can file a motion to life the stay. 

Originally posted by @Rebecca K. :

Randy, that’s what I’m thinking as now, if I’m understanding correctly, the past rent is a part of their bankruptcy and they only have to pay future rent. I have a property in California and my PM said they file eviction notices within days Of missed rent or some other kind of warning.

 I just had a tenant in a commercial building file bankruptcy.  Fortunately, one of my partners in that venture is a lawyer and she helped figure out the legal ramifications.  Basically, in our case the tenant could (and was required as always) to pay future rent, but the past due rent would have been placed with all the other debts in the bankruptcy and paid out over time, if ever.  Fortunately for us, I was in semi-regular contact with the tenant and he paid us his back rent a day before the official filing for bankruptcy, so we were made whole. I was told the ramifications vary based on what type of bankruptcy is filed.

However, there is nothing (as far as I know) stopping you from attempting a court eviction for the unpaid rent.  The judge may or may not allow it, but I would not hesitate to file and leave it up to the judge to instruct me.

What I hate in your case is that the eviction apparently didn't occur until several months' rent were missed.  Were you aware the PM had not collected the rent?  I've never used outside PM, so I don't know how every conversation/transaction would go, but I'd definitely like to know my PM would at least inform me a tenant was one month past due, then two, then three.  That would give me the opportunity to instruct the PM to initiate eviction proceedings.

Originally posted by @James Martin :

You are correct their past rent is part of their bankruptcy and they must stay current for future rental payments. If they fall behind you can file a motion to life the stay. 

had this exact same thing happen to me late last year

I am told that the minute they are late with a payment now, the motion is filed and granted

they are also required by the court to set up a repayment schedule, and are strictly held to that too. unfortunately, that schedule may be long.

Hi Randy. Thank you. Yes, I was aware of the late rent and it was a mistake on my part to be complacent. However, I am learning. I'm a little hesitant to fire the pm at the moment because I am obligated to pay them management fees for the amount of the lease (2 years). Although that may be different, since they have not collected all of the rent . Glad to hear your situation turned out for the better. :)

Hi Steve.

How is that court repayment schedule going?

Yes, I am going to be on my pm to initiate eviction court proceedings. In addition, their slowness to take action has me thinking I may switch property management. Thank you for your contribution to your thread.

Originally posted by @Rebecca K. :

Hi Steve.

How is that court repayment schedule going?

Yes, I am going to be on my pm to initiate eviction court proceedings. In addition, their slowness to take action has me thinking I may switch property management. Thank you for your contribution to your thread.

i assume the repayment is going ok

my pm said the eviction order stays in place, and the second they are late on rent or repayment, the bankruptcy protection is gone, so the eviction is able to proceed immediately 

Originally posted by @Rebecca K. :

A tenant is almost $4,000 late with rent.Through my property manager, we were awarded judgement and possession after an eviction proceeding. Since then, the tenant has filed for bankruptcy, which has ceased all action to gain possession and evict through general session court. Now my property management is filing a Motion to Lift Stay Order in Bankruptcy court. 

 Rebecca, 

I just went through a fairly similar process here in Memphis and I've been learning a little about the bankruptcy court here in town. If you were awarded possession before they filed bankruptcy then your property shouldn't be included in the automatic stay clause. I would call a local bankruptcy lawyer and double check, but I was told by my lawyer that if I had won possession before they filed bankruptcy then I could've continued with the eviction process. Unfortunately my tenant filed bankruptcy the day before our final eviction hearing, but in your case it sounds like you were awarded possession prior to them filing. Either way the process isn't too bad, best of luck.

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