Carlsbad, CA · Member since 2012 · 3 posts · 1 vote
I'm pretty new to the rental business.
I have someone interested in my condo, but his credit is really bad,
and he is about to file bankruptcy to start fresh. His fiancee who
will be co-leasing and cosigning has great credit. He is willing to
put down a 2-mon deposit plus a huge pet deposit to easy my fear. My question is that if he files for bankruptcy while living in my rental, how it affects me as the landlord. If he stops paying rent while in bankruptcy proceeding, can I evict him?
Rental Property Investor · Colorado Springs, CO · Member since 2010 · 476 posts · 305 votes
14y
I love renting to people who file BK. It gives them a clean slate and I don't have to worry about their creditors garnishing wages. I've had several tenants in the past who had creditors start garnishing wages and they either have to leave or go on a payment plan with me to stay caught up on rent. Yes, you can still evict them if they stop paying rent to you while in BK proceedings. You are not a creditor to them.
Rental Property Investor · Colorado Springs, CO · Member since 2010 · 476 posts · 305 votes
14y
I love renting to people who file BK. It gives them a clean slate and I don't have to worry about their creditors garnishing wages. I've had several tenants in the past who had creditors start garnishing wages and they either have to leave or go on a payment plan with me to stay caught up on rent. Yes, you can still evict them if they stop paying rent to you while in BK proceedings. You are not a creditor to them.
Real Estate Consultant · San Diego, CA · Member since 2012 · 44 posts · 13 votes
14y
While their rent is calculated in the BK equation, all back rent owed from before the settlement is considered a debt owed. You may have months of back rent that get negotiated to 15% of the total owed.
Carlsbad, CA · Member since 2012 · 3 posts · 1 vote
14y
Thanks for all the great advice. Sounds like too much trouble and too many unknowns for what's worth. The down side could be huge. I guess I will stay with safer choices. Thanks.
Involved In Real Estate · Las Vegas, NV · Member since 2010 · 341 posts · 86 votes
14y
Remember that the fiancée is their only source to credit and they are putting down two months of deposits. If one person on the lease defaults, you can go after the therefor the entirety. I don't feel this one is too much trouble, in fact I feel it's more of a guarantee. In my opinion, I would take this one and run.
Carlsbad, CA · Member since 2012 · 3 posts · 1 vote
14y
Ok, here what I figured out by talking with my attorney.
1. If he files for BK and include me as creditor, there's an automatic stay of at least 8 wks which means I can't evict him during this time.
2. Since they're not married, the fiancee can possibly leave if they ever get into a fight, and she can go any where. The one with the bad credit+BK is the one I have to deal with.
3. It doesn't matter who is on the lease, when it comes to eviction, both must be served and evicted, so the BK will stop that.
4. Eviction involving BK costs thousands of $$$.