What are the rights of a landlord if the tenent claims bankruptcy?

Asked 10/14/2009 under Bankruptcy | 429 View(s) | More Legal Topics

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Bankruptcy Law Answers

If you sued the tenant for eviction and won a judgment for possession before the tenant filed for bankruptcy, you can proceed to evict the tenant, even if the tenant then files for bankruptcy in an attempt to stop the eviction. In this situation landlords can usually proceed with the eviction without having to ask a judge to lift the automatic stay.  However, in a few states, and only in evictions based on nonpayment of rent, and in very narrow circumstances, a tenant can stop an eviction at the last minute by filing for bankruptcy, if the tenant files a certification and pays back rent and forward rent.  As the landlord, if you file an objection to the tenant's certification right away, you'll get a hearing in the bankruptcy court.  If you convince the judge that the tenant's certification is not true, the court will lift the stay and you can proceed to evict the tenant.

If you have not won a judgment for eviction when your tenant files for bankruptcy, and the tenant is (or becomes) behind in the rent, or violates another term of the tenancy, you can't deliver a termination notice, let alone start the eviction process. This prohibition is known as the "automatic stay."  In this event, you'll need to go to the bankruptcy court and ask the judge to "lift," or remove, the automatic stay before you can evict the tenant.  In most cases, you'll get the stay lifted within a matter of days and then you can proceed with your termination and eviction.

Note:  If you need to evict a tenant who is using illegal drugs on the property or endangering your property, even if the tenant files for bankruptcy before you win a judgment, you can still proceed with an eviction without asking the bankruptcy judge to lift the automatic stay.  You'll need to prepare a certification explianing such a situation and file it with the bankruptcy court and serve the tenant notice.  If your tenant does not file an objection within 15 days of being served, you can proceed with the eviction without asking the court to lift the stay.  If a tenant objects, the bankruptcy court will hold a hearing.

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