MY landlord just declared herself bankrupt under chapter 7 and sent us a note saying she isn’t paying us our deposit. Is this legal?

Asked on July 1, 2009 under Bankruptcy Law, Pennsylvania


M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Under Pennsylvania a law, your security deposit was to have been held in a separate, interest bearing account.  That money should not be affected by the filing since it was on yours and not your landlord's.  Your landlord would only have a claim to all or part of it, as allowed for under the lease (for example if you caused damage to the rental unit or the like).  Absent that, it is my understanding under the law this is your money and should not be included in the bankruptcy estate.  Additionally, chances are very good that at this point the landlord may have spent that money.  If so, she is guilty of conversion and the bankruptcy trustee will not allow for the discharge of such a debt.

What you need to do now is to contact the federal district court where this bankruptcy was filed and make the bankruptcy trustee in the case aware of your claim.  In fact, possibly your landlord will give you the case number and trustee's name.

Additionally, since I am not admitted to practice in your state, you may want to confirm this with a bankruptcy attorney in your area. 

Best of luck.

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