First of all, let me remind the readers that I’m not an attorney, nor am I giving legal advice. I’m simply sharing some of the issues that we come across in the world of property management.
There are specific procedures we must follow when a tenant declares bankruptcy. Bankruptcy is a federal matter dealt with in federal court, (NOT a state matter). The purpose of declaring bankruptcy is giving a debtor a fresh start. When the tenant files a bankruptcy the ‘automatic stay’ stops all actions from creditors, and we must stop the eviction process. Automatic stays can apply to credit card companies and medical billing as well. Normally we would be notified by mail of the matter, and everything would be put on hold. It’s not all doom and gloom for the owner/landlord though. Most tenants don’t want to jeopardize the lease and are able to exclude someone in their bankruptcy, and of course, this needs to be in writing. Some do continue to pay their rent! Chapter 7 seems to be the most common form of bankruptcy we see in property management. It’s important to have witnesses if you’re
having a conversation about a potential bankruptcy or one in progress with a tenant.
For detailed legal advice contact Tschetter Sulzer Attorneys and Counselors at Law at:
Oh, by the way. If you know someone who is looking to rent, sell or buy a property, please call or email us with their information and we’ll take good care of them!
As always, thank you for your business and continued support!