What will you do when you receive a bankruptcy petition notice on one of your tenants, panic? No need to do so unless the rent is in arrears or if the tenant is pending dispossessory.
If you do receive notice regarding a tenant that is paid up, the bankruptcy filing is probably no worry for you at all. Such people are clearly trying to get their financial life back on tract, but while they are doing that, they need a place to live. Looking for a new lease during bankruptcy, especially before the bankruptcy has been discharged is hard work. Most responsible landlords would look unfavorably upon such applicants. The probability is that the tenant needs that house more than you need the rent. They’re not going anywhere, and you will be the first to get paid come payday.
If on the other hand, when you receive this notice, the tenant is in arrears or in the midst of a dispossessory, prior to issuance of the writ of possession, you do have a problem, and you do need to worry. The bankruptcy court will order you to cease efforts to collect on the arrearage, and the eviction court will stay the dispossessory warrant. One hope is that the tenants will recognize the necessity to live someplace and begin making rental payments again on their own. You will not be able to accept payment on the arrearage, but you can accept the payment for future rents. This might be a good place to seek legal counsel.
If the tenant does not voluntarily begin making monthly rental payments, you can file to set aside the stay with the eviction court, so that you can continue the eviction. This is usually an expedited matter for the court, so you should be back on track for dispossessory within 30 days or so.
Daniel R. Wilhelm
Managing Broker
3 Options Realty, LLC.
678-397-1282
