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Landlord Bankruptcy Representation

What if My tenant Files Bankruptcy?

Tenants enjoy immediate protection from U.S. Bankruptcy Courts when they file bankruptcy. When a tenant files bankruptcy, you – as a landlord – are deemed to be one of your tenant’s creditors. It is extremely important that you follow the Bankruptcy Court’s rules. On misstep – even if unintentional – can result in hefty fines. The good news is that there is a way out of this. And landlord bankruptcy representation from a competent law firm is your answer.

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My Tenant Filed Bankruptcy. What Do I Do?

“Tenant” and “bankruptcy” are two words no landlord ever wants to hear in the same sentence! Tenant bankruptcies are complicated.

Here are some questions we often get from our landlord clients who have bankrupt tenants:

  • How does a bankruptcy filing affect the eviction I just started?
  • Am I in trouble if I filed an eviction after my tenant filed bankruptcy?
  • If my tenant follows through with the bankruptcy, what happens to all of the unpaid rent?
  • What rights do I have as the landlord after my tenant files bankruptcy?
  • I’ve heard that bankruptcies can take years. Will my tenant be required to pay rent during this time?
  • Can I get my property back if the lease ends in the middle of my tenant’s bankruptcy?
  • What does it mean if one tenant files bankruptcy but her co-occupant spouse does not?
  • If an occupant not named on the lease files bankruptcy, are my rights still restricted?

  • Is there any way to have the tenant’s obligation to pay rent excused from the bankruptcy?

Not to worry! We’ve got the answers….

What the Automatic Stay Means to Landlords

The first thing a Texas Landlord needs to understand is that automatic stays are immediate. When your tenant hands her bankruptcy petition to the bankruptcy clerk, the automatic stay is in place as soon as the clerk’s stamp hits the paper. Your right to demand rent payments or demand your tenant move out of your rental property immediately ends. Your tenant’s consequences for not paying rent also come to a screeching halt.

If you started an eviction before your tenant filed for bankruptcy relief, the eviction court is legally required to halt the eviction process. Were the eviction court to proceed, the Judge in that case would be violating the automatic stay! It seems like a really unfair set of rules, particularly if the landlord was unaware of the bankruptcy stay. But our firm’s attorneys can nearly always help you get things right with the Bankruptcy Court. But if you knew about your tenant’s bankruptcy an continued to collect anyway? Uh-oh…. That’s often a matter of damage control. NEVER mess with your tenant after they file bankruptcy. Don’t even call your tenant!! Call your lawyer first.

Schedule a FREE CONSULTATION with our Landlord Bankruptcy Attorney

Plano TX | Dallas TX | Irving TX | McKinney TX

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What Happens If You Ignore the Bankruptcy Stay

Ignoring the Bankruptcy Stay

Ignoring your tenant’s bankruptcy stay can result in some very serious consequences. Any action you take against your tenant during an active bankruptcy stay is void. Therefore, if you tricked the Justice of the Peace into proceeding with an eviction trial and you won an eviction judgment, that eviction judgment is completely unenforceable.

These types of shenanigans can also prove to be quite costly. Violating a bankruptcy stay gives your tenant a civil cause of action against you. The tenant can recover actual damages, punitive damages, attorney fees, and costs. Let’s say your misrepresentation to that Justice of the Peace later led to your tenant’s forcible removal. Your tenant’s actual damages might include any damage to their personal property, moving expenses, even reimbursement for hotel stays. Your tenant’s attorney fees in such a case could easily run into the tens of thousands of dollars.

Oh, but there’s more! The Bankruptcy Court might impose its own fines against you. A Bankruptcy Judge can hold you in contempt for violating a bankruptcy stay. In 2011 a Florida bankruptcy Judge slapped Bank of America with a $12,500 fine when the bank violated only one stay.

Not sure what to do when your resident files for bankruptcy? Our TX real estate attorneys can help.

Schedule a FREE CONSULTATION today!

Call Us! (817) 383 4664

Bankruptcy and Eviction FAQ for Tenants and Landlords

We know that you have questions about bankruptcy and eviction. Here are some of the most frequently asked questions we get from our clients:

What Can Be Done After a Tenant Files Bankruptcy?

There are a number of things a landlord can do to combat a tenant who files bankruptcy. However, these remedies are not as fast as the eviction process.

The most important first step for landlords is to file a Motion to Lift the Stay. This is where the bankruptcy court gives the landlord permission to disregard the automatic stay. Such an Order permits the landlord to begin the eviction process. An Order Lifting the Stay permits the landlord to continue the eviction process when the tenant filed bankruptcy during an active eviction case. After receiving the Bankruptcy Court’s Order Lifting the Stay, the landlord must file a special notice with the eviction court. This notice will include a copy of the Order Lifting the Stay.

Are Landlords Required to Hire Attorneys for Representation in Bankruptcy Court?

Landlords who list corporations, LLCs, trusts, or other legal fictions as the landlord on their tenant’s lease agreement must hire an attorney for representation before a U.S. Bankruptcy Court. If you are listed individually on your tenant’s lease agreement, you likely can represent yourself as a Creditor in your tenant’s bankruptcy. This, however, is almost always a really bad idea.

In terms of complexity and risk, representing yourself as a creditor in a bankruptcy case is about an 8 on a scale of 1 to 10. This assumes a 10 is a jury trial in a felony-murder trial. And you’re the defendant, facing the needle! Hence, you should always hire a competent attorney for landlord bankruptcy representation in one of these cases.

Why Should I Not Represent Myself as a Creditor in My Tenant’s Bankruptcy Case?

The short answer to this question is that there are simply too many rules, and those rules are all over the place. Much of the law describing the steps you must take is included in the United States Code. However, there is also a Bankruptcy Procedural Code that will apply to your case. And then there is each Bankruptcy Court’s local rules. These are the rules that are specific to each federal trial court district in the country. The local rules often include special filing requirements and procedures for setting hearings just in motions to lift bankruptcy stays. There are 94 federal districts.

Furthermore, U.S. Courts of Appeals and the U.S. District Courts can rule on other bankruptcy cases. These rulings can have the effect of fleshing out any grey areas in the United States Code. If you are unable to locate these cases, you risk having your case upended. Having competent landlord bankruptcy representation can make a huge difference in the outcome of your case.

You really need to know what you are doing when you file a Motion to Lift the Stay in a tenant’s bankruptcy. The process is complicated. And doing it wrong can prove to be very costly.

Let’s Stop the Hemorrhaging. Call Us Right Now! Schedule Your Consultation with our Landlord Bankruptcy Attorney Dallas, TX

Schedule a FREE CONSULTATION today!

Call Us! (817) 383 4664

WHAT THEY SAY

Testimonials

We had a problem with a tenant that after giving the deposit and paying for the first month; he immediately got behind paying rent of the second month and was not complying with contract agreements for paying late fees, etc. In the beginning, the problem seemed manageable, for what we did the minimal (send 3-day notice letter, call references, etc.) After being unsuccessful in collecting the payment, we decided to take legal action and avoid further delays.

AC

I was in a situation were I had to extract a non compliant tenant within my dwelling, I was at a crossroads as to how to evict this individual, I searched the Internet and found the Girling law offices, they were able to give me the guidance I needed, they handled my case with professionalism and courtesy, thanks Girling Law offices.

Wendell

I was fortunate enough to find Girling law. Mr. Girling and his team immediately turned things around. They were knowledgeable and attentive it turned out to be the best decision I could have made. They handled all correspondence with the tenant from the moment I first spoke with them until the tenant was out of my property successfully. They took all the stress of the situation away and quickly got my tenants out. It made a world of difference to me especially since I am an out-of-state owner.

Rona

I had a fantastic experience! Marc’s knowledge of real estate law is amazing and his staff was courteous and did a great job keeping me informed about my case

Jason

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