Bankrupt Tenant

Creative Commons License credit: Saad.Akhtar

If you have a tenant who has filed for bankruptcy, is still residing in your property and not paying rent or violates your lease in some other manner, you may not be able to evict them, or even send them a notice of termination of the lease. However, there are steps you can take to remedy the situation. Bankruptcy is not a free pass for your tenant.

The new bankruptcy law of 2005 gives both the landlord and tenant some new rights and responsibilities. Tenants that file bankruptcy are granted an automatic stay, which means they do have the right to stay where they are living and you will have to take your complaints to the federal bankruptcy court. Usually, you will get authorization to proceed with your eviction process within a few days.

If your tenant has broken the lease by using illegal drugs, or dealing them, or performing some other activity that clearly endangers your property, then you do not have to ask the federal bankruptcy court to lift the automatic stay. You can proceed with your eviction process, but make sure you document their violations. The lesson here, do your tenant background searches thoroughly and avoid renting to credit risks in the first place.