Investing in a rental property is a huge business prospect which can let you earn consistent income without fearing for the decline of real estate market. However, the rental real estate is no short of its own set of troubles which can be pretty daunting for any landlord. For instance, the tenants may initiate the tenant bankruptcy case by filing for it upon getting an eviction notice. Let’s discuss this scenario with a bit more detail.
Let’s start with eviction notice
Since there are many tenants who hardly keep up with their finances, it might get pretty easier for them to skip the payment of rents for a number of months. Their story about the financial crisis may be very touching but it would be very hard to tolerate the nonpayment of rent for more than a certain number of months. Hence, you may find it convenient to file for a federal warrant. It’s worth mentioning that it would be in good ethics not to ask for the rent too often after hearing your tenant out. So, asking for it more often and triggering the eviction case very quickly can actually backfire on you in worse manner.
You filed for tenant’s eviction, then what?
When you file for the eviction of your tenant, the case becomes public. The details about filing would be added in the list of recent filings in the courthouse. So, you can expect anyone to go to the courthouse and find details about the case you have filed. Hence, the bankruptcy attorneys would find a business prospect after going through the details of this filing and they would start sending mails containing case representation offers to the tenants you are trying to evict. Hence, your tenant may find it easier and sensible to file for bankruptcy. This kind of response by your tenant would make things pretty difficult for you.
Chapter 7 and Chapter 13 Bankruptcies
Chapter 7 and Chapter 13 are the two types of bankruptcies related personal finances. Although, chapter 7 is allows the tenant to get every penny, which he/she owes, forgiven, this process is not very convenient. So, the most people would go for chapter 13, which just lessens the liabilities for tenants.
What does all of this mean for you?
So, the tenant has filed for the bankruptcy. The immediate effect of this filing is that the process of eviction would come to a halt. Now, you get no legal right to ask your tenant for anything. Hence, you will not have any right to ask for the rent either. You can surely ask an attorney to help you but that will be another costly practice in order to get this automatic stay lifted. Otherwise, you will have to wait for the bankruptcy case to conclude on time before you can initiate the process of tenant’s eviction.
What to be done to handle the situation?
The best thing you can do to handle the situation is to avoid filing for eviction. You can get into a deal with your tenant to avoid all these expenses related to legal procedure of triggering the eviction and getting the case for bankruptcy filed in response by the tenant.