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Tip #205: Giving Notice

protectionJust when you thought having to evict a tenant was bad enough, imagine receiving a notice that the tenant has filed for bankruptcy protection.

Needless to say, this complicates matters. Under bankruptcy law, all legal actions to collect against the tenant — including eviction actions — are frozen in place by the Automatic Stay.

The date the bankruptcy is filed is important. Usually, if the eviction order has been entered prior to the filing date, the landlord can continue with the move out. But, if the case has yet to be heard or an order is not yet entered,  it’s likely that no further legal action can be taken without first filing a Motion for Relief from the Automatic Stay in the bankruptcy court.

Even if permission is granted to continue with the eviction,  any claim for unpaid rent or damages may evaporate.

When you see a notice of bankruptcy, it’s best to speak with a bankruptcy attorney to discuss your options. Self-help can lead to even further delays, and stiff penalties for violating the automatic stay. You may be prohibited from dealing with a tenant directly if they are represented by an attorney.

If you question whether the bankruptcy notice is legitimate, confirm the filing with the clerk of the bankruptcy court (a federal level court) using the case number from the notice.

See last week’s Landlord Quick Tip.

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