What to do if Your Tenant has Filed for Bankruptcy During an Eviction

When choosing an appropriate candidate to rent your property out to, you likely took all of the appropriate measures. You worked hard to find the one that fit your location best. You also ensured that they had an immaculate history and financial status with no bankruptcy filings. However, sometimes, despite all of your hard work and efforts, things aren’t quite as they seem. 

When you find yourself dealing with a ‘bad apple’ tenant, it can be devastating. When in need of a speedy eviction process, the last thing you want to see is a bankruptcy ‘automatic stay’. These forms are not only scary but hard to dispute without experience and proof.

Sounds like a horror movie, right?

Fortunately, with a bit of information regarding the bankruptcy process in Baltimore and an understanding of your options when given an ‘automatic stay’ document, you can finally move on from this horrendous situation and find a truly responsible tenant to replace them.

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How Does the Bankruptcy Declaration Affect You?

There are a lot of specifications associated with how an eviction in Baltimore is handled when dealing with the bankruptcy process. The main specifications you should be considering are whether or not the eviction proceedings are initiated and a Judgment for Possession is granted before the bankruptcy was filed or after, and whether or not you believe that the tenant will be capable of paying rent in the future as well. 

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Did the Eviction and Judgment for Possession Happen Before the Bankruptcy?

To elaborate on the first specification, in Maryland, the law states that an eviction that has already led to a Judgment for Possession prior to the bankruptcy filing terminates the lease unless the individual can get caught up with rent or resolve the issue that led to the eviction in the first place. 

For instance, if your tenant is three months behind on rent or has an incredibly messy and dangerous living arrangement in your home, you likely will want to evict them. Despite this, if the tenant can pay you back and clean the home in a timely fashion, they may be able to still live there until the bankruptcy filing is fully completed. 

The fortunate part of this is that there is an amended bankruptcy law from October 17, 2005 in Maryland which is making it far more difficult for these bankrupt individuals to proceed with this option. In order to do it properly, they must not only pay 30 days rent when they file but also be able to prove to a court why they deserve to have a chance to make it up. 

Therefore, if the tenant is a mess or their financial status is not looking up in the slightest, you have a great chance of being able to petition the court to have the automatic stay in your case removed so the eviction can proceed.

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Did the Eviction Process Happen After?

Begin the eviction process as soon as you can and don’t be afraid when you find that the bankruptcy was filed before this. It just means you have more work ahead of you but is still possible.

Because bankruptcy puts a hold on all payments and debts except for taxes and student debts, the best way to handle this situation is to question the individual’s ‘good faith’, or their reason for filing. 

Similarly, if you either fear for your other tenants, your property itself, or don’t believe that the person will be able to pay their rent moving forward, you may be able to reverse the stay likewise. After all, why force yourself to suffer for the mistakes of your tenant?

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Do you Believe the Tenant Will be Able to pay Their Rent Moving Forward or not?

On the other hand, the second specification on this list is quite simple. It means that they likely will go about this situation in that way. However, you still have a chance. If you feel as though the tenant won’t be able to make their payments moving forward, you’re golden. As long as you can prove this to a court, you can evict them with ease.

In order to petition the court, you will need to file a motion stating your case or your concerns. You will need to explain why you feel that the stay will put your property in jeopardy. 

According to Nolo, “The landlord can file a motion asking the bankruptcy court for permission to evict you. The landlord requests permission by filing a motion to lift the automatic stay. The court will typically grant the landlord’s request unless you have a good reason why the eviction shouldn’t take place.”

Therefore, the best way to handle this situation is to simply prove your case in court. You can also explain why the automatic stay is not ideal firstly. Then, proceed with your eviction as planned at this point. 

However, perhaps this process has only overwhelmed you further. Or maybe you would like help along the way regarding the ‘eviction during a bankruptcy’ process! With this said, don’t hesitate to contact Moon Ridge Property Management today! We have dealt with countless situations just like this! We know exactly how to handle it from start to finish so you don’t have to!