Tenant Has Filed Bankruptcy

[jk]

My question involves bankruptcy in the state of: Michigan

a friend (seriously) owns a house and the tenant has filed BK. He was telling me a few things that I was not sure of or they were correct and hopefully somebody well versed in BK can help. She was not delinquent on rent prior to filing but has fallen delinquent since. (I believe 2 months currently)


the automatic stay. He was told that it must be renewed after some period (can't remember. seems like either 1 or 6 months). I was under the understanding it was in place for the duration of the bk process. He seems to believe if she fails to renew the stay he will have an opportunity to take action to evict. Seems incorrect to me.

He would like to evict her as he is trying to sell the house and it would be preferable for it to be "move in ready" for a purchaser prior to the school year starting in Sept. Is it possible to evict while she is in BK or is he simply stuck until it is completed?

He is under the understanding she can not be required to pay rent during BK (although it would accrue) and he would have to take some action after the BK to force her to pay the rent. I thought she had to make payments or the owner could ask the court to remove the stay and allow an eviction.

I know there are a few other questions but that's all I can recall at the moment. Any direction would be appreciated as while he is a smart guy, he is trying to do this all on his own.

[despritfreya]

jk,

I will respond later today. Quick question. . . Is this the renter's 1st bk (that you know of)?

Des.

[jk]

jk,

I will respond later today. Quick question. . . Is this the renter's 1st bk (that you know of)?

Des.

Unknown. Friend has said nothing that would suggest it was or wasn't.


thanks for the response.

[despritfreya]

Your friend is mixing 362 with the requirements of 11 USC 365 - the rejection or assumption of leases. Under 365(d) the Trustee has 60 days from the filing date to assume or reject a residential lease. If the Trustee does not assume it, it is deemed rejected. However the rejection of the residential lease does not terminate the automatic stay. In fact, 365 has a provision that the rejection of a lease of personal property terminates the stay (of 362), but not of real property. In addition, 362 speaks of the lack of an automatic stay for landlords who already have a judgment for eviction for residential property.

As far as I can tell, your friend will have to file a Motion to lift the automatic stay for cause - cause being, the failure to pay under the terms of the lease. Your friend wants the stay lifted so that he/she can regain possession by utilizing his/her state court remedies. Since the lease is a pre petition contract it will be subject to the discharge. I do not believe your friend can seek $$$ as part of those state court remedies even for the time the tenant resides in the property without paying.

I hope this helps.

Des.

[jk]

I hope it does as well. I'll have to print this off and get it to him.

Thanks a lot des.

[Mr. Knowitall]

The tenant does accrue post-petition rent - it's a new debt incurred after the filing - but as a practical matter it's usually not worth pursing.

[jk]

The tenant does accrue post-petition rent - it's a new debt incurred after the filing - but as a practical matter it's usually not worth pursing.

yes, I understand that and that is actually part of his problem. The tenant was current on rent prior to filing but has not paid rent since filing. Am I misunderstanding the situation when I think that is not allowed? or is there a period where she could defer rent until the court addresses her situation?


basically, he just wants her out. He has been trying to sell the house for a year or two and after getting burned on a land contract, he decided to just rent it out until it sold. He was going to evict so it would be empty and open for immediate occupancy (the school year is coming and folks prefer to move before that, if possible). When he filed to terminate her tenancy, she filed BK and he has been at a standstill since (although it is only a couple of months, max).


thanks for the input K.

[Mr. Knowitall]

To take action on any post-petition rent or to evict, as previously suggested, the landlord would need to bring a motion to lift the stay or wait until it expires.

[jk]

gotcha.

thanks