How Does Filing for Bankruptcy Affect Your Rent?
People looking for a professional bankruptcy attorney in San Diego are worried about this particular thing: what happens to tenants and the rent they pay after they’ve filed for bankruptcy? This question interests both the panicking occupants who are not sure if they will be able to keep paying for their rent or end up evicted, and from worried landlords who fear they will never be able to collect their due payments. Both parties should be well-informed in order to separate fact from fiction and avoid any serious repercussions, especially as new financial crises lurk around the corner.
Talk It Out
The first step both parties should take in the event a tenant files for bankruptcy is sitting down and having a talk about their options. Some landlords may be willing to develop a payment plan or accept half of the rent amount owned, while others may not be that open to negotiations. Many landlords use the rents collected to pay their own mortgage and cannot afford to support a bankrupt tenant. If you are a tenant filing for bankruptcy, the worst thing you can do is to avoid the landlord, similar to how you shouldn’t avoid the creditor. Maybe the landlord will understand your situation and offer to take a partial amount or accept late payments. In this case, make sure you get a written agreement and a receipt, as you might need them down the road.
Review the Agreement
Reviewing the lease agreement is imperative to tenants filing for bankruptcy. Tenants will need to review their obligations to the landlord as agreed upon in the document. This includes the amount they need to pay each month and the date the rent is due. It also includes the preferred payment method and the terms under which the landlord can increase the rent amount. Finally, they should find out if there are any fees for late rents and the terms and conditions of cancelling the agreement.
Bankruptcy and Rent
The law states that landlords are not allowed to terminate the lease or evict tenants after they’ve filed for bankruptcy. However, landlords can seek compensation for automatic stay but the relief won’t be immediate unless the tenants did not satisfy their lease obligations. Tenants can occupy the leased apartment up to 60 days (or more if the court allows an extension) before they decide whether they want to assign the lease to another party or accept the lease. In the latter case, the tenants are obligated to fulfill their financial obligations to the landlord in full.
If the tenant does not pay their rent on the first date after filing for bankruptcy, the landlord can address the bankruptcy court and seek payment. Tenants filing for bankruptcy are obligated to pay the rent and other contractual obligations, such as taxes, common maintenance bills and insurances. The most common problem landlords face is tenants filing for bankruptcy in between their due dates, meaning they only have to cover the rent for the month following the bankruptcy procedure. If the tenants cannot afford to pay their due rents, the landlord can move for eviction according to the lease agreement. Many tenants try and fight eviction, but this can lead to more serious complications for the tenant depending on their defense.
Consult an Expert Bankruptcy Attorney San Diego
Whether you are a tenant filing for bankruptcy or a landlord trying to collect the due expenses, contact the BK Lawyers, the respected San Diego bankruptcy lawyer group to review your options and obtain legal advice with no additional obligations. We promise informative, affordable and accessible service to all clients and promise the best results through full cooperation during the process.