Renting to someone under bankruptcy

[STEPHAN]

What is the name of your state? FL

What would I have to consider if I would rent an apartment to someone that has already filed bankruptcy? He is already making agreed payments.

(I am not familiar with the filed of bankruptcy at all.)

 

[quincy]

What is the name of your state? FL

What would I have to consider if I would rent an apartment to someone that has already filed bankruptcy? He is already making agreed payments.

(I am not familiar with the filed of bankruptcy at all.)

What Chapter bankruptcy (7 or 13) did the prospective tenant file?

 

[STEPHAN]

Chapter 13.

 

[quincy]

Chapter 13.

The good news is that the prospective tenant needed to be employed for the Chapter 13 bankruptcy to be approved.

But you will want to find out the cost of the prospective tenant’s repayment plan to determine if the tenant’s income is great enough to cover the required Chapter 13 payments to creditors, and any additional payments not included in the Chapter 13, plus the cost of car, utilities and rent.

Many who are under a debt reorganization plan can be financially stretched.

 

[STEPHAN]

Thank you very much quincy!

Are there restrictions regarding future eviction? Do I need bankruptcy court approval to file an eviction or similar?

 

[quincy]

Thank you very much quincy!

Are there restrictions regarding future eviction? Do I need bankruptcy court approval to file an eviction or similar?

You shouldn’t need the bankruptcy court to approve an eviction if you lease to a tenant after this tenant is already making payments under a Chapter 13 debt-reorganization plan.

Again, though, you will want to learn how much income your tenant actually has to spend on rent. The majority of the tenant’s income will be going toward the repayment of debts.

You want to avoid as much as you can the need for a future eviction.

 

[STEPHAN]

Thank you very much. I am trying to avoid this possible tenant, just wanted to make sure I understand the situation to not get into trouble.

 

[LdiJ]

You shouldn’t need the bankruptcy court to approve an eviction if you lease to a tenant after this tenant is already making payments under a Chapter 13 debt-reorganization plan.

Again, though, you will want to learn how much income your tenant actually has to spend on rent. The majority of the tenant’s income will be going toward the repayment of debts.

You want to avoid as much as you can the need for a future eviction.

I am not sure that it is accurate to use the word "majority" in this context. I have had many clients in Chapter 13 and none of them had the majority of their income going towards their repayment plan. They all had decent chunks, but none of them had to pay out the majority of their income...not even close.

 

[adjusterjack]

Former landlord here. 20 years with three rentals.

I would consider a person in Chapter 13 if he/she provided the following.

Pay stubs year to date.
Tax returns with W-2s for 2021 and 2020.

Above to verify employment history.

The following completed bankruptcy forms:
B122B
B122C-1
B122C-2
B315

Review this list of forms to see what those are and why I suggest them.

Bankruptcy Forms | United States Courts (uscourts.gov)

 

[quincy]

I am not sure that it is accurate to use the word "majority" in this context. I have had many clients in Chapter 13 and none of them had the majority of their income going towards their repayment plan. They all had decent chunks, but none of them had to pay out the majority of their income...not even close.

The person filing for Chapter 13 is given an “allowance” (a living expense) and there are exemptions that can be claimed - but these may not be enough to cover all rent. It depends on the property leased whether it will be enough.

STEPHAN will want to do a more thorough look at the prospective tenant’s financial situation than he probably would need to do with tenants who have not filed for bankruptcy.

 

[STEPHAN]

I have about 100 applications. So I do not want to spend time on it.

Thanks for the inside on the legal situation.

 

[quincy]

I have about 100 applications. So I do not want to spend time on it.

Thanks for the inside on the legal situation.

We all appreciate the thanks, STEPHAN. Good luck in selecting your tenant(s).