When a tenant, that is getting evicted, files a bankruptcy

tenant files bankruptcy

When a tenant files bankruptcy

Understanding Tenant Bankruptcy and Eviction Laws in New York

When a tenant files for bankruptcy during an eviction process, it can significantly affect a landlord’s actions and decisions. Here’s what you need to know and do as a New York landlord facing this complex situation.

The Impact of the Automatic Stay

Firstly, be aware that the filing of a bankruptcy petition immediately triggers what is known as an “automatic stay.” This stay is a legal injunction that halts all collection activities, including eviction proceedings, against the debtor. As a landlord, this means you cannot continue with eviction actions, attempt to collect rent, or contact the tenant about the debt without permission from a  bankruptcy court Judge.

Steps to Take After the Automatic Stay

  1. Verify the Bankruptcy Filing: Confirm that your tenant has indeed filed for bankruptcy which can be done via a bankruptcy lawyer.
  2. Seek Legal Counsel: It’s crucial to consult with a lawyer that handles bankruptcy law cases. Often a lawyer that handles evictions does NOT handle bankruptcy cases. The bankruptcy court is a federal court and not all lawyers are even admitted to the federal court. Admission to the federal court requires a separate admission application process. A lawyer with bankruptcy expertise can guide you through the process and help protect your property rights.
  3. File a Motion for Relief: Your attorney (that has bankruptcy expertise) is likely to discuss the possibility of filing a motion for relief from the automatic stay with the bankruptcy court. This motion asks for permission to proceed with the eviction despite the bankruptcy. There are some timing issues, to take into consideration, which should be discussed with your attorney.

What Not to Do

  • Do Not Ignore the Stay: Violating the automatic stay can lead to serious penalties. Do not attempt to evict the tenant or collect rent without legal authorization. Your tenant is likely to have their own bankruptcy lawyer seek sanctions against you if you violate the automatic stay of protection.
  • Do Not Harass the Tenant: It’s important to handle the situation professionally and avoid any personal confrontations or harassment over the matter.

Why Legal Expertise Matters

Bankruptcy laws are complex and require a nuanced understanding, especially when intertwined with New York landlord-tenant regulations. Our law firm has extensive experience in handling such cases, ensuring that your rights as a landlord are upheld while navigating the intricacies of bankruptcy procedures. There are things that you need to know about the bankruptcy. For example, the tenant may be trying to file a bankruptcy to specifically to eliminate past due rent.

Contact Us Today

If you’re a landlord dealing with a tenant’s bankruptcy, swift and informed action is crucial. Contact our law firm today to discuss your situation with a bankruptcy expert. We can help you understand your legal options and take the necessary steps to protect your property interests.

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