Former tenant w/judgement for unpaid rent files Chapter 7

[PixelRogue]

What is the name of your state (only U.S. law)? PA

Former tenant with judgement for unpaid rent files Chapter 7 and I'm asked to not proceed efforts to collect judgement.

Note - the terminology is that the tenant was 'advised' to file Chapter 7 and not sure if there is actionable opportunities associated w/the term advised vs. filed.

In short, what are my options to collect judgement? Thank you in advance for any insight.

 

[sandyclaus]

What is the name of your state (only U.S. law)? PA

Former tenant with judgement for unpaid rent files Chapter 7 and I'm asked to not proceed efforts to collect judgement.

Note - the terminology is that the tenant was 'advised' to file Chapter 7 and not sure if there is actionable opportunities associated w/the term advised vs. filed.

In short, what are my options to collect judgement? Thank you in advance for any insight.

So, did the tenant file yet, or have they only been ADVISED to file for Chap 7 bankruptcy?

If they have filed, and are asking that the judgment be included in the bankruptcy, you can't pursue collection action. You will have to stand in line with the other creditors and make your claim as part of their bankruptcy proceedings.

 

[PixelRogue]

Additional information

The phrasing from the letter stated the client was advised to file, along with a statement of the application and strong language not to pursue until further notice.

Now, from what I'm reading, there are new provisions whereby landlords are protected in cases of bankruptcy, similar to provisions such as child support.

"BAPCPA limited the applicability of the automatic stay in eviction proceedings. If the landlord has already obtained a judgement of possession prior to the bankruptcy case being filed, a Debtor must deposit an escrow for rent wit the Bankruptcy Court, and the stay may be lifted if the Debtor does not pay the Landlord in full within 30 days thereafter."

30 days will be up shortly ~ figured I would at least inquire as to the status of such an escrow. Also curious if a dialog with the legal firm would be an advantage or disadvantage?

 

[LdiJ]

The phrasing from the letter stated the client was advised to file, along with a statement of the application and strong language not to pursue until further notice.

Now, from what I'm reading, there are new provisions whereby landlords are protected in cases of bankruptcy, similar to provisions such as child support.

"BAPCPA limited the applicability of the automatic stay in eviction proceedings. If the landlord has already obtained a judgement of possession prior to the bankruptcy case being filed, a Debtor must deposit an escrow for rent wit the Bankruptcy Court, and the stay may be lifted if the Debtor does not pay the Landlord in full within 30 days thereafter."

30 days will be up shortly ~ figured I would at least inquire as to the status of such an escrow. Also curious if a dialog with the legal firm would be an advantage or disadvantage?

That is a bit different however...because it addresses an eviction and ongoing rent for a debtor that has not moved out of the residence.

My impression is that you don't have that problem. The debtor is not still squatting in your property. If I am wrong, please correct me.

 

[nextwife]

No STAY on efforts to collect exist until the case is actually filed in the BK court. Filing status can be determined via regular checks on Pacer.

 

[FarmerJ]

There is supposed to be a creditors meeting where those the petitioner owes are supposed to be notified if the person is trying to have the debt reduced or discharged , I would tell you it may not do alot of good to attend if the person has zero hope in the eyes of a bankruptcy trustee of repaying the debt they owe you then you wont get a dime but if you make sure you attend this meeting as long as you are notified of it and voice your concern for being paid if the trustee sees that the petitioner has the income you might see some kind of payment even if its a percentage. Some LLs never get a dime when a tenant files bk. ( about the only thing you can do is reduce the risk of this happening again by getting first month and last month with your deposit in cash from new tenants so that way if tenant becomes behind you can begin to evict for non pay)

 

[PixelRogue]

Great input

Great input everyone...really appreciate.

Eviction / Back Rent
I tried to work w/the tenant for about 5-6 weeks before starting the eviction process <-lesson learned. Once eviction process started I learned the tenant had experience or insight into the procedures and used each opportunity to delay (etc). Eventually went to court, client evicted... nearly had to file more procedures because client did not vacate according to court established date. Entire process took about 5 months plus incurred expenses. After client finally leaves, I inherit mattresses and trash of all kinds, needed to replace carpet etc. which were additional expenses incurred.

Notice to Creditors
Yes, a meeting has been scheduled in about 3 weeks. I am one of about 26 creditors.

Tenant has a house and it is my understanding (so I'm told by clerks in the court house) my judgement is as a lean against their home (husband was renting during separation period). How can I validate (in a legal document for instance) the lean against the property? Chapter 7 is to liquidate, yet I expect the home will likely be excluded. The tenant also has three active bank accounts (they closed the account which was used for rent) and I'm curious if an account of a child is being used by the parents.

Situation
I'm a small landlord and work my tail off in the business. Needed to supplement the missing rent personally to meet business expenses...major impact over the past year. Are there steps I can take to secure a better outcome? Get the proper attention from the Clerk etc?

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[PixelRogue]

Plan B

Good to have a plan if Chapter 7 works to the favor of the defendant.

Debts of willful and malicious injury.. to the property of another entity...
Debts not discharged include debts for alimony and child support, certain taxes, debts for certain educational benefit overpayments or loans made or guaranteed by a governmental unit, debts for willful and malicious injury by the debtor to another entity or to the property of another entity,...

Is there a reasonable case that can be built that not paying the rent (and damages etc. to the apartment) constitute willful injury? If so, what process is taken? Guessing this case would need to be made to the Clerk at time of hearing?

Such claims "will be discharged unless a creditor timely files and prevails in an action to have such debts declared non dischargeable." What steps would I take?

​

 

[Mass_Shyster]

There's probably not much you can do at this point but let the bankruptcy run its course and hope your judgment lien isn't avoided.

A judgment lien can be avoided (discharged) if it impairs an exemption. Since the bankruptcy laws permit a $20,000 exemption on a primary residence, your lien will only survive if the debtors have less than $20,000 in equity (value of home minus balance due on note).

There's also an exception in PA where property held as tenancy by the entirety may be exempt against debts owed by only one spouse. I honestly don't understand the implication of this and don't have time to research it.

If your lien is avoided, you will become an unsecured creditor, and the debt will likely be discharged.

Also, not paying rent doesn't qualify as willful or malicious injury. If they trashed the place on their way out the door, that would be willful or malicious.

 

[PixelRogue]

Thank you

Thank you for the input. Looks like there is a slim chance anything be cured. There are about 27 other people in the queue as well.

 

[Mass_Shyster]

Thank you for the input. Looks like there is a slim chance anything be cured. There are about 27 other people in the queue as well.

As of right now, you're at the front of the line because your lien is secured. That may change.

 

[PixelRogue]

New information

Had a chance to look at the records filed and the other creditors in the queue. If I understand what I'm seeing correctly:

There are two secured creditors. Mortgage lender and auto loan. Yep, a 2012 vehicle. Defendant is planning on keeping the home and the vehicle ~ asking to maintain payment schedules for those two items.​

There are about 27 creditors. All of them, myself excluded, are financial institutions. Credit Card A w/5k. Credit Card B w/4k, etc.​

There are two court filings. Couple filed for divorce (just prior to tenancy apparently) and the tenant/landlord judgement <-the case we are discussing now.​

Side note: Court documents state there is one bank account in use, however my information indicates THREE accounts in use. However, I do not have access to get more details on those accounts.