Can a landlord evict a residential tenant who filed Chap. 7 bankruptcy & did not list nor notify landlord of bankruptcy action?

Asked over 1 year ago - Detroit, MI

Tenant filed a Chap. 7 bankruptcy 3 months before expiration of residential lease. Tenant did not list nor notify landlord of bankruptcy filing. Landlord, unaware of bankruptcy filing, served tenant with Demand for Possession, due to expiration of lease, 60 days before expiration of lease and informed tenant, in writing, that landlord would not renew the lease, nor enter into a month to month tenancy. Under Michigan law can landlord evict tenant?

Attorney answers (5)

  1. Scott Benjamin Riddle

    Pro

    Contributor Level 20

    4

    Lawyers agree

    Answered . The landlord violated the automatic stay (albeit unintentionally) whether or not they knew about the Bankruptcy case or the stay. Once they find out, they have a legal obligation to not only stop, but perhaps to take steps to remedy the situation (ie, withdraw the eviction case, etc.). The Landlord would be wise to either get a lawyer in the Bankruptcy case, or wait until it is over (and even than, can't collect discharged debt).

  2. Dorothy G Bunce

    Pro

    Contributor Level 20

    4

    Lawyers agree

    Answered . Anything can happen if the tenant fails to oppose the eviction, but from a technical standpoint, the bankruptcy protection exists whether the landlord is notified of the bankruptcy or not. Hope this perspective helps!

  3. Ahren Ananda Tiller

    Contributor Level 7

    4

    Lawyers agree

    Answered . Upon filing a bankruptcy case, 11 U.S.C. 362 creates an "Automatic Stay," which is an injunction that stops all acts of a creditor (i.e. in this case a landlord) from collecting on a debt The stay not only conveys and affirmative duty for creditors to abide by the stay, but also nullifies any collection activities (i.e. lawsuits, foreclosures, repossessions, etc.) that occurred while the stay is in effect.

    In this situation, the Landlord was not "noticed" of the bankruptcy action, therefore they have a defense to a "stay violation" claim against them, however courts have recognized that absent formal notice, actual notice (i.e. the creditor became aware of bankruptcy informally) is enough to force the creditor to rectify their stay violation and even conveys a duty for the landlord to take affirmative steps to rectify (i.e. reverse) the actions they committed to collect on the debt while the stay was in effect. Here the landlord should immediately upon realizing the bankruptcy had commenced go to the state courthouse and file a "stay of the eviction proceeding" until her either files a motion for relief from stay in bankruptcy court and/or the case is closed and the stay is lifted (i.e. usually 90 days in a chapter 7).

    This is an extremely complicated and touchy area of law. The landlord definately needs a lawyer and if not careful could get slapped with a sanction motion for violating 11 U.S.C. 362, whereby they could get a huge attorney's fee bill under 362(k). I would definitely get a lawyer.

  4. John Martin Hilla

    Pro

    Contributor Level 9

    2

    Lawyers agree

    Answered . As noted by others, the fact that you weren't noticed of the filing means that you have a defense against a motion for contempt or sanctions for violating the "automatic stay against collections" that kicks into place the moment a bankruptcy petition is filed, protecting the filing debtor against various acts that amount to collection of debt.

    However, now that you know, you are not without recourse. You do need to cease & desist collection activity and prosecution of that Demand for Possession ASAP until you get yourself clear of the Automatic Stay. Landlords have a right to possession of their premises that is protected under the Bankruptcy Code, and you can retain counsel to represent you in the bankruptcy proceeding to motion for relief from the Automatic Stay as well as to take other measures.

    But you need to operate within the bankruptcy process at this juncture.

  5. Robert Michael Fox

    Contributor Level 10

    1

    Lawyer agrees

    Answered . The automatic stay, pursuant to S362 of the Bk code was violated. Now that the landlord is aware of the BK filing, he must cease and desist from any collection activity/lawsuits. Some jurisdictions (such as the southern district of NY) require that the tenant post any rent due within 30 days with the clerk of the court once a warrant of eviction is issued. The landlord either has to make a motion to lift stay in the BK case in order to proceed with eviction or wait until after discharge.

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