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Is new rent due after a renter files bankruptcy?

Mattoon, IL |

I currently have a renter that has filed bankruptcy as of October. I realize that a stay has been put in place but the renter was up to date on his rent payments. The bankruptcy was filed on October 10th. Now that Nov 1st has come and gone the renter technically owes this months rent. Should they still be making the rent payments and how do I go about notifyin the renter that rent is now due? Does all correspondence have to go through a lawyer which would darn near cost the amount that is due rent wise?

I apologize about that Mr.Messutta. I did omit quite a bit of information. The tenant filed a Chapter 7 bankruptcy on October 10th, 2010. Eviction wise, we were not thinking about evicting since that in itself can be a hassle and due to us living in a small town we did not want to create bad blood. The rent on the small building is 300.00 a month. The renter was currently up to date on all payments. I had heard that they may demand prior rents. My main question was would the renter be responsible for the rents due after the bankruptcy filing? I just wasn't sure which direction to look for who would be responsible to paying for the building since it is technically still in use and unrentable to future tenants while his property is still there. Once again, I apologize for not providing the needed information.

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Attorney answers 1


1. October what? Upon filing of any bankruptcy proceeding there is an "automatic stay" that will prevent you from starting an eviction; it will also prevent you from proceeding with one started PRIOR to the filing for at least a month and perhaps longer.
2. INSUFFICIENT INFORMATION. You have different rights and restrictions depending on the KIND of bankruptcy the tenant filed.
3. You could LOSE rent payments the tenant made to you for a period up to 90 days PRIOR to the filing (or if the tenant happens to be a related party up to a YEAR prior to the filing...) which is called a "preference period" and the trustee could come after YOU for the money, that would go back into a pot that could instead be diverted to any of the tenant's secured lenders - like a car loan.
4. Your recourse, unfortunately, is your tax return, where you can show reduced income and increased expenses for your income property (including attorney fees, etc.). At least you get to expense it off . . . with no AGI offset.
And if you do not want to have a bankruptcy attorney monitor this for you, you run the risk of losing 90 days prior plus several months' more.... Figure it this way, you didn't even know what kind of filing the tenant made . . . it's complicated stuff.

The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the State of Illinois. Responses are based solely on Illinois law unless stated otherwise.

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