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Tenant files for Chapter 7 and moves out in the middle of the night.

I had a tenant who was being garnished.  She was 6 weeks late paying rent.  Stupid me, I tried to work with her and keep a roof over her and her children's head.  She ended up being three months behind on the rent.  Then she moved out in the middle of the night, sticking me with 3 1/2 months of unpaid rent, plus hundreds of dollars in utilities that were unpaid. I contacted her.  She informed me that she had a lawyer and had filed Chapter 7.  She has put me in the chapter 7 bankruptcy so I could not go after her for all the money she owes me.  Gave me a case number and told me that I could not contact her any more.  Help!  I do not know what to do next.  She broke her lease, can it be in Chapter 7???

Let that be a lesson to you not to let someone get so far behind on rent.  Once she was late paying rent, serve a 5 day pay or quit notice.  And if she didn't pay, then you should have taken steps to evict!!!  I believe you realize that you were not being business-like by trying to baby this tenant.  Obligations of a tenant created before bankruptcy is filed are referred to as "pre-petition" claims. Claims or debts created after filing are "post-petition" claims.   If the tenant stays in the premises any time after the bankruptcy is filed, the claim for rent for this period of time is considered an "administrative claim." Administrative claims are post-petition claims and are paid before any other claims in the bankruptcy, whether the tenant has filed a Chapter 11 or a Chapter 7. Thus, to the extent that there is any money to pay any creditors, the rent incurred after bankruptcy commenced will be paid. If there is not enough money to pay all administrative claimants (those people providing goods or services to the bankrupt tenant after commencement of the bankruptcy), then the administrative claimants all share proportionately in whatever money is available.  Rent owed for periods before bankruptcy was filed, known as pre-petition rent, is an "unsecured" claim. This is the last type of claim to be paid and, if paid at all, is almost certain to be severely discounted.   If a tenant's lease has not terminated when a Chapter 7 or Chapter 11 bankruptcy is filed, then the tenant must assume or reject the lease within 60 days of filing bankruptcy. Before the 60 days are up, the tenant may make a motion to the court asking for an extension of the 60-day period. The landlord must be told what date the 60-day period expires.   See this website for more:
Dawn, thank you for your advice. Shame on me for not stepping up to the plate and not being more professional. I have learned a very hard lesson.
Kudos to Dawn for the information and saying it like it is. I hope others heed what was written. Real Estate is a business. Run it like a business. YOUR future depends on it.  Make sure you (1) do your research on the new tenant (2) Do Not allow possession of the property before due date. This includes storing item(s) before move-in date (3) make sure you collect ALL sec.dpst before move-in date (4) sec.dpst and 1st months rent should be cash, money order or bank check. No personal check. (5) Do a move-in inspection (6) Make sure you have a written contract (7) Serve Notices immediately for non-payment or lease violations. Follow with an eviction, if necessary (8) Do annual inspection at a minimum. If you live close, drive-by inspections are helpful (9) Charge at least 5-10 % of the rent for late fees (10) Know your State and Local Tenant / Landlord laws. -----Disclaimer: Since I’ve been answering a lot of questions, I thought I would make the following statement. I’m not affiliated with EZlandlord Forms. I’m just here (not sure how long) to help those that have questions. Having 40+ yrs with Rental Property and done well, it’s my way of “Pay it Forward (check out the movie).” However, it is up to you to become familiar with your State/Local laws. I always like to know if the suggestions I offer are helpful. Feel free to comment anytime. Thanks in Advance. BTW...check out the Rental Property Organizer at Free Trial Download with data.
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