Landlord Woes: When Your Tenant Files a Bankruptcy Stay During an Eviction Action
Just when you thought your eviction process was smooth sailing, your tenant throws a curveball by filing for bankruptcy. When a tenant files for bankruptcy during an eviction action in Ohio, it triggers an automatic stay, which temporarily halts most collection activities, including eviction proceedings. It can complicate and draw out the process, however, there are legal steps a landlord can take to proceed with the eviction.
Step 1: Determine the Type and Timing of the Bankruptcy Filing
If the tenant has filed a Chapter 7 Bankruptcy, they are seeking to discharge debts, and the process can last typically a few months.
If the tenant has filed a Chapter 13 Bankruptcy, they are proposing a repayment plan, and that process can extend for several years.
If the bankruptcy was filed before the eviction judgment, the automatic stay generally applies, and you will need to seek relief from the stay to proceed.
If the bankruptcy was filed after the judgment for eviction was granted, then typically the eviction can proceed despite the automatic stay.
There may be exceptions and limitations to either of these scenarios and as with any legal process, it is best to consult with an attorney to determine your rights and the best legal path forward.
Step 2: Seeking Relief from the Automatic Stay and Filing a Proof of Claim
Landlords can file a Motion for Relief from Stay in the bankruptcy court. This asks the court for permission to continue the eviction. Grounds for granting relief may include, but are not limited to 1) the tenant is not paying rent, 2) the property is not necessary for the tenant’s reorganization (this applies to a Chapter 13 Bankruptcy), 3) the landlord is suffering financial hardship due to the tenant’s nonpayment, 4) the tenant fails to comply with post-petition obligations, or 5) the tenant is engaged in illegal activities.
Landlords may also file a Proof of Claim with the bankruptcy court. You can obtain the form on the bankruptcy court’s website, and it is essential for documenting the amount owed by the tenant. You will need to complete the form accordingly and include supporting documentation. This can be a complex process, and it is advisable to obtain an attorney.
Step 3: Attend the Bankruptcy Court Hearing
After filing the motion, the court will schedule a hearing where you can present your evidence and reasons why the eviction should proceed. If the court grants the motion, the eviction case can resume.
Step 4: Continuing the Eviction Process
If the bankruptcy court lifts the stay, you may continue with the eviction proceedings from where it left off before the stay was enacted. You may also pursue collections action for damages from the tenant once they have vacated the property.
Navigating the complexities of a tenant’s bankruptcy during an eviction can feel like a daunting task for any landlord. However, understanding the legal processes, knowing your rights, and taking proactive steps can help you manage the situation more effectively. You will want to contact N.P. Weiss Law to retain your legal team today to assist you in protecting your interests and ensure a smoother resolution.
