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Terry L.
Terry L., Attorney
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Experience:  Better Business Bur 15yrs bankruptcy experience. Chicago Bar
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I am a landlord and a potential tenant would like to rent a

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I am a landlord and a potential tenant would like to rent a unit from me. They have told me they presently are in Chapter 13 and told me they will be filing Chapter 7 prior to moving in. What steps should I take to protect myself and the new lease.
Submitted: 4 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 4 years ago.
You can get a cosigner, that way there would be a 2nd person responsible for the payments. If the tenant puts you in the chapter 7 conversion, (assuming you lease before the conversion) your lease will control. If they are discharging debt, you should have that as one of the causes for breach of contract. If they are behind on payments you can then move to evict. The tenant is liable for any rents due post filing while they still possess the property, but not for any pre-filing amounts. If the case has been converted, then you rent, then it would be all post-filing, and would have no effect on the lease obligations.
Customer: replied 4 years ago.

Terry,

 

Thanks for the quick reply.

 

A few follow-up questions. Can you define "converted"? Does that mean they just have to file Chapter 7 prior to signing a lease with me or do they have to go through the whole process prior to signing the lease to be classified as post-filing.

Assuming they move in prior to filing then I should have a clause in the lease stating the lease would be breached if they are discharging debt so I can evict them if they aren't paying.

Co-signer is not likely because I think both the husband and wife are filing prior to moving in.

 

Is there any spot you can point me to for verbiage to add to my lease to protect me?


Thanks,

Ed

Expert:  Terry L. replied 4 years ago.
When a debtor is in a chapter 13, they can convert to chapter 7. Debts incurred between the date of the ch13 filing and the conversion can be added into the chapter 7 for discharge. If the ch13 gets dismissed, then the debtor can file for chapter 7, but conversion is usually the route taken.
You can have them sign the lease before or after the case, it really does not matter.
If they are behind on their rent, and list you as a creditor, you can ask the court to allow you to start an eviction,at any time. If the lease is signed after their ch7 is filed or converted, it is a post-filing debt, and the rules will not apply.
I don't draft rental leases, so I don't have specific language for you to use, however.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2562
Experience: Better Business Bur 15yrs bankruptcy experience. Chicago Bar
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Terry L.
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Bankruptcy Lawyer
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Better Business Bur 15yrs bankruptcy experience. Chicago Bar