How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask lawNinvest Your Own Question

lawNinvest
lawNinvest,
Category: Bankruptcy Law
Satisfied Customers: 20012
1723468
Type Your Bankruptcy Law Question Here...
lawNinvest is online now
A new question is answered every 9 seconds

I am a landlord of a single-family house with a lease coming

Customer Question

I am a landlord of a single-family house with a lease coming up for renewal. The tenants are having financial difficulty, but they are wonderful people and I'd like to make it possible for them to stay, even if they can't pay the full amount of each payment. What I'm thinking of doing is allowing them to pay as low a $x per month and the difference between the amount due and $x would become a note payable to me in the future with a set interest rate. My understanding is that secured notes can't be wiped away by bankruptcy, so this note would be secured by the future income of the tenants. My question is: would this note indeed survive a possible bankruptcy? If so, would the following language in an amendment to the lease be sufficient? "Tenant hereby provides a Note to the Landlord for any unpaid balances upon termination of this agreement for any reason, secured by his personal assets and his personal future earnings."
Submitted: 4 years ago.
Category: Bankruptcy Law
Expert:  lawNinvest replied 4 years ago.
A secured note is a loan agreement secured by collateral. It is not secured by "future earnings" since you have nothing to foreclose on if they default. It can be secured by his personal assets and you would need to identify those. A secured note is similar to a mortgage, whereby the lender is making a loan to be secured by the house if there is a default. Given that there is an identified collateral it typically avoids bankruptcy since that debt would be first to be paid.

From the scenario you present I don't see how this would work since you are not making a loan but rather you are accepting an IOU to the difference which cannot be paid. Further for each event they cannot pay the entire balance you would need to create a separate note since you are required to provide specific terms of what has been in default and what collateral has been used to secure it. In my legal opinion I don't see how this would work since this is not a loan agreement and you would require specific terms for each amount that is borrowed and security for the note.







Please click accept, it is greatly appreciated. To request me for future questions, please begin your question with “Attention lawNinvest” Thank you.

_______________________________________________

Please Note: My answer or reply is limited to your facts presented and additional information you post may not come in after my reply or answer has posted, if this has occurred please let me know and I will answer further. Due to site tech reasons, oftentimes I am initially only able to see the first part of your post, so this may result in more interactions between us. There might also be a delay in my reply or answers, as I may be helping other customers, or called away from my office or have logged off. Please be assured your question(s) will be answered promptly.

If I have been helpful, please click Accept for my time and research, this is the only way I get paid. If you need more help or clarification, please click reply. Positive Feedback is greatly appreciated and reciprocated. Feedback should relate to customer service and not about the law, which I have no control over. You can always request me through my profile here or beginning your question with “Attention lawNinvest” Thank you.

Legal Disclaimer. The information given by me is not legal advice. I am not establishing an attorney-client relationship with you. I am providing only research, resources and information only for you to be informed and educated about your particular needs and my answer is limited to the facts presented. You are only paying me for such information given. No part of this disclaimer can be copied or reproduced without the express consent of the owner [lawNinvest]. Thank you.

Customer: replied 4 years ago.
Dear Sir or Madam,

Please help me with a creative solution to this problem. I don't want to turn them out. They are in financial difficulty with children in close-by schools and it would be a terrible problem for them. At the same time, while I am willing to accept less than market rent now, I'd like to be paid when they are finally able, and I want to protect myself if they later have to declare bankruptcy.

Here's another idea for new wording in their lease renewal: "Upon termination of the lease for any reason, if there are unpaid amounts due at that time the Tenant agrees to cooperate with the Landlord to facilitate the garnishment of future earnings until the balance due is paid."

Would this work? Do you have any other creative ideas to make this work?

Sincerely,
Hal Segal
Expert:  lawNinvest replied 4 years ago.
No that will not work, you cannot garnish wages without a judgment.

Sorry but there is no way to defeat a bankruptcy on an IOU. You can only use collaterals on loan agreements and you can't garnish on wages. If you really want to help them, then just lower the rent to what they can afford and avoid the hassles of collecting the difference. In landlord-tenant law you either sue when the rent is due for the amount agreed or if you accept a smaller amount you are deemed to have waived your rights since you did not sue when you had the chance.

Sorry.





Please click accept, it is greatly appreciated. To request me for future questions, please begin your question with “Attention lawNinvest” Thank you.

_______________________________________________

Please Note: My answer or reply is limited to your facts presented and additional information you post may not come in after my reply or answer has posted, if this has occurred please let me know and I will answer further. Due to site tech reasons, oftentimes I am initially only able to see the first part of your post, so this may result in more interactions between us. There might also be a delay in my reply or answers, as I may be helping other customers, or called away from my office or have logged off. Please be assured your question(s) will be answered promptly.

If I have been helpful, please click Accept for my time and research, this is the only way I get paid. If you need more help or clarification, please click reply. Positive Feedback is greatly appreciated and reciprocated. Feedback should relate to customer service and not about the law, which I have no control over. You can always request me through my profile here or beginning your question with “Attention lawNinvest” Thank you.

Legal Disclaimer. The information given by me is not legal advice. I am not establishing an attorney-client relationship with you. I am providing only research, resources and information only for you to be informed and educated about your particular needs and my answer is limited to the facts presented. You are only paying me for such information given. No part of this disclaimer can be copied or reproduced without the express consent of the owner [lawNinvest]. Thank you.

lawNinvest,
Category: Bankruptcy Law
Satisfied Customers: 20012
Experience: 
lawNinvest and other Bankruptcy Law Specialists are ready to help you
Customer: replied 4 years ago.
Well, you are being a devils advocate -- which is helpful. But I still need a creative solution. How about (1) my including a Note with the lease that he signs when he renews and the amount of the Note becomes whatever amount is still due at termination, and (2) he agrees to facilitate a judgement that would allow for garnishment of future earnings?

Again, if you still don't think this will work, please provide another solution. If you give me something I can use, I'll increase my payment to you from $15 to $50.

Hal
Expert:  lawNinvest replied 4 years ago.
Sorry, I don't believe anything else will help your scenario. I will opt out to see if someone else can interject.
Expert:  RunTam38 replied 4 years ago.
Hello Customer and welcome to JustAnswer.

I pretty much agree with what LawNinvest has already told you. I do have one suggestion which involves a somewhat complicated process, but which might work if the situation is of short duration.

For each month that the tenants cannot pay the full amount, loan them the difference (which of course they would return to you as rent payment) and have them sign a promissory note secured by their vehicle (assuming it has sufficient value to cover the note). The complication is that each month you would have to prepare a new note for the new total amount, once again secured by the vehicle. Depending on your state law, this might also require filing the security agreement with the DMV.

This could also work using other personal property as collateral, if they have anything of value (such as jewelry, furniture, collectibles, etc.), but the collateral would have to be described in the agreement with specificity (each item separately listed, not just "household furniture" or "jewelry", etc.).

Thanks for asking your question here on JustAnswer. If you have any other questions, please let me know. I have also suggested moving this question to the bankruptcy category, to see if any expert there has any ideas. That will require review by JA admin, so may take awhile to occur. In the meanwhile, if you find my suggestion satisfactory, you can accept my answer here.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
< Last | Next >
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
  • My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer. Eric Redwood City, CA
  • I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight. Michael Wichita, KS
  • PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent. Three H. Houston, TX
  • Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!! Elaine Atlanta, GA
  • It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem. Tony Apopka, FL
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
 
 
 

Meet The Experts:

 
 
 
  • FiveStarLaw

    Attorney

    Satisfied Customers:

    3203
    Bankruptcy Lawyer. Experienced.
< Last | Next >
  • http://ww2.justanswer.com/uploads/FL/FLAandNYLawyer/2012-1-27_14349_3Fotolia25855429M.64x64.jpg FiveStarLaw's Avatar

    FiveStarLaw

    Attorney

    Satisfied Customers:

    3203
    Bankruptcy Lawyer. Experienced.
  • http://ww2.justanswer.com/uploads/TL/tleeders/2012-6-13_204815_TSL1.64x64.jpg Terry L.'s Avatar

    Terry L.

    Attorney

    Satisfied Customers:

    2204
    Better Business Bur 15yrs bankruptcy experience. Chicago Bar
  • http://ww2.justanswer.com/uploads/mnphillips2/2009-03-13_203105_10984459-249293407.jpeg Phillips Esq.'s Avatar

    Phillips Esq.

    Attorney-at-Law

    Satisfied Customers:

    950
    B.A.; M.B.A.; J.D.
  • http://ww2.justanswer.com/uploads/CO/cortrightlaw/2011-12-5_4117_Kevin.64x64.JPG cortrightlaw's Avatar

    cortrightlaw

    Attorney

    Satisfied Customers:

    490
    Attorney practicing Bankruptcy Law including Chapter 7, Chapter 11, Chapter 12, and Chapter 13.
  • http://ww2.justanswer.com/uploads/Jay1968/2006-12-03_004423_JoeRossPhoto.jpg JoeLawyer's Avatar

    JoeLawyer

    Attorney

    Satisfied Customers:

    376
    Attorney in the practice of Bankruptcy Law since 1996
  • http://ww2.justanswer.com/uploads/DY/Dylatess/2012-9-11_1968_BHBTemplePhoto.64x64.jpg dylatess's Avatar

    dylatess

    Attorney

    Satisfied Customers:

    370
    35 plus years of experience specializing in bankruptcy law
  • http://ww2.justanswer.com/uploads/US/USLawAnswers/2012-9-20_23143_20090105211638Headshot3b.64x64.jpg Brent Blanchard's Avatar

    Brent Blanchard

    Bankruptcy Attorney

    Satisfied Customers:

    315
    Twelve years experience in all aspects of debtor & creditor BK.