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Elizabeth Prentice
Elizabeth Prentice, Attorney
Category: Bankruptcy Law
Satisfied Customers: 170
Experience:  Managing Attorney for one of the largest consumer bankruptcy firms in America.
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Ive just received a disclosure statement from my Leases Attorney

Resolved Question:

I've just received a disclosure statement from my Leases' Attorney advising me of his filing for chapter 11. The statement shows our lease as being "Assumed". Is there any reason I wouldn't want my lease assumed? They are giving me a period of time to reject the assumption if I'd like to. He is current on his rent. The Lease expires in Feb. of 2014.

I've heard that rent is treated differently than other debts. Your thoughts?

I know there is a lot of information you need to opine on this so, I'll give you some pertinent facts.

The Petition date was : Feb.07, 2012
The Disclosure Statement Hearing date is: Dec. 05, 2012
The "Effective Date" has yet to be set.

There is a "ballot for accepting or rejecting the plan" included in the pack of papers. It states my Lessee filed a chapter 11 "plan" on October 30, 2012. Since he doesn't owe me any money, I don't see a need to vote on this plan, right?

So, other than the couple of questions I've posed I'm just looking for some input on the subject, and asking what if anything I should do to protect my interests.

Please let me know if you need further information.

Thank you for your time,

Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  Elizabeth Prentice replied 1 year ago.
I am a bankruptcy attorney and I would be happy to answer your questions. When a Debtor assumes an obligation for a debt (in this case the Lease), his statement of intention typically displays this, as you mentioned. The Debtor's "Assuming the Lease" means that he merely plans to continue making lease payments to you, which I see as a positive thing! However, just because the Debtor stated that he assumed the Lease is not enough to protect your rights as a creditor. I recommend that you do two things: 1) File a Proof of Claim and 2) Send the Debtor's Attorney a Reaffirmation Agreement for the Debtor to sign, and then file it with the Court.

With regards XXXXX XXXXX proof of claim, you will be notified by the assigned Trustee to the case when your deadline to file a proof of claim will be. Typically, the Trustee will also send you the proof of claim form. You must fill it out and attach a copy of the Lease, when you file it with the Court. This preserves your right to receive money owed to you in the event the Debtor defaults.

Secondly, a Reaffirmation Agreement is a type of contract. It states that the Debtor has freely chosen to assume the debt owed (the lease payments still owed to you for however many months), and that should the Debtor default, they (the money owed) will be non-dischargeable. I have seen all types of Reaffirmation Agreements, depending on what they are for, such as cars, mortgages, leases, jewelry, boats, etc. They can be very simple or very detailed. You may want to research online and look at a few samples before you draft one; however, I always recommend an attorney to draft it for you, since they already have forms. Additionally, the Debtor does not have to sign a reaffirmation even if you give him one. This means that if the Debtor defaults, you can immediately pursue your rights to file a Motion to Lift Stay and take back the property if the Debtor defaults.

Lastly, you should review the Debtor's Plan and make sure that he has enough money set aside to be able to pay you the rent. You can chose to object if you wish, if his accounting does not look accurate. You also want to make sure he has listed the proper amount of money he is to continue to pay you each month.

I hope my answer has assisted you, and that you will provide me a positive rating!
Elizabeth Prentice, Attorney
Category: Bankruptcy Law
Satisfied Customers: 170
Experience: Managing Attorney for one of the largest consumer bankruptcy firms in America.
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