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Bankrupt Tenants

We are seeing an increase in the number of tenants that are essentially nothing more than a squatter. They obtain possession of the premises and then pay very little or nothing. After the Landlord obtains an order of possession from the justice court they appeal and when the appeal is heard and they lose, they retain a bankruptcy lawyer to tie the property up even longer. It is an effective strategy, especially against the naive landlord.

Once the tenant has sought bankruptcy protection, the proper procedure is to either 1) file a Motion to Compel Debtor to Assume or Reject the Lease, or 2) file a motion to lift the automatic stay that prevented the landlord from evicting the tenant.

Although no two situations are the same, normally we file a lift stay motion. We find this brings the matter to conclusion in the least amount of time and expense. It causes the tenant and his bankruptcy lawyer to negotiate with us more quickly.

The most important point for the Landlord is that bankruptcy really only changes the forum in which you are going to fight with your tenant for possession.  Tenants that were unable to make timely payment of rent before bankruptcy rarely do so after bankruptcy and we usually just continue to pressure the tenant to vacate in one form (or forum) or another.

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