Indiana Lawyer for Bankruptcy Answers “What-If’s” – Part 1

July 22, 2012 1:54 am Published by

Sometimes, questions posed by Bankruptcy in Indiana readers about something that’s already happened help answer other readers’ “what if..” questions.

At the five Zuckerberg bankruptcy law offices, for example, this is an everyday occurrence: people who’ve been laid off work for a long while, even if they’ve recently found a job, aren’t able to keep up with their apartment or house rent payments.  Or they’ve fallen behind on mortgage payments and need help to stop foreclosure.

Every once in awhile, though, one of my Columbus bankruptcy lawyer colleagues reminds me, it’s the other way around, where it’s the owner of the house or the apartment building or the duplex who can’t keep up with payments to the bank.  The question then arises, when it’s the owner of a rental who is filing for individual bankruptcy in Indiana, how long will it be before the tenant needs to move?

My years of experience as a debt consolidation lawyer offering bankruptcy services in Indiana have taught me one thing:  the answer to most questions that concern landlords, tenants, and bankruptcy begins with the two words “it depends”.

First, it depends on whether the landlord is trying to save the property.  Filing personal bankruptcy in Indiana, remember, does not automatically bring foreclosure.  Under Chapter 13 bankruptcy law, for example, a landlord might catch up on the apartment building mortgage payments while completing a three to five year debt repayment plan.

Second, assuming the landlord is not current on the mortgage, and that there could be a foreclosure, how long the tenant can stay on the premises depends on how long the foreclosure is delayed.  Remember, whenever a bankruptcy in Indiana of any type is filed for the first time (that includes small business bankruptcy in Indiana), all legal activity, including foreclosure, is put on hold by the bankruptcy automatic stay.  Months can go by before the bankruptcy court removes the house or building from protection.  Sometimes, the tenant ends up making the rent payments to a receiver or to the bankruptcy trustee and even remaining in the property under a new owner.

The third thing to consider is that tenants have rights under the 2009 Protecting Tenants at Foreclosure Act, allowing tenants to stay until the end of their lease. (This can be a complicated thing to enforce.).

One of our bankruptcy attorneys in Richmond, Indiana, reminds tenants that the security deposit money they may have paid when they moved in is not the property of their landlord, and cannot be taken by the bankruptcy court to pay creditors.  The money will either go to the new owner of the property, and when the time comes, returned to the tenant.

I’ll continue to provide Indiana bankruptcy information on questions like these. Tenants shouldn’t have to lose their living quarters through no fault of their own, is my opinion.  But as I continue to help people deal with all sorts of financial issues, I know that when landlords file bankruptcy in Indiana, things can get complicated for their tenants.

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This post was written by Mark Zuckerberg

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