Discovering that your renter has filed for bankruptcy can leave you feeling unsure of your next move. You may be asking, “What do I do now that my tenant filed for bankruptcy and stopped paying?” If you need a landlord-tenant attorney in Greenville, SC, Matejka Law can walk you through your legal options.
Our post below explains what happens after a renter files and your next steps.
Understanding the Automatic Stay Order and What It Means for You
The moment a renter files for bankruptcy, a federal court order called the automatic stay goes into effect. This stay temporarily blocks creditors, including you, from pursuing collection actions or continuing eviction proceedings.
That means you cannot send demand letters, file new lawsuits, or proceed with a pending eviction without permission from the bankruptcy court. Violating the stay, even by accident, can lead to sanctions and attorney fees awarded to the renter.
The stay does not erase the debt. It simply pauses your ability to collect, which is why acting early matters when handling late rent payments that have grown into a larger issue.
Chapter 7 vs. Chapter 13 Filings
The type of bankruptcy filing your renter chooses affects how the case will play out. If you are asking, “My tenant filed for bankruptcy, so what now?” the chapter listed on the paperwork is the first detail to check.
Here are the two filings you are likely to see:
- Chapter 7: This filing focuses on liquidating non-exempt assets to pay creditors. It generally wraps up within three to six months.
- Chapter 13: This filing involves a repayment plan over three to five years. Renters often use it to catch up on past-due amounts.
Under Chapter 13, you may receive partial payments through the court-approved plan. Under Chapter 7, recovery is often more limited because the renter may have their debt discharged entirely.
Filing a Proof of Claim for Unpaid Rent
To recover any money owed before the filing date, you must submit a proof of claim with the bankruptcy court. This document formally tells the court how much the renter owes you and asks to be part of the repayment plan.
The court sets a strict deadline for filing this claim. Missing it can mean losing your chance at recovery. Federal deadlines are firm, so acting quickly is the safest approach.
Your claim should cover unpaid rent, late fees, and other charges allowed under the lease agreement. Keep detailed records of payment history and notices sent to support your filing.
Reviewing the Repayment Plan
In a Chapter 13 case, the debtor submits a repayment plan that outlines how creditors will receive payment over time. When you tell your attorney, “My tenant filed for bankruptcy and proposed a plan,” reviewing that document line by line becomes the priority.
Pay close attention to whether the plan addresses past-due balances and ongoing monthly rent. If either is missing or undervalued, an objection filed through your attorney can help correct the issue before approval.
The renter must also decide whether to assume or reject the lease. Assuming means agreeing to keep paying and cure past defaults, while rejecting ends the agreement and returns possession to you.
Requesting Relief From the Automatic Stay
When the repayment plan falls short, or the renter continues missing payments, you can ask the court to lift the stay. A motion for relief gives you the chance to resume eviction in the magistrate’s court and recover your property.
Common reasons courts grant relief include:
- Failure to pay post-petition rent: When the renter misses payments that come due after the bankruptcy filing
- Lack of adequate protection: When the property is damaged, or its value is at risk
- Bad faith filing: When the bankruptcy appears to be filed only to delay eviction
Some situations also fall outside the stay entirely, such as evictions based on illegal drug use or endangerment of the property. Many residential housing providers find that working with experienced counsel helps move the case forward more efficiently.
Matejka Law Is Ready To Help
A renter’s bankruptcy can be challenging to navigate as a property owner, but knowing your rights gives you the confidence to act without risking sanctions. Our team helps you respond to the filing, submit a proof of claim, and pursue motions to lift the stay. If you also need to sue for unpaid rent, we can guide you through that process.
Matejka Law serves property owners across South Carolina with practical advice rooted in years of courtroom experience. If you find yourself thinking, “My tenant filed for bankruptcy, and I need help in Greenville, SC,” call (864) 527-6800.
