     Renee | Tuesday, February 22, 2000 - 10:28 am 
I have questions from the other side of Chapter 13...the creditor side. Most if not all of what I see on the Internet pertains to debtors. I got caught up in the Chapter 13 web by renting a house to a couple that are in Chapter 13. I knew this in advance but had no clue as to the implications (first time landlord). They made rent payments for two months and then stopped payment, claiming they had no money. I have done a lot of searching but cannot find the answers to the following questions: 1. Does the automatic stay provided by Chapter 13 provide for protection for debt incurred after the initial repayment plan was confirmed? 2. Is rent owed considered a secured debt? I think it is because I have a signed lease agreement. 3. Can repayment plans be reopened and revised to provide "new" creditors with some form of repayment? I am a "little" guy and cannot afford to pay the mortgage on my rental house without some form of rental income. And I am having a hard time getting the renters out. Apparently I need a "motion for relief from the automatic stay" to get an eviction, hence question #1. Any information you can provide would be greatly appreciated. |
| Voigtkampff | Tuesday, February 22, 2000 - 12:37 pm
I am not even sure if the automatic stay applies since this is a post-petition debt. If you read §362(a), the 1999 code provides 8 acts that the automatic stay prohibits. I am not aware of changes to the 2000 code, but you will have to check that yourself.
An eviction, even if just for possession of the rental, is a court proceeding. One of the 8 prohibited acts is §362(a)(1) - "proceedings against the Debtor that was or could have been commenced before the" bankruptcy filing.
An eviction can also sue for money damages. So
§362(a)(6) also applies, prohibiting "any acts to collect...a claim against the Debtor that arose before the" bankruptcy filing.
Since any proceeding OR any claim for money damages arose AFTER the commencement of the case, does the stay even apply? I have seen judges ignore the clear language of §362, so ask a local attorney. |
| Voigtkampff | Tuesday, February 22, 2000 - 12:54 pm
Even if the stay does not apply, in an abundance of caution, you MIGHT want to file a motion for relief from the stay. Under §362(d)(1) you can get that relief "for cause, including the lack of adequate protection of [your] interest in property." I would say that your risk of losing the property to foreclosure (because they are not paying rent) would qualify as a lack of adequate protection. Some courts have local rules which allow an expedited procedure to get relief. (But that is more common in ch 7).
Does the plan even propose to repay the arrears on the rent? If not, the plan can be amended OR modified (2 different things) to include it. But I don't know if the plan was even allowed to include it in the first place since it is a debt that occurred after the commencement of the bankruptcy. You must look to what judges in that district have decided.
You must look to:
(a) someone who is more experienced than I am;
(b) someone who knows the local rules and case law in that district; AND
(c) the court file to see if the there is a plan, amended plan, or modified plan.
But in conclusion, ONE possible suggestion would be to file the motion for relief, stating as grounds that the stay does not even apply AND that you are in danger of losing the home to foreclosure. Demand adequate assurance of payment. Speak to a local attorney.
In response to your other questions: The lease is not really a secured debt. Rather it is an executory contract. It should have been disclosed on schedule G. Whereas the amount of rent should have been disclosed on schedule J. It might ALSO be listed on schedule F, as an unliquidated claim.
Do not try to find the answer to this over the internet. I can only address it generally and I probably give more than most people. You really do need a local attorney for this. I recommend speaking to several. And even if you do get stay relief, you will still have to go through a formal eviction process in state court afterwards in order to actually get possession. This could all take time so hurry, before you lose the property. |
| renee | Wednesday, February 23, 2000 - 09:29 am
Thanks much!
Renee |
| renee | Thursday, February 24, 2000 - 05:14 am
Update:
I think it is time for me to get a new lawyer. I hired one about 2 weeks ago and so far he hasn't filed anything with regards to getting the stay lifted. He was supposed to do this a few days after I gave him a retainer fee. I questioned him on some of these issues and he thinks I need the stay lifted, probably because he will make about $500 from me. He thinks the automatic stay applies, even though it is post bankruptcy debt. He is not working too hard to get the money owed me, basically telling me I will never get anything from the tenants. He thinks I need to pursue the money in state court after the stay is lifted but I wonder what obligations will be imposed in a situation like this. I told him I was going to file a "proof of claim" and he said he wouldn't do it because there really wasn't a whole lot of money involved. Maybe not a lot of money to him. So I think I will file the proof of claim, what can I lose? I'd rather have the security of a trustee paying me back, assuming a bankruptcy judge will accept the new debt. I have already gone through the eviction process; the judge initially ruled in my favor but then backtracked because of the automatic stay deal. I don't think she really understood the codes herself so now I am trying to do all the legwork to get things figured out and moving forward. I will research the sections of the code you referred to and maybe I can convince the judge that I am not bound by chapter 13. The (their) plan does not currently provide for payment of arrears because the rent money owed is not part of their bankruptcy. The tenants indicated they might do this but I called the trustee the other day and she said I was not listed as a creditor. The trustee indicated the new debt would go in front of a bankruptcy judge and he/she would rule to accept or dismiss the debt. It raises questions in my mind as to what prevents a debtor from racking up new debt if a judge is simply going to dismiss it. |
| Voigtkampff | Thursday, February 24, 2000 - 07:20 am
Any action taken by a court AFTER a bankruptcy is filed is usually considered to be void ab initio, which is pretentious for saying that it never happened. The state court is probably right to backtrack.
If your attorney thinks that you should pursue the money in state court then you have get to state court, even to follow his advice. So you do need stay relief. And if he feels that the stay does apply to this debt, then how can he advise you to pursue them for the debt in state court?
Even if you cannot pursue the debt itself, you do need stay relief pronto to get possession. You can get stay relief just to pursue possession, without pursuing the debt. The court will PROBABLY eventually have to make some formal determination as to whether the debt is part of the bankruptcy since it is post-petition. Without such a determination, the state court judge might be reluctant to proceed.
If you were not even listed as a creditor, then that opens up many opportunities for you. Too many to explain here. But among other things, a debtor can get in a lot of trouble for omitting things. They were required to disclose to the court: (1) all creditors; (2) all executory contracts; (3) all setoffs (such as against a security deposit); and (4) all pending lawsuits.
I agree that it's time for an attorney. Maybe a new one. |
| renee | Thursday, February 24, 2000 - 10:03 am
Thanks so much! I'll let you know what happens. |
| Voigtkampff | Thursday, February 24, 2000 - 12:02 pm
I know NOTHING about this, but ask your attorney about 11 USC 365(b)(1). I know that it varies from chapter to chapter, but in some circumstances, there is only so much to time to assume an unexpired lease. And I THINK that the debtor is required to give you some adequate assurance that you will get your rent money.
Also ask the attorney about §365(d)(1), which seems to say that is the unexpired lease is not assumed or rejected within 60 days from filing bnk, it is deemed rejected.
Also read §365(d)(2) which more specifically applies to chapter 13s.
This is really outside of my experience. |
