Tenants Filing Bankruptcy to Avoid Eviction Repayment?

Question

I just had to evict some tenants, and they told me that if I get a judgment against them, they'll "just file bankruptcy so [I] never see a dime."

My first instinct was to laugh out loud, but then I thought, "Hold on--these people really don't have anything to lose. And they're stupid enough that they just might try something any sane person would realize was idiotic. I wonder if..."

Anybody have tenants try that before? I'm in Indianapolis if you happen to have local experience, but if not, still love to hear your story. Or, for that matter, any other story that made you wonder what on earth your tenants were thinking!

Dick Rosen · Answer

I rarely ever try to chase the money because you'll rarely ever get it but I do always get the judgment on their record because then I know that the next landlord will see it and be warned. I've had tenants apply with rental judgments on their record and I will only accept them if they pay the judgment... one actually did a few years back. So my 2 cents is, please get the judgment and if the tenant happens to come to me... I will chase your money for you, right back to you. This should be an industry standard!

Lynn McGeein · Answer

You're most likely to never see a dime whether you file a judgment or not, especially if they have no money and no assets.   However, you're more likely to get paid if you do file the judgment, especially if you can garnish wages, which I haven't done so no idea how.  If they then decide to file bankruptcy, which isn't free to do so will cost them money to do it, you'll know you cost them money, too, along with damaging their own credit which will cost them a fortune in higher interest rates and insurance premiums, deposits on utilities, etc., so while you may not ever see the money, they'll be paying for it.

Mike D'Arrigo · Answer

@Lindsay Wilcox

Whether they file bankruptcy or not, you could still have a hard time collecting. If they're working, you could get a wage garnishment but if they're not, you're probably not going to collect anything even with a judgment.

Chris K. · Answer

I agree you shouldn't expect to see a dime of that money. I too have had a tenant say the same thing to me, that they'll just file bankruptcy and I will never see my money. My sole reason for filing for judgement was to create a record for the next person to see. If I do ever get paid it'll just be a bonus.

Aly W. · Answer

Even if you never see a dime from them, others will see that judgment...like future landlords and other creditors. The long term repercussions are far worse for them. I say go for it!

Mark Creason · Answer

Lindsay,

What is the cost to file the judgment and what could you potentially recover?

I would recommend filling out the form and then throwing it in the trash.  You did get lucky in that they did not trash your place.

Mark

Tony H. · Answer

Was in law off/on 13 years.  I have some experience.  Educated in finance and aerospace.  I invest regularly.  Your situation is frustration - but stand up for yourself!!!!!  Don't let them run over you.

Tony H. · Answer

Hi,

Eviction and bankruptcy and completely two different things.

Eviction rules are typically state or even local.

On the other had, bankruptcy is FEDERAL; it's trumps all.

But if you simply got an eviction, no money award, sue them again for the back rent.  That is all they can 'claim to toy with' in the bankruptcy court.  And in ANY BK court there is a debtor meeting.  Anyone they owe money to can show up.  If they owe you money (not just an eviction - an actual award/judgment of money/repairs/back rent, etc) - GO AFTER THEM.  With a money judgment, the federal BK court will listen to you - doesn't matter what chapter filing they use.

GET THE MONEY JUDGEMENT.  FOLLOW IT THROUGH WHAETEVER GAME THEY PLAY.  THEY ARE SCAMMERS.  TEACH THEM A LESSON.  IT CAN BE DONE.  GET A JUDGEMENT FOR MONIES.

Matt Sicignano · Answer

I will always go after debtors for a money judgment in an eviction. In Georgia, if they aren't personally served (tack and mail) you can get an eviction, but no money judgment. If they are personally served, and don't show up, you have a default judgment. It's the same cost, and you can make a decision on what to do. Filing bankruptcy is not cheap, and a total wipe-out of debt (chapter 7) is harder to do these days.  If they do a 13, you'll get less but at least you'll have the court to collect! If you have a good rental application, you should have car info, job info and ss#'s. You can use that information to try to collect, especially if they have a good job history. One garnishment of mine got only one payment-the deadbeat quit and disappeared!  In another, I got full payment from the employer, who failed to answer the garnishment before the deadline. You "pays your money, you takes your chances"!

Tenants Filing Bankruptcy to Avoid Eviction Repayment?

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