Tenants owe me 5K in back rent - What is my recourse?

Question

Hi,

My first time in 5 years of Real Estate Investing that I had to evict someone. So the process is new to me...

The tenant was recently locked out (11.28) and their Petition to Restore was denied.  They owe me over 5K in back rent, late fees, and lawyer fees.

Can any one offer advice on the best way to collect on this debt?  What are my options?

I appreciate the advice!

Joe Hudson · Answer

If you're willing to expend the extra cash, sue them in small claims court as Thomas suggested. You will at least have a judgement against them and while you may never see the $5k again, at least it will go on their credit and possibly prevent them from doing it to the next person.

If they offer to settle... take it!

Anthony Wick · Answer

After you get judgment against them in small claims court, find out where they work (ha ha I know) and get a wage garnishment on them.

Arlen Chou · Answer

@Michael Lenahan the unfortunate reality is that you will probably never see that money.  The court system is built around pain, not justice.  Basically it will cost you more in time and dollars to try and get that money.  You can play a game of "chicken" and tell them that you will go after them and screw up their credit, etc.  But you will probably burn more in legal fees and personal time than what you could gain from winning.  They probably already have bad credit and they don't care what you do.  In the off chance that they do care, you can try and negotiate with them and tell them you will sign a waiver releasing them if they pay some discounted amount.  Again, this is a basic game of chicken that you cannot win if the opponent has nothing to lose.

Sorry for you pain, good luck to you!

Joe Hudson · Answer

Michael, it sounds like the courts gave them 30 days from the way you say tenants want to take "all 30 days".  If that's what the court said, you don't have an option to give them less.  However, at 12:01, the stuff is yours. You can put it on the street but L&I will fine you for putting it out there.  After that date, you can give them a date to come get it if you're still willing.

Having said that, you are not at their mercy otherwise.  You were given the judgement against them to evict so you hold the power.  Just follow the courts rules and you'll be fine.

Also note, different states have different regulations on what you can and can't do (wage garnishment etc) so be careful to always follow the fair debt collection act.

Tom S. · Answer

@Michael Lenahan  Sorry to hear on this.  Regarding your statement "selling the debt to a collection agency" - have you researched any agencies?  I've never had any luck going this path, most of the agencies were high volume only, or didn't offer any cash to me, even discounted cash, up front.  Most said I would get a cut on anything they collect, and then I never hear again.

I've had decent success with the small claims court route - it doesn't take much time or expense.  I've then been able to request in court for the tenant to set up a payment plan.  Or you can take the judgment and garnish their wages.

- Tom

Matthew Paul · Answer

Who cares whether its convenient to them . Give them a date in writing , certified mail . The next day put the stuff on the street .

Michael Lenahan · Answer

More on this situation....

Tenant wants to take all 30 days to remove their stuff and telling me when it is convenient for them.

I told them that pick up date doesn't work for me and offered two other dates, but that doesn't work for them.

Am I still a the mercy of this tenant?  Do I have to accomdate their scheduled to pick up their stuff?

Michael Lenahan · Answer

Good Advice.  Thank you!

1. No, but I should make that a best practice moving forward.

2. I run an extensive background check and I’ll check to see if that is an option.  It is my duty to make sure the next landlord knows what they are getting into.

3. Never been to small claims court but there is a first time for everything.

4. I might just sell the debt to collections and save myself the hassle of going through small claims.

Cheers!

Luciano A. · Answer

Option 1:Did you require them to have renters insurance? If so you might be able to collect from their policy.

Option 2:If not and you run background checks you can update their profile under the landlord section (that is if you have this option with company you use) to report eviction and to make sure your info is listed as owner of property so if future landlord starts to verify they can see you own and not John Smith like the tenant listed on their application.

Option 3: I would file small claims, get judgement then if you have their bank info go back to court and ask for them to seize their bank and any money into it. There is a process to do that but not sure if and how your state does that. If you cant seize their account just hold the judgement for 7-10 years whichever your state uses and one day when they really need to cleanup their credit report they might reach out to settle.

Final resort.....hire collection company and if you get 40% of what is owed you still benefit by getting something rather than nothing.

Best of luck

Tenants owe me 5K in back rent - What is my recourse?

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