Generally, the bankruptcy court will approve a lease assumption even over a lessor’s objection if the lease is not terminated or expired, a full cure of defaults can be immediately made, additional adequate assurance will be provided if needed, and there is the likelihood . If you have an unexpired lease or executory contract when you file for Chapter 7 bankruptcy, the bankruptcy trustee assigned to administer your case might "assume" the lease or contract if it’s valuable. If not, you’ll be free to decide whether you’d like to continue under a personal property lease (assume it) or discharge (wipe out) your obligation in bankruptcy. Even if your residential lease agreement says your landlord can evict you for filing bankruptcy, that provision is invalid & unenforceable. Federal Bankruptcy Law and Lease Termination. Federal law does not allow your landlord to terminate your lease just because you file a bankruptcy case. U.S. Bankruptcy Code Section (e)(1) says.
Every rental application is different. There are close to 20, people filing for bankruptcy in Australia every year. More than half of these people are renting. I moved into a townhouse within months of my bankruptcy and it did not affect me in any way. Bankruptcy What is bankruptcy? A guide to Australian Bankruptcy Why do people file for Bankruptcy? Click here to open drop navigation The life cycle of a bad debt How will bankruptcy affect me?
Bankruptcy only covers the debts that you owed before you became bankrupt, not after. Being bankrupt could provide greater security for the landlord than you being insolvent. This means that your risk of defaulting on rent is greatly reduced in comparison to your position when insolvent. So logically speaking, leasing to you when bankrupt could actually be less risky than leasing to you prior to bankruptcy. Real estate agents and landlords cannot just access your credit record without you knowing.
You must provide them with consent to obtain a copy of your credit report. And most importantly, your rental history is key. A bad reference can limit your options.
A good rental history, however, will be an incredible asset. Enquire now for a free phone consultation Thank you for your messsage. We will be in touch shortly. Adequate assurance may take the form a replacement deposit particularly if the former lease deposit has already been set-off by the lessor prior to filing Chapter If a commercial lease is not assumed within days, the lease is deemed rejected under the law and the debtor-lessee must immediately vacate and surrender the property to the lessor.
If a lease is rejected, the lessor may also be entitled to rejection and termination damages as claims that can be reorganized. In addition to the timely payment of post-petition rent, if there has been a default under the lease, that default must be cured at the time the lease is assumed, i.
Note that the act of filing of bankruptcy itself is not an event of default under the law that must be cured even if the lease says otherwise. Additionally if the debtor wishes to keep operating the premises under the lease, they also must cure all pre-petition defaults including rental arrears within a short period after filing bankruptcy or otherwise plan to vacate the premises within this same short period of time.
While commercial leases are often are renegotiated in the course of a Chapter 11 proceeding with a cooperative landlord, sometimes the most that a debtor-lessee can expect is for Chapter 11 to provide a relatively short window of opportunity to either make good on a defaulted lease or move into another suitable property without the immediate threat of eviction.
You should always consult an attorney regarding your specific rights under your particular circumstances. Lynn Wartchow of Wartchow Law Office is an experienced Chapter 11 attorney with a track record of successful Chapter 11 reorganizations in Minnesota. Contact Wartchow Law for a consultation. Your email address will not be published.
This site uses Akismet to reduce spam. Learn how your comment data is processed. The Chapter 11 Debtor-Lessee has Days to Assume the Commercial Lease The Bankruptcy Code specifies that a non-residential real property lease must be either assumed or rejected within days of the Chapter 11 case being filed, with one extension of this deadline available for good cause.