What to Do When a Tenant Files Bankruptcy?

Insurance by Castle - Motion For Relief From Stay To Evict Tenant

For every 99 tenants that are a delight to deal with, there may be 1 that has contributed to his/her share of grey hair upon your head.

Odds are, at some point you’ve had to evict somebody who fits that bill.  Maybe they declared bankruptcy to delay your eviction well into the future.  

Lost wages from rent can create its share of headaches and court cases can create apprehension in even the most experienced landlord.  We’re firm believers that this doesn’t have to be the case.  

Interested in maximizing your collections while minimizing delays?

Read on if you are!

Motion for Relief from Stay to Evict Tenants

If a tenant declares bankruptcy in the midst of an eviction, an automatic stay will be granted.  Basically this means any collection activities including the actual eviction is stopped once their bankruptcy petition is filed.  Federal Bankruptcy laws apply to ALL court procedures and give the court time to acquire the tenant’s assets including the lease or rental agreement. 

Court cases can be long, drawn out affairs and even more so for savvy tenants who are educated on this option.  There are even eviction delay firms that specialize in giving their clients (your tenants) extra time to remain in the dwelling.  The legal system itself can seem stacked against you with those who seek to “work the system.”  

The good news?  You can file a formal request with the federal bankruptcy court to continue with the eviction despite this change.  Once the tenant receives a notice of this motion and if they want to object they will respond with their desire to do so.  This objection will need to be made within a certain timeframe, which will be listed in the notice.

If they don’t respond to the notice, this will mean you’re one giant step closer to collecting what’s owed you.

Instructions for preparing the landlord’s motion for relief from stay to evict tenant are available here.

Timeframe for Delay Tactics from Tenants  

Here in the state of California there are very clear cut rules to follow when evicting someone.


  1. Property owner files unlawful detainer lawsuit with Superior Court
  2. Tenant has 5 days to send response disputing complaint
  3. Judges preside over the case and decide who to rule in favor of

An eviction case can take anywhere from three weeks to a few months depending on when the judge agrees to first hear arguments from both parties.  At this point in the process, most of the delays to prevent the eviction are instituted.  

Some of the available options for the tenant are:

  • Motion to quash landlord’s unlawful-detainer lawsuit
  • Demurrer challenging eviction reason
  • Make requests for additional information
  • Bring up “special circumstances”
  • File bankruptcy
  • Months can pass during this back and forth process, especially if an eviction delay firm is involved.  We mentioned them in the previous section, but it’s worth noting more details about their practices to prepare you in case they are a part of these proceedings.  

Their expertise lies in preparing motions that can prevent the case from proceeding smoothly and efficiently.  Clients will usually pay a flat upfront fee that is much less than their rent price for a couple of months.  

Even if all of your tenant’s attempts to delay things indefinitely fail, some will challenge the judges ruling and remain in the property while this new attempt is reviewed.    

It’s good to know possible tactics ahead of time, as it’ll allow you to counter tenants that have delinquent debt.  

Helping Landlords Move Forward With an Eviction

Our goal here is not only to prepare you for what may come, but also give you options to shift from the defense to the offense.

Once you receive notice from the bankruptcy court, you can apply for an exemption from the stay through an automatic bankruptcy petition.  Even if a current rent payment is automatically suspended after a tenant files for bankruptcy, this doesn’t stop the eviction if back rent is owed.  

As the filing may hamper your ability to pay the mortgages on your properties for example, be sure to include that information in your application.  If granted, the court is required to lift the stay and continue the eviction proceedings.  

It’s also good to be aware that the law terminates the lease once an eviction order has been issued.  Say a tenant is advised filing for bankruptcy is their best option, if they default the automatic deferral becomes null and they must continue to fight the eviction. 

When you find yourself in this situation, make another application to the court for an automatic eviction to take place.  Being prompt and taking the initiative are two characteristics that you most likely have, so use them to your advantage.   

If you need expert advice, be sure to seek professional help during any court proceeding.  Landlord lawyers specialize in evictions and you can find the top rated ones by performing a Google search or asking your peers. 

And remember, you have advocates around you willing to help when situations such as this present themselves.  Every option that offers an advantage should be utilized to give you the highest chance of success.   

How Insurance by Castle Can Help

Here at Insurance by Castle, we understand it can be difficult navigating the confusing legal battle over money that is due you.  We hope this guide has at least allowed you to glean a basic understanding of what a motion for relief from stay to evict tenant is, and offer encouragement that you have options as a landlord.

Your success as a property owner is surely due in part to your resilience and flexibility in learning new concepts, and adjusting to major changes in your industry.  Viewing this in that light should give you hope that learning from it will better prepare you for continued success in the future.        

Our team specializes in landlord insurance for landlords, apartment owners with more than 1 rental property, property managers and property investors.  Contact us today and allow us the privilege of insuring your properties so they are wrapped in a “security blanket” for life’s eventualities.  

*We are not attorney’s, we are providing this information to help you as a landlord and are not providing you with legal advice. Always consult your legal counsel for any legal matter.

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