Collecting Rents After Filing A Chapter 7 - A Must Read

[newbie2]

As of yesterday, we are discharged and closed. We surrendered our home and our rental property -- we are not paying either mortgage and want the banks to foreclose. However, we are in Florida and know full well this process could take forever. It's been a year on our primary residence with no word from the bank. The rental property we quit paying on in October, so it will most likely be longer for it to foreclose. Tenants had moved out before we filed for bankruptcy, so it is vacant now. We have a neighbor keeping up the lawn but other than that, it is empty (has already been broken into once) - so do have some minor damages that we would need to take care of to rent it out again. My attorney told me that once the bankruptcy is discharged that the property reverts back to us (not the estate) so we are free to rent it out if we choose to. This correct info?? Just wanting a second opinion. I would like to repair the damages and rent it out on a month to month basis. We would be completely up front with incoming tenants and intend to charge half the normal rent due to the situation. We also want to put into the contract that we are not responsible for repairs that might come up after they move in -- i.e., I'm not sinking any more money into this house. The normal rent for houses in the area is $1000 and we would be charging $500 so I feel like this is fair. It is a newer house too, so I foresee nothing that could come up that would cost major funds for the tenant. Bottom line, even if it did - they could just pack up and leave. We aren't charging a deposit. Essentially I just want someone to take care of the place so we don't have to and bring in a little money to offset the rent we are going to have to be paying when we move from our home. Do you see anything wrong in what we want to do? Are we legally okay? In case it matters -- the 1st and 2nd mortgage on the rental property are both held by the same bank.

Be very careful about this language in a contract. It could be a violation of your local housing regulations as well as state regulations concerning rentals. Just because a debt was discharged in bankruptcy doesn't mean that you don't have to follow local rules / laws as a landlord.

[ryan44]

Be very careful about this language in a contract. It could be a violation of your local housing regulations as well as state regulations concerning rentals. Just because a debt was discharged in bankruptcy doesn't mean that you don't have to follow local rules / laws as a landlord.

You right you can't put that in your lease but you make it very clear verbable that if you don't want to repair anything and that is why the rent is half off. If they do make you repair something then you tell them the lease will be over and they will have to move out based on the month to month lease..I have a tenant in this same situation and he understand the deal we made. He is very happy to comply with making the repairs. I told him worst case the furnace goes out. I'll refund his last months rent and he will need to move out asap.

[ssmdem]

You right you can't put that in your lease but you make it very clear verbable that if you don't want to repair anything and that is why the rent is half off. If they do make you repair something then you tell them the lease will be over and they will have to move out based on the month to month lease..I have a tenant in this same situation and he understand the deal we made. He is very happy to comply with making the repairs. I told him worst case the furnace goes out. I'll refund his last months rent and he will need to move out asap.

That makes sense. I can see why it can't go in the contract. I'm hoping to be able to do this with someone I know. There are so many in our community that are struggling right now, and I'm hoping to be able to help someone out by charging the lower rent. We don't want to move back into the house ourselves - wrong school district -- but I'm hoping to be able to help someone I know until the bank plays their card. The only thing I can imagine them possibly having issues with might be the A/C. Everything else is new and should be fine.

[arthoralbert]

Chapter 7 bankruptcy on your credit file will scare off some lenders until you've rebuilt your credit score. If you are planning on buying a house after a Chapter 7, choosing the right home loan and waiting for a certain period of time to pass can help you qualify for the best rate on a new mortgage.