Renters living in our house.

[momof3inSD]

We have a renter in our house that we plan to file BK on. Do we need to let them know before we file or how does that work. We do plan on telling them when we do file though.

[HHM]

Generally, you would not need to inform them.

[mmenz22779]

you will have to include the rent as income when you file. I belive legally you have to inform them 60 days but not sure on that one.

I have rentals that have people in them that i have not told yet but as soon as i get the NOD i will let them know and if they want to stay there will work out something until the forclosure.

As a curtisy you should should let them know.

[momof3inSD]

I feel horrible for the family living there its a small town the house is in so if we let them know before we file the whole town will know. Our bank is in that town and our mortgage is through the bank. Our lawyer did say rent doesn't count as income or is that just for the means test?

[mmenz22779]

on schedule I it shows a line for "income from real property"

I would get a second view.

[allavdj]

We have a renter in our house that we plan to file BK on. Do we need to let them know before we file or how does that work. We do plan on telling them when we do file though.

Just for clarification... Are you planning on letting the house go back to the bank when you file BK? If so, then you need to tell them in some way shape or form that their house is about to go bye bye. You don't have to give them a reason other than, "As of xyz date you need to be moved out". You might also check the renter's laws in your state to make sure you do everything by the book so the renters can't come after you for not giving them enough time or whatever.

[JRScott]

As a courtesy and especially if they've been good renters I'd go by and discuss it with them. If its a small town it's likely at some point folks will find out anyway, I wouldn't worry about that to much. I live in a small town and I can tell you this there are far more that have filed bk than you imagine. I've found a lot, in church on my street etc.

[momof3inSD]

Just for clarification... Are you planning on letting the house go back to the bank when you file BK? If so, then you need to tell them in some way shape or form that their house is about to go bye bye. You don't have to give them a reason other than, "As of xyz date you need to be moved out". You might also check the renter's laws in your state to make sure you do everything by the book so the renters can't come after you for not giving them enough time or whatever.

Yes, we do plan on letting it go back to the bank. We plan on filling hopefully in the next month. Can't they stay there or does the bank want them out right away the bank took out our November payment (automatic withdrawl) Our lawyer said the renters can't come back and do anything to us and she said maybe the bank will keep renting to them. I'm sorry if this is babaling as the date gets closer to us filling the worse I feel.

[justbroke]

Regardless of whether you you intend to break the lease or not, and it's a Chapter 7, then you need to file a Motion to Assume or Reject Lease. This is because Leases are automagically considered rejected after 60 days in a Chapter 7 (they are considered automatically rejected at Confirmation in a Chapter 13).

If you don't Assume the lease/contract, then it automatically expires. If you intend to keep the property and continue leasing to the Tenants, then you need to Assume that lease. Otherwise, your tenants have an out.

[momof3inSD]

Regardless of whether you you intend to break the lease or not, and it's a Chapter 7, then you need to file a Motion to Assume or Reject Lease. This is because Leases are automagically considered rejected after 60 days in a Chapter 7 (they are considered automatically rejected at Confirmation in a Chapter 13).

If you don't Assume the lease/contract, then it automatically expires. If you intend to keep the property and continue leasing to the Tenants, then you need to Assume that lease. Otherwise, your tenants have an out.

Their lease is up in January. Our lawyer said we should tell them in January since they took the payment out for Nov and she thought they would probably take out the Dec payment. Our house is still on the market and in the lease it states to have the house in show condition and when the realtor went into the house it was filthy, but they know its on the market so if we did get an offer they would have to leave any way. So to answer the person about good renters not the greatest.
I guess this all started I was talking to my best friend about this and she make me feel like s**t that we aren't telling them right away. I feel crappy enough and then to have a friend act like that. I guess when you go through this you know who your true friends are.

[justbroke]

You haven't even filed yet. Once you file, you'll have 60 days to tell them -- if you're rejecting their lease -- and it's a Chapter 7. Otherwise, you could have 4-6 months before you have to tell them in a Chapter 13 (my confirmation date is 5 months from my petition date).

The bottom line is that it all depends on your situation, which Chapter of Bankruptcy you file, and what the disposition of the property is going to be.

[momof3inSD]

You haven't even filed yet. Once you file, you'll have 60 days to tell them -- if you're rejecting their lease -- and it's a Chapter 7. Otherwise, you could have 4-6 months before you have to tell them in a Chapter 13 (my confirmation date is 5 months from my petition date).

The bottom line is that it all depends on your situation, which Chapter of Bankruptcy you file, and what the disposition of the property is going to be.

Thanks I'm so clueless about all this stuff. We are going for chapter 7.

[justbroke]

Thanks I'm so clueless about all this stuff. We are going for chapter 7.

Are you keeping (re-affirming) the rental property?

[momof3inSD]

Are you keeping (re-affirming) the rental property?

no we are letting it go back.

[justbroke]

no we are letting it go back.

Okay, so you don't really need to inform your renters, unless you want to.

Here's what will happen. You'll file and then state in your Intentions that you're surrendering the property. The Bank will make a Motion for Relief from Stay and/or your lawyer (or the Trustee) will file a Motion to Abandon Real Property.

Once this is done, the Bank will proceed with foreclosure, unless some other arrangement (Quit Claim / Deed In-Lieu-Of) is done. Then your renters will know then. Plus, the Bank will probably assume the lease -- as almost all Mortgages have an assumption clause when it comes to leases.

The Bank may want to keep your Renters and they'd pay the Bank or a management company hired by the Bank.

So, as HHM wrote, you don't have to... they will eventually find out.