By April Royal, Birchstone Residential
Back in the 1900’s, believe it not or not, games came in boxes. Not “Xbox’s”, but actual cardboard boxes. Games had real, not virtual, pieces. Many of these games came with two wooded cubes with dots a.k.a. dice. Some games had cards that were used to alter the player’s circumstances! Our ancestors actually had family game nights that involved sitting across a real table, in someone’s home, playing with real people! Sounds crazy I know!
To anyone reading this under the age of thirty-five you will never have the satisfaction seeing the smile slowly turn to tears on your smug older cousin’s face as you collected their last beige $100 bill, and you were declared the winner of world’s longest Monopoly game!!! Oh, the joy!
It may surprise you to learn that Monopoly was originally called “The Landlord’s Game.” Now that we are all playing Monopoly for real, seeing renters declare bankruptcy is not near the fun as seeing your sniffling, tattle-tailing cousin pout on their way out the door as you do your happy dance!
Real life bankruptcy is not fun. As we move out of the New Year and towards Valentines Day, tenant bankruptcy filings increase. Using rent-money to buy Christmas presents; credit card debt; inflation; job loss; energy prices; and delinquent rental balances can all lead tenants to seek bankruptcy protection. No love lost for landlords in this season of candy hearts and chocolates.
We are landlords, not clairvoyants. We do not know all our residents financial obligations that accumulate during their lease term (gambling debts, consumer debt, car payments, vacation time-shares, pay day loans, judgments, child support, government fines, delinquent taxes, etc.). As one bad financial decision leads to another and another, FWAA members often get stuck with unpaid rent.
Most FWAA members attempt to work-out a payment plan with residents that are struggling with delinquencies. But if the tenant fails to respond to reasonable offers and delinquent debt becomes insurmountable, then we proceed with eviction.
You file the eviction, then you receive notice that the tenant has filed bankruptcy! Ugh! The good news is that FWAA members have the TAA REDBOOK as a resource. The unwelcome news is that, like pauper affidavits, most tenant-bankruptcy claims are merely eviction delay tactics.
To help you better understand how to respond to a resident’s bankruptcy, read the TAA REDBOOK article “Debtor Dilemma” by Houston Apartment Association General Counsel Howard Bookstaff.
In this article, Bookstaff explains that most renters filing for bankruptcy do so under “Chapter 7” or under “Chapter 13”. In a Chapter 7 bankruptcy, the debtor’s assets (minus those exempted by the state) are liquidated and given to creditors. Many of the debtor’s remaining debts are canceled, giving the debtor what is known as a “fresh start.” In chapter 13 bankruptcy, the debtor is put on a repayment plan for up to five years.
Any debts not addressed by the repayment plan do not have to be paid.
Under bankruptcy law, a tenant’s petition operates as a stay. In other words, all court action stops—including evictions. Bookstaff says that if a resident files bankruptcy: “don’t panic.” The law contains a procedure under which the stay can be lifted to allow you to proceed with the eviction.
You will need to get an attorney to represent your interest in the bankruptcy court. Your counsel will need to file what is known as a motion to lift stay with the U.S. Bankruptcy Court. The good news for Tarrant County owners/operators is that the U.S. Bankruptcy court for all North Texas is in Fort Worth (501 W. 10th St., Fort Worth, TX 76102 (817) 333-6000).
The entire process to lift the stay usually takes about 30 to 45 days. The result of a favorable ruling from the bankruptcy court is that an order lifting the stay will be granted. That order can then be taken to the judge in the eviction action, and the eviction can proceed.
It is frustrating that the resident gets to stay in their unit rent-free before you can evict them! This is a real person who tried to “game” the system but lost. You win! Happy dancing is optional!
April Royal, Birchstone Residential, is FWAA’s 2025 President Elect and Government Affairs Committee Chair.
