What Happens When A Tenant Files For Bankruptcy In Maryland?

In my very first merit trial about five years ago, I helped a landlord evict a non-paying tenant. I’ve been helping landlords evict delinquent tenants ever since. It would take five years for a tenant to file for bankruptcy after I’ve filed a failure to pay rent case against them, but it finally happened. This story begins like any other, with me filing a lawsuit.

On the day of the merit trial, I presented my case as usual. And the tenant admitted that they owed the money. I thought to myself great, the tenant admitted to owing the money so I don’t have to do anything. I was wrong The tenant then said they filed for bankruptcy and brought a copy of the bankruptcy filing court.

The Judge then instructed her to show me a copy of the pleadings for my review. I reviewed them, and according to the papers she filed for bankruptcy about two days before the court date.

In Maryland, (and probably every State), a bankruptcy pleading temporarily freezes creditors from taking adverse actions against debtors. The legal term for this freeze is called an automatic stay. There is a special exception for landlords in which a landlord can continue eviction proceedings if they received a judgment for possession prior to the tenant filing for bankruptcy. I suspect that the rationale behind this exception was to protect landlords from rapidly losing money (as they often do when they have non-paying tenants).

But unfortunately for me, this tenant was a professional and knew to file for bankruptcy prior to the hearing. The Judge postponed the case because he could not do anything at that time.

Round 2 – Motion To Lift Automatic Stay

In order to stop the freeze, we had to file a motion to lift the automatic stay in our local Bankruptcy Court, The U.S. District Court for Maryland in Greenbelt. (Note, if you are a Corporate Landlord, then you must appear with legal counsel to do this).

In the motion, we asked to court to lift the stay so we could proceed with eviction proceedings. In a motion to lift automatic stay you have to show “Cause” as to why the requested relief should be granted. It must be done on a case by case basis.

Here, the reasons were simple. The tenant owed landlord months of rent and made no efforts to pay the landlord.

After filing the motion, a hearing was held in which we were granted an automatic stay.

Round Three – Back in Landlord-Tenant Court

I want to tell you that after getting back into District Court I shellacked the tenant. I came prepared to argue that the motion to lift the automatic stay was granted and that delivered a beat down. But that’s not what happened.

The tenant didn’t show up. She knew better. She knew she was going to get lawyered. The Judge entered a default judgment in favor of the landlord.

Too Long Didn’t Read

  • If a tenant files for bankruptcy anytime prior to the landlord being granted a motion for possession, he will be granted an automatic stay.
  • Landlord must file a motion to lift the automatic stay and have a hearing in bankruptcy court to make the freeze go away.
  • Landlord must then go back into landlord-tenant court to evict the tenant.

Need Help Evicting A Tenant That Has Filed For Bankruptcy in Maryland?

Do let the automatic stay stop you. The Pendergraft Firm, LLC. to crush the automatic stay so you can continue your eviction proceedings. If the tenant doesn’t quit, you must evict!

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Real Estate Attorney at The Pendergraft Firm LLC
Brian Pendergraft is a general real estate attorney.Click here to schedule a consultation.
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