How to Handle Tenant Bankruptcy in Phoenix

What to Do if Your Phoenix Tenants Filed for Bankruptcy

tenants-in-phoenix-filing-bankruptcy

Whether it’s the result of job loss or financial irresponsibility, tenant bankruptcy can pose problems with Phoenix landlords. It can quickly slam on the breaks of your rental income, leaving you wondering where to turn next.

If you have a tenant who filed bankruptcy or is in the process, there are several considerations to keep in mind. This guide will help you determine how to handle tenant bankruptcy in Phoenix.

 

Defining Bankruptcy

Bankruptcy is a legal proceeding that allows people to eliminated unsecured debt, such as credit cards. This process also stops foreclosure, repossession, wage garnishments, and attempts to collect the unsecured debt.

Guess what else? Depending on what part of the process the tenant is at in bankruptcy, a landlord can’t immediately try to collect debts. In fact, you can face a fine for doing so.

Before you panic, know that the actions to deal with Phoenix tenant bankruptcy depends on several factors. First, let’s discuss the chapters of Bankruptcy.

 

Chapter 13 Bankruptcy

chapter-13-bankruptcy-filing-by-renters

Chapter 13 is also known as a wage earner’s plan. This type of bankruptcy can help wage earners pay off debt under a secured payment plan. They make payments in installments over a period of 3-5 years, while federal law forbids creditors from collection efforts. People who run into issues such as job loss typically file Chapter 13.

 

Chapter 7 Bankruptcy

This version of bankruptcy eliminates unsecured debt such as credit cards and medical bills. There is no repayment plan for Chapter 7, and Phoenix tenants walk away without any debt. Chapter 7 is the most common type of bankruptcy.

No matter which chapter of tenant bankruptcy you are dealing with, there is an automatic stay appointed by the court.

 

What is an Automatic Stay?

An automatic stay is a statutory injunction that prohibits landlords from trying to obtain possession or control of a tenant’s property.

After the tenant receives an automatic stay, a landlord cannot take action.

However, this doesn’t mean that you lose all your income.

A tenant can make a choice to leave your property once they filed for bankruptcy. This means that you can list your rental properties in Phoenix and carry on with business as usual.

The second option is for the tenant to continue paying rent despite that they are going through bankruptcy.

The third option is that they will owe post-petition rent plus fees or face eviction.

 

Do Tenants Have to Pay Rent During Bankruptcy?

rent-payment-due

If the tenant remains living in your rental property, they must pay post-petition rent—although this can take some time to collect.

For example, if a tenant files bankruptcy before the next lease due date, they are only required to pay the next rent payment plus the associated fees.

Furthermore, lease payments the tenant did not pay before filing bankruptcy is still owed. This is known as a pre-petition claim.

The timing of the bankruptcy filing can play a big role in when and how you will receive rent payment.

If the tenant does not pay the amount due, the landlord is able to request a lift of the automatic stay. This allows the motion of eviction to move forward.

 

Evicting a Phoenix Tenant Filing Bankruptcy

The process to evict a tenant in Phoenix over non-payment and bankruptcy is by way of rejecting the lease. This is the legal term for the tenant breaching the lease, requiring them to turn over your property and vacating the premises.

This can happen if you request to lift the automatic stay, where the judge allows the eviction process to proceed. However, you can only evict if the automatic stay is lifted and you’re unable to take action otherwise.

Keep in mind that if the tenant does other actions to void the lease, such as illegal drug use, the bankruptcy filing won’t do anything to delay or stop the eviction process.

When a Phoenix tenant files for bankruptcy, you are not out of options or out of income. While there might be some waiting involved, you will receive your funds whether the tenant pays as usual or its post-petition.

If the tenant is successfully evicted, the same laws apply as any other tenant. The tenant must be moved out from the property on the specified date, or other legal or financial consequences can happen to the tenant.

 

Immediate Action to Take for Phoenix Tenant Bankruptcy

phoenix-property-manager-dealing-with-handling-tenant-bankruptcy

While you can’t prevent a phoenix tenant from filing for bankruptcy, there are other ways to take action and lessen the blow of the process.

  1. Prepare for eviction early: If you have signs that a tenant might file for bankruptcy, such as habitually late payments or verbal hints, start the process now. If the eviction is already in motion before the tenant files, it can be easier to evict.
  2. Work with the tenant’s bankruptcy trustee: Their trustee calls the shots on who gets paid. Keep the door of conversation open so you can find out new information about rent payment.
  3. Know your rights and the laws: Even though a tenant files for bankruptcy, this doesn’t mean you are out of money or out of luck. Working with an experienced property management company in Phoenix can help guide you through this process.

 

Being prepared for the possibility of Phoenix tenant bankruptcy is an advantage. However, an even better advantage is avoiding situations like this if at all possible.

These are a few guidelines on how you can possibly prevent the circumstances of tenant bankruptcy.

 

Be Selective with Tenants to Help Prevent Bankruptcy Issues

It’s important to know who you are renting to and their credit and past rental history. Look for the following when screening a new Phoenix tenant:

  • Run credit reports for tenants: Most landlords look for credit scores between 600-650 when it comes to renting units.
  • Require first and last month’s rent to move in: This will keep you covered for at least two months while the tenant is working through their bankruptcy filing.
  • Obtain credit enhancements: This is a way to help you collect rent if the tenant is going through bankruptcy. In addition to security deposits, you can also tap into letters of credit and lease bonds. A good credit enhancement entails the likelihood of being enforced due to bankruptcy.

 

Get Help Managing Your Phoenix Rental Property

Property management is full of twists and turns, including when tenants file for bankruptcy. Real Property Management Phoenix Valley is your source for experienced property managers, tending to issues including bankruptcy and eviction. We invite you to contact us about our property management services and get a free quote.

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Tenant Repairs

To charge the tenant or to not charge the tenant; that is the question!  Recently we had a local appliance company out to a property we manage in Mesa.  The tenant repair issue was a foul smell from the washer.  The invoice came back and said “washer is working well at this time.  Told tenant to run some citric acid through the washer to help with mildew smell”.  We then charged the tenant for their visit.  The tenant was extremely upset and contacted the appliance vendor directly.  After that conversion suddenly a revised estimate appeared.  The new estimate stated that the cost could be up to $500 to repair.    There was no further explanation so we called the company.  They explained that for this tenant repair they would need to take apart the pump to clean out a build up of soap. We questioned how they had arrived at this diagnosis without going back to take the washer apart.  Turns out Real Property Management Phoenix Valley is one of the only property management companies who will hold a tenant responsible for a repair they cause!  According to the appliance company all of the other companies they work with automatically charge the homeowner.  Here are a few examples of repairs that tenants should pay for:

  1. Putting bones and/or other objects down the garbage disposal that causes it to break
  2. Not aligning garage door sensors thereby the door won’t close
  3. Replacing smoke detector batteries
  4. Replacing air filters
  5. Replace light bulbs
  6. Resetting GFCI outlets and or breakers

If you are unsure if a repair is the tenant’s responsibility you can refer to the AZ Landlord Tenant Act.

 

For all of your Phoenix Property Management & Phoenix Real Estate & Phoenix Property Management Needs Contact:

Real Property Management Phoenix

www.rpmphoenixvalley.com

602-358-8130

info@rpmphoenixvalley.com

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Phoenix Rental Lease Agreement

Phoenix Rental Lease Agreement
 Phoenix Rental Lease Agreement

One of the most important items a  landlord will have is their Phoenix rental lease agreement.  The more detailed and specific the agreement the better for both the property owner and tenant.  In this blog we will discuss four important components of the lease including occupant names, late fees, legal notice fees & appliances.  The lease agreement should include all property owner names and the full address.  Additionally, it should include all occupant names include minors.  Real Property Management Phoenix Valley suggests listing minors as well as their date of birth.  We also recommend obtaining that information from the lease holder in writing.  This information will be very valuable for when you complete a property inspection.  We suggest taking this information with you to the inspection so you can verify that only the people on the lease are residing in the home.  This will help you to recognize if there are any unauthorized occupants in the property.

Next let’s address late & legal notice fees.  Late fees should be specified as a per day amount versus one lump sum after the due date.  This way the tenant has incentive to pay the rent as close to on time as they can.  The daily late fee amount should be somewhat substantial so that the tenant has incentive to pay on time.  Also, we do encourage a grace period of one to two days but not much longer.  This ties into our next component of legal notice fees.  Spell out in the lease agreement that the tenant is responsible for any legal notice fees.  This way if the tenant doesn’t pay the rent you can charge them back for the cost of serving them with the legal notice of an eviction. The tenant will have between 5-10 additional days to pay rent.  For this reason you do not want the grace period to be longer than two days.

Final for this blog we will address appliances. The lease agreement should list which appliances the home owner is including in the property.  It should also spell out which appliances the landlord will fix and which the tenant is responsible for.  Keep in mind that the landlord will always be responsible for the stove, built in micro and dishwasher.  However very often the tenant is responsible for the fridge, washer & dryer as they tend to be optional appliances.

For more information on our lease “must haves” visit our blog/podcast page to listen to our two additional segments.

For more specifics on our Phoenix rental lease agreement “must haves” tune into our podcast below.

 

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Utilities & AZ Landlord-Tenant Act

Utilities & the AZ Landlord-Tenant Act
Utilities & the AZ Landlord-Tenant Act

This week our blog will focus on utilities & the AZ Landlord-Tenant Act.  The Act states that your lease agreement must clearly list what utilities are the responsibility of the tenant.  Additionally, the lease should specify whether the tenant is responsible for putting the utility into their own name.  Often times with multi-family properties the utilities stay in the owner’s name.  When this happens it must be disclosed in the lease if the units are individually sub metered.  Additionally, you can have the tenant pay for their usage as well as any costs associated withe the sub metering.  Be sure to always send the tenant a copy of the invoice.  Also, keep in mind that if your property isn’t sub metered and you decide to sub meter you must give the tenant notice.

If the properties aren’t sub metered then the owner must use one of more of the following billing systems:

  1. Per tenant meaning that each tenant receives their own bill
  2. By square footage taking the entire bill and dividing by total square footage to then get a price per square foot; that number is then multiple be the total size of each unit
  3. Per type of unit so one bedrooms have a set price, two bedrooms higher price etc.  With this option each type must have the same price
  4. Per number of water fixtures; we have never known anyone to use this system because typically all one bedrooms would have the same number of fixtures so option 3 would be much easier

No matter the system that you use you can only charge the tenant for their cost and you can’t add a mark up.

For a full copy of utilities & the Arizona Landlord-Tenant Act click here.

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Arizona Landlord Tenant Act

The Arizona Residential Landlord Tenant Act (“ARLTA“) is the law governing most private, residential, rental agreements. In other words, the Arizona Landlord Tenant Act provides tenants and landlords with rights, obligations and remedies in the rental relationship.  There are six sections in the act.  In this post we will discuss the section on terms and conditions that must be included in a lease agreement.  According to the Act, rent must be payable at the time and place agreed upon by the parties.  Additionally, rent is to be paid at the dwelling unless otherwise specified in the lease.  If the rental agreement doesn’t  have a fixed term than the term is week to week for roommates and month to month for all other cases.  In our lease agreement we always break out the rent AND tax amount.  This way if the rental tax increases the landlord can pass the cost onto the tenant with thirty days notice.

Within the lease the landlord may request a contact person who can enter the unit should the tenant die.  Should that occur be sure to always collect a copy of the death’s certificate.  If the landlord is unable to contact that person within ten days than the landlord may dispose of the tenant’s belongings after death.  If the landlord makes contact with the authorized person they have the authority to enter.  They then have either twenty days or the last day that rent is paid for to remove all belongings.  After that period the landlord can remove any items and has no further liability to the tenant’s estate or heirs.

Real Property Management Phoenix Valley has three podcasts on our recommendations of items to include in a lease agreement.  To listen please visit us here.

 

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Phoenix Lease Agreement Creation

Our latest podcast is  now available and it closes our series on phoenix lease agreement must haves. To review; our first segment was about specific items to include in the lease.  Then our second segment reviewed lease payment information. In this segment we discuss HOA addendum, pet agreements and lease end/move out verbiage.  Our free tip relates to the conversion of the lease to month to month.  All three segments will help the Phoenix landlord to draft a comprehensive lease agreement.  The lease agreement is an essential item for successful property management in the phoenix area because it sets the expectations for both the landlord and the tenant.  We always suggest enforcing the lease agreement rather than making modifications once the tenant is in place. Also we suggest Phoenix landlord’s to be familiar with the AZ Landlord Tenant Act and you can obtain a copy here.  To listen to the first two segments visit us RPM.

 

 

 

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Phoenix Property Management – Three Tips for a successful Phoenix Move!



No matter how you look at it, moving is stressful! Packing, changing routines and uprooting your household is a surefire recipe for stress no matter who you are.  However, adding pets and children into the equation can amp up the stress even more! Here we provide tips for the three steps of a move; preparation, moving day and post move.

Preparation:
The best way to prepare your children is to talk about the move and have them assist with the prep work.  Let them decide on things like paint color for their new room.  If possible, take them to things such as restaurants, shops and schools near the new property and help them visualize what new memories will be like at the new home.  As much as possible try to engage your kids in the packing process so that if you have to pare down their items they assist with the decision making.  Be sure to pack a few of their favorite items either in the car or at the top of a box specially marked so they can have them at the new home right away.
Moving Day:
Expect moving day to be hectic, and do everything you can to alleviate that stress. If you can, have a friend take your pet for the day so that you don’t have to worry about them getting out while moving things into the new place.  Also, maybe see if your kids can do a play day with friends so that they don’t have to experience the stress and pressure with the actual move.

Post-Move Tips:
Try to unpack all boxes as quickly as possible so that the property starts to feel like a home quickly.  Return your pets to their normal eating and walk schedule right away.  Also, be sure your kids have their favorite toys. Getting back to routine provides security and comfort to little ones (with both two and four feet!) in the midst of change.


For all of your Phoenix property management & Phoenix Real Estate needs contact RPMWV Phx 623-748-7800; info@rpmwvphx.com; www.rpmwvphx.com
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Renting vs Buying Phoenix Metro Area

 
 
 
Where you decide to live and whether you decide to buy or rent are large lifestyle decisions. We break down some of the top reasons for each option. 
REASONS TO RENT IN PHOENIX
  • Bad Credit. Maybe you need time to rebuild your credit from a bankruptcy, foreclosure or divorce.  These are all large lifestyle changes that can impact your credit and while renting you can work on re-building.
  • No Maintenance Expenses. Perhaps right now your time is tight so you would rather have someone else be responsible to fix the leaking faucet.  With renting you call the Landlord for these issues.
  • Job Uncertainty. Are you between jobs, or maybe thinking about switching soon. Being a renter allows you the freedom to do so. Especially if you are on a shorter lease agreement, or even a Month to Month.
  • Which Neighborhood Is Best? Perhaps you are new to the Phoenix metro area.  If so, it is nice to have some time to find the right place for you and renting allows you to have that time before settling down some roots.
  • Big Life Changes. As we all know, you can’t predict your future. We do our best to plan it out, but it doesn’t always turn out that way. Being a renter allows so much more freedom and can be a much-needed relief while you’re dealing with some bigger things in life.
REASONS TO BUY IN PHOENIX
  • Decorating Control. As a renter you really have no control over things like paint & carpet color but of course once you own a home all of those decisions are up to you!
  • Equity. When you have a mortgage, you increase your degree of ownership in your home with every payment. A good general rule is that if you plan to stay in your home for at least five to seven years, the costs of owning the home are more likely to be offset by accrued equity and increased housing value. If interest rates drop, you have the option to refinance your mortgage at a better rate. When you pay rent, you are actually paying your landlord’s mortgage and adding equity to their bank account.
  • Tax Deductions. Being a homeowner you can deduct mortgage interest along with your property taxes. Renters do not get this bonus! Also, if you meet certain requirements the IRS won’t apply “capital gains” tax on your profits when you sell your home. In addition, those who work from home may be eligible to take deductions for their home office and a portion of utilities.
 
RPMWV Phx offers full service Phoenix Real Estate & Phoenix Property Management services.  For additional information you can contact us at info@rpmwvphx.com or 623-748-7800.

Follow @rpmwvphoenix

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Top 3 Aspects of Rent Collections, Phoenix Rental Property



When you own rental property, your goal comes down to the amount of rent you collect. It would be nice if you were always paid the rent on time and the check cleared without problems. However, that rarely occurs 100% of the time. Even with careful tenant screening, your tenants can run into unexpected financial situations and your payments are no longer coming in on time or regularly. Your rent collection process should help your cash flow be as regular as possible.
1. Set the Rent Expectations Early
Real Property Management WV Phoenix has been successful in encouraging successful rent collecting when the process starts with the careful screening of your potential tenants.  When you have a vacancy, it is a temptation to rent your home as quickly as possible and not be as careful as you should be with your tenant choices. We are patient and make sure your potential tenant has a high enough credit score and is able to prove an income sufficient enough to be able to pay the rent regularly as well as has sound rental references. An applicant should earn at least three times the amount of the rent for your unit. Then at the lease signing, we let your tenants know Real Property Management WV Phx expectations and policies with regard to rent collection. Good communication from the start makes us strict, but fair, and policies are understood from the beginning of their residency.
2. Technology Payment Process
A rent collecting process that is technologically based is a secure and convenient way for your tenants to pay their rent. Real Property Management WV Phx has an online collection option which lessens any rent collection delays. When the rent is collected, this automated system also works for the property owner giving a direct deposit from the collected rent to the owner. Keeping the rent collection process professional and not personal, with understood expectations, gives us the tools for a more successful renting experience.
3. Automated Collections Process
An aspect of rental property management in Phoenix, AZ that is never pleasant is the business of collections when a tenant doesn’t pay the rent. Even the best screened tenants can have a difficult time in their personal lives that affects their abilities to pay rent on time. With an automatic collection process, the moment rent is not collected; automated notices can be sent to the tenant. These notices can be scheduled easily and speak to your tenants with respect. As soon as the law permits, an eviction process can be started with a non-paying tenant so your days without rent can be as few as possible.
Clear rent policies along with a secure technology platform through Real Property Management WV Phx will help your Phoenixrental property rent collecting run smoothly.
RPMWV Phx offers full service Phoenix Real Estate & Phoenix Property Management services.  For additional information you can contact us at info@rpmwvphx.com or 602-281-2884

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The Top 6 Things to Look for in Screening A Phoenix Rental Applicant

Whether you think of screening as a tool to protect yourself and your Phoenix investment or as a dreaded part of being a property manager, it is absolutely critical for your success and safety.
Here are the top 6 items you need to screen for:
1. Income should equal 3x the monthly rent amount
2. Credit is clear or utility collections & charge offs
3. Positive references from previous third party landlords such as property management companies & apartment complexes
4. Verifiable employment & time on job
5. Criminal history must be screened
6. Screen for previous evictions
Even as a DIY landlord, it is important to establish clear rules for who you will and will not accept and stick to them. Tenants with a rough past often avoid renting from property management companies because of the stricter guidelines for qualification, however, if you are going to be completely fair (and lawful) in your requirements and avoid complaints, you must treat everyone equally by asking the same questions and not bending the rules for one person and not others. Phoenix investment property owners need to remember: it’s not personal, it’s business.
The next time you screen a tenant and are wondering about the screening process, remember that you are allowed to reject tenants with: bad credit history, insufficient income to meet the rent demands, previous damage to other units, consistent late rent payments,  poor job history. You cannot, however, reject an application for discriminatory reasons including: race, religion, nationality, gender, age, disability status, and/or familial status. Acting as a businessman instead of an emotional one will leave you with a better reputation as a Phoenix investment property owner.
The key to successful property management is consistency. Consistency in who you rent to, what questions you ask, and the screening process you put each tenant through will allow you to avoid possible lawsuits and Fair Housing Act laws.
RPMWV Phx offers full service Phoenix Real Estate & Phoenix Property Management services.  For additional information you can contact us at info@rpmwvphx.com or 602-281-2884

Follow @rpmwvphoenix

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