CP Law Associates

My tenant's gone bankrupt what can i do?

My Tenant has Gone Bankrupt - What Can I do to Collect Rent Arrears?

Bankruptcy  is the last option for individuals who are unable to pay off their debts when they become due. In some instances this can also include rent arrears that may have built up before the bankruptcy order was made, this then puts future rental payments at risk. 

Whilst the tenant is subject to the bankruptcy procedure, there will be restrictions about the proceedings that can be taken against their property.

It is important to note that a creditor with a debt incurred and due for payment before the bankruptcy order was made cannot;

  • Take legal proceedings against the tenant
  • Have any remedy against the tenant’s property in respect of that debt
  • The term ‘property’ in this instance is defined as money, goods, land and the rights and liabilities over property and this includes a tenancy


So, if you are a landlord and your tenant has gone bankrupt, what are your options?

Repossession Proceedings

If you have a bankrupt tenant, if the tenant is able and willing to pay the rent voluntarily then as you are a primary creditor they will be allowed to so, provided that they have the means to be able to. It is only money above their normal living expense will be seized by debt collection. 

If your tenant however, is already in arrears and you believe that further arrears will be accrued and they will essentially become a sitting tenant then you may be able to evict the tenant under the Section 21 Possessions procedure. If this is the case then the possession order will be mandatory and the bankruptcy will not offer them protection against this. If you are looking to evict an existing tenant for rent arrears and would like advice on obtaining a Section 21 Notice then we suggest that you speak to a member of our legal team, specialising in tenant and landlord disputes.

If, your tenant is already in 2 months of rent arrears or more, then you could seek possession of the property by using the Section 8 Procedure. Previously there had been discussions about whether a landlord could use rent arrears as grounds for repossession in a bankruptcy, but in a 2011 ruling it was found that the insolvency would not prevent the judge from making a repossessions order. 

Contact Us - Landlord and Tenant Dispute Lawyers

Contact Us If you have a tenant that you are trying to evict from one of your properties, the legal team at CP Law Associates can help guide you through the correct process depending on  your situation. We can help you with guidance around whether you require a section 21 or a section 8. We offer a free initial consultation.

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