Hi Heather, I hope you are doing great now.

My name is Gerry Dieck. I am having the same problem you had back in Dec. 08. I rent a house in Austin TX for $2,900/Month with my wife and 3 kids. My sec. deposit is $2,900. My lease will finish in 2 months. Yesterday morning I received a Bankruptcy letter from the court that my landlor filed on March 30, 2009, (3 weeks ago). I haven't called my landlord to ask him what is going on, I wanted first to understend what would happen with my deposit?, should I pay this comming mont rent?, is he still entilted to receive the rent or should I stop paying?....

How this matter turn out to you? I will appreciate your comments. gdieck@prodigy.net.mx

Best regards, Gerry Dieck gdieck@prodigy.net.mx (512) 266-2823

Wow, Heather. I hate that when that happens, and if your renting, it happens more than you think! So important to have help. At this point though, I really think you need legal advice. $5000 is a lot of money to lose, versus an hour or two with an attorney. How long is your lease? You could stay at the house, until your ordered to leave, or the lease expires. However, if they file bankruptcy to stave off a foreclosure, or walk away from the house, it is sounding like your risk is high in not getting your money back. Your probably wandering which attorney to hire? I have an attorney whose name and number I would be happy to give you! Call me!
Nicole Arenas, 214-991-9507
Realtor

I would do both. It is extremely difficult to recover anything from a Bankruptcy. Usually people file for bankruptcy when they do not have any other choice; especially if they are filing for Chapter 7. Bankruptcy procedures sometimes take a long time, so you might have those 2.5 months to recover your security deposit in lieu of paying rent. In case you can not stand the heat, if there is any heat comming from the Lender, the Bankruptcy court or anybody else, I would also try to get listed as a creditor in the Bankruptcy court.

Best to check with a Bankruptcy attorney. He will advice you of your legal rights and the possibility of any recovery.

You are not alone in this scenario. We're hearing it a lot right now. Get with an attorney and know your rights. Things are really ugly with some rentals, and tenants are left to scurry to find somewhere else to live with little or no notice.

Heather,
It is probably worthwhile with that amount of deposit to hire an attorney to advise you.
I am not an attorney and cannot give legal advice, but my guess is your deposit is gone.
You should be listed as a creditor.
It is very tough to determine what will happen at this point. I've seen banks wait a long time to foreclose, especially in bankruptcy procedings. So you could have months to stay. It is also possible they will post for foreclosure shortly. From what I understand bankruptcy typically only delays foreclosure for a short time, but does not stop it here in Texas.
Even if you are listed as a creditor, my guess is your deposit is gone. That's just a guess, but being listed as a creditor does not mean you will get it back. This is the toughest thing to figure out as a renter, and that is if the rent is being paid to keep the loan current and the financial status of the owner. This is not the first time for this to happen to someone. In this case I'm even a little surprised they gave you any warning or notice. Sometimes the way the tenant knows something is wrong is when the notice gets posted on the door.
Hiring an attorney to represent you is important as your contract may have priority over the loan/bank depending on when the loan was taken and when your lease was signed. There may also be some option for you to withhold or escrow future rent payments in anticipation of the deposit being gone.
I hope you can stay in the house, but if not and you need assistance finding another one please give me a call.

Bruce Lynn
Prudential Texas Properties
214-675-6992

Yes you will want to be listed as a creditor, no they can not have your live off the deposit if they are no longer the owner and no the bank will not let you stay, they will begin eviction once they take the property back. you may want to consider legal advice to protect yourself. you usually always at least get the 1st meeting free or try the Texas bar Association as well. good luck in working things out.

Sorry to hear about this

We represent tenants for leasing in Dallas area contact my office locate another rental property.

YOUR RIGHTS: Confer with real estate attorney you might have right sue for security deposit in small claims court.

FORECLOSURE RIGHTS TENANTS:
Once a home goes into foreclosure no other fees are paid to former property owner. Bank will serve you with eviction notice IN SOME CASES bank will provide you a cash incentive if you move prior filing legal procedures for eviction.

NOTE: If you are living FREE in property for one month or more be same as returning security deposit could be less of a hassle.

Contact my office where we can assist you with all your questions or locating another home to lease.
972-699-9111
Lynn