Bankruptcy is not of itself a ground for possession, but rent arrears are. However, the court may be restricted from making a money judgment against a bankrupt tenant.
If the arrears are provable in the bankruptcy (that is, they accrued before the bankruptcy order was made), the court can make an order for possession, but cannot suspend it or postpone it on terms of payment of those arrears. The landlord will also be unable to obtain a money judgment for those arrears.
In particular, no creditor in respect of a ‘debt provable in the bankruptcy’ (a debt incurred and due for payment prior to the making of the bankruptcy order) shall, without the leave of the court:
- have any remedy against her/his property in respect of that debt
- start any action or other legal proceedings against her/him
If the rent arrears are not provable in the bankruptcy (that is, they accrued after the bankruptcy order was made), the court can suspend or postpone an order for possession on payment of current rent and rent arrears that are not provable in the bankruptcy.
If a tenant is in serious rent arrears, a landlord may apply for possession if the amount of the arrears are more than two months or eight weeks, depending upon how the rent is paid. This would be a mandatory ground for possession.
As mentioned in one of our other blogs a social landlord is unlikely to be concerned about the status of a tenant but will be concerned about the existence of rent arrears. They may not be able to rely on the AST ground, but they could bring a claim for rent arrears which might be a ground for possession, for debts not provable as previously explained. They are also obliged to comply with a protocol showing that they have worked with tenants who are in financial difficulties to overcome any problems concerning rent arrears of other breaches of the tenancy.
COVID-19
It should be noted that because of COVID-19, the normal notice periods to commence possession proceedings relying on the assured shorthold ground has been extended to six months, and generally the notice period for any breach of the tenancy is also six months. However, these will almost certainly be reduced once the pandemic is viewed as being at an end.
Next Step
If you want to find out anything further about this topic then please feel free to call on 0330 236 9930, 0330 236 9938 or 07961 116321. All conversations will be in strict confidence. You can also email me vee@navigatebr.com
This article is for information and interest only. It is not a substitute for full professional advice, which will take in to account the specific and individual circumstances. Navigate Business Recovery Limited cannot accept any responsibility for any loss arising as a result of any person or organisation acting or refraining from acting on any information.
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