Readers of this blog may be learning about how bankruptcy and creditor actions may impact a debtor’s property. Now, let’s consider a less-common entity that is also subject to Arizona laws regarding creditors and personal property: self-storage facilities. There are occasions when liens may be placed against a debtor’s storage locker and its contents.
Suppose a storage facility tenant who was behind on rent for a long time files for bankruptcy. An automatic stay then goes into effect. Can the storage facility owner proceed to place a lien against the locker contents and sell them to recoup the lost rent? Or should the facility owner file as a creditor in the bankruptcy proceedings, and request the court’s permission to conduct a lien sale?
Actually, until the Bankruptcy court lifts the automatic stay (or rules in favor of a motion against the stay) a creditor may not proceed with any action against a debtor. Should the court dismiss the bankruptcy filing, a creditor may proceed with a lien sale. If the court discharges the debt, however, the debtor is no longer required to pay the rent owed on the storage unit.
Perhaps the best way a storage facility owner/creditor can protect his/her interests is to act quickly when any tenant becomes delinquent on rent, and upon doing so exercise their legal rights prior to any indication of bankruptcy. This same proactive thinking can help creditors in other situations as well. Engaging an experienced creditors attorney will help navigate the legal process.
Most standard rental agreements in Arizona ought to include some form of remedy authorizing the owner to sell the contents should delinquency occur. The contract rights and remedies must conform to Arizona statutes. Should the bankruptcy filing take place before the contract can be enforced, however, the owner/creditor should enlist the help of a skilled bankruptcy attorney to assert the claim for unpaid rent.
Working with an experienced and knowledgeable Arizona creditor’s attorney can be a tremendous help. If you would like more information about personal property and bankruptcy, possessory liens, creditors’ rights, or if you need assistance from an attorney, contact Windtberg & Zdancewicz to schedule an initial consultation.
The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation in all collection matters. We are experienced in creditor’s rights including garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases. If you need assistance with your collection matters, please contact us at (480) 584-5660.