It isn't uncommon for people who are having financial trouble to move around a little, usually looking for a better job or an opportunity to get their financial situation under control. If that applies to you, you may have put some things in storage while you stay with friends or relatives, hoping the financial crisis will pass. Unfortunately, that can lead to a complicated problem if you end up filing bankruptcy. What happens to everything you have in storage? This is what you should know.
1.) Everything you have in storage is an asset.
Whether you just have your most precious possessions in there or you have the majority of your household goods in storage, talk with your bankruptcy attorney early on about what sort of items are being stored. That way, the items can be listed as part of your assets and an appropriate value attached. Keep in mind that if the items are intrinsically valuable as a whole, or you have a few pieces of art or a collection that's valuable, that you may have to surrender these to the bankruptcy trustee so that they can be sold to offset your debt.
2.) An automatic stay goes into place on your past-due rent.
A storage contract is a lease, so the past-due collections for that least cease once the bankruptcy's "stay" goes into motion. However, this may immediately affect you in one of two different ways:
- If no lien has already been placed on your unit by the storage facility at the time the stay begins, you can obtain access to your unit without paying the past-due amount. You are, however, required to pay the ongoing monthly rent.
- If a lien has already been placed on your unit by the storage facility at the time the stay beings, you don't have to worry about the items being sold, but you cannot access them either. The trustee will eventually have to decide what happens to the contents. In the meantime, you're required to pay the ongoing monthly rent.
You will also be required, at this point, to file a "Statement of Intention" with your bankruptcy petition, explaining to both the bankruptcy court and the holders of any leases with you—including the owner of the storage unit—whether or not you intend to continue paying. If you want to keep your items, you have to promise the court and the storage unit's holder that you'll start making your currently monthly payments. Otherwise, the owner of the unit is free to ask the court to move against you so that he or she can take possession of your items and sell them for any back rent he or she is owed.
3.) You can still lose your possessions for failure to keep up the current payments.
If the lien is already on your storage unit, you can expect the storage facility owner to apply for permission from the bankruptcy court to auction off your property. More than likely, the bankruptcy trustee will offer some sort of compromise, allowing you to pay some of the debt and keep your stuff.
If there's no lien, you need to stay current in order to avoid further action. While the storage unit's owner can't just decide to lock you out and sell your property, he or she can apply for permission to proceed with a lien against you and the trustee will likely allow it if you aren't current on your lease.
Make sure that you discuss the exact situation you're in with your bankruptcy attorney. It may help to take an inventory of the items in storage with you to the bankruptcy attorney's office if you have it available. Take any correspondence from the store unit as well. That way, your attorney will be able to advise you about the best course of action.Share