When you file for bankruptcy, something called an “automatic stay” goes immediately into effect. Essentially, it’s an abrupt halt to the legal actions that creditors can take against you — which is usually just enough time to buy a little breathing room and give you the chance to gather your resources and make a few decisions.
Is the automatic stay enough to stop an eviction?
Like most answers involving the law, it depends on your situation. Here’s a brief overview of what to expect:
1. If you’re already under an order to vacate, meaning that you’re behind in your rent and your landlord has asked the court to evict you, filing bankruptcy won’t stop the eviction. That’s the bad news. The good news is that you don’t have to try to juggle your car payment, credit cards and other debts for a little while — so that money is now available to help you find another place to stay.
2. If you’re current on your rent, you probably have the option to stay in your lease. During a bankruptcy, your financial affairs have to be an open book, so the trustee will ask you to decide if you intend to keep paying the rent. If so, you will likely be allowed to continue making payments as usual. The stay does not prevent you from paying your current rent.
3. If you’re not current on your rent but not yet under an order of eviction, you’ll likely face the choice between catching up your rent and assuming the lease or moving. If you aren’t too far behind on your payments and your relationship with your landlord hasn’t soured, you may find it easier to catch up the past-due amount and stay where you are.
4. If you move, your past-due rent and any money that would ordinarily be due from a broken lease will become part of the bankruptcy. Generally, those are considered unsecured debts and will be discharged accordingly.
5. If you are doing something illegal in your rental home, like trafficking or manufacturing drugs, your landlord can seek relief from the bankruptcy trustee by filing and asking for permission to evict you. If there’s sufficient evidence to satisfy the trustee, the request will likely be granted.
If you’re in a difficult financial situation, don’t make guesses — talk to a bankruptcy attorney today.
Source: FindLaw, “How a Tenant Bankruptcy Affects a Landlord’s Right to Evict,” accessed Aug. 4, 2017