Does Bankruptcy Stop Eviction?
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Does Bankruptcy Stop Eviction?

While bankruptcy's effect on eviction is not as powerful as its ability to stop home foreclosure, filing bankruptcy may have several benefits for people looking to prevent eviction.

These benefits may include allowing renters more time to make overdue rental payments, preventing landlords from pushing for evictions, and freeing up finances so tenants can afford to pay their rent.

Whether bankruptcy may stop eviction, though, depends in part on when the bankruptcy is filed, and the specific bankruptcy laws in your area.

Filing Bankruptcy After an Eviction Notice

The eviction process usually occurs in state court, where a landlord successfully obtains a judgment for possession allowing them to evict a tenant.

If a landlord has already has received a court-ordered judgment for possession, and the tenant has yet to file bankruptcy, the tenant's options may be limited.

However, if a tenant files for bankruptcy after the state court eviction decision, some states allow a final opportunity for tenants to stave off eviction. In these states, tenants may take the following steps in order to prevent eviction:

  • The tenant must pay the equivalent of one month's rent to the bankruptcy clerk when filing the bankruptcy petition.
  • Tenants must also certify that their rent has been paid, and notify their landlord.
  • If tenants take these two steps, they may be granted a 30-day reprieve in which they can remain in their house or apartment. At the end of this month-long break, tenants must take more steps to ensure that they are not evicted.

Eviction laws, though, vary widely by state, so speaking with a local attorney may help inform tenants of their state's property laws.

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Filing Bankruptcy Before Eviction Proceedings

If, on the other hand, a landlord has not yet received a court order for eviction, then the tenant has more options.

The automatic stay, a prominent feature of bankruptcy, may prevent a landlord from starting a collection action against the tenant, or pursuing eviction. The landlord may, however, ask the bankruptcy court to lift the stay.

In addition, while bankruptcy does have the potential to stop eviction in cases involving unpaid rent, it usually cannot prevent eviction if the landlord's action is due to:

  • Illegal drug use
  • Property damage
  • Other violations of rental agreements

So, if a tenant is facing eviction due to unpaid rent, and the eviction process has not been completed in state court, filing bankruptcy may very well be able to stop the eviction.

To learn more about whether bankruptcy does or does not stop eviction in your case, contact a local bankruptcy lawyer today.

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