Can Bankruptcy Stop an Eviction? Learn How it Works
Facing eviction can be a scary and stressful situation. Many people are struggling with rent and eviction issues, especially due to recent economic challenges. For many renters, filing for bankruptcy may be a viable temporary solution as it can help with easing financial burdens and pausing eviction process.
But how well does bankruptcy work when it comes to stopping an eviction? Let’s take a look into the connection between bankruptcy and eviction while discussing the automatic stay, specific conditions by state and the advantages/disadvantages of turning to bankruptcy as a means to stop eviction.
The Automatic Stay and How It Affects Evictions
When you declare bankruptcy, an automatic stay kicks in right away. This stay puts a hold on creditor actions, including evictions. The automatic stay is a court order issued by the bankruptcy court that temporarily halts actions by creditors, including landlords, to collect debts or proceed with eviction. Can bankruptcy stop eviction actions immediately?
So long as the bankruptcy has been filed prior to a final eviction judgment, the answer is usually ‘yes.’ Your landlord—who is considered a creditor—is required to pause the eviction process while the bankruptcy “stay” is in effect. This temporary measure provides tenants with relief and an opportunity to manage their financial situation. In Chapter 7 bankruptcy, the automatic stay typically lasts until the discharge of eligible debts or until the court grants relief to the landlord or other creditors.
Evictions Filed Before Bankruptcy
The situation can be a bit more complicated if the landlord issues a notice of eviction before you file bankruptcy. But does bankruptcy stop eviction in such cases? If the landlord received a final judgment for possession before the bankruptcy filing, the judge has already decided that the landlord is entitled to possession of the property. This final judgment is significant because, once it is issued, the automatic stay from bankruptcy typically cannot prevent or delay the eviction process.
In cases where the eviction is solely based on late rent payments, the tenant might still have an opportunity to remain in their rental property, but the extension is more likely to be granted if the bankruptcy filer is in a Chapter 13 payment plan, and they pay the missed rent to a trustee as part of their chapter 13 “plan.”
Evictions Filed After Bankruptcy
Will filing bankruptcy stop an eviction if it is filed after the bankruptcy process begins? The answer depends on timing. A Chapter 7 case typically results in the automatic stay being in effect for around 90 days. Once the automatic stay is lifted, the landlord may be able to pursue its rights.
Can filing bankruptcy stop an eviction permanently? There is no way to permanently prevent eviction because, fundamentally, the nature of a lease is that a tenant is occupying someone else’s property. So even if not sooner, a landlord can pursue an eviction when a lease expires.
In Chapter 13 bankruptcy, the automatic stay lasts until the completion of the repayment plan or until the court grants relief to the landlord.
Process for Landlords to Lift the Stay
When a tenant declares bankruptcy, landlords seeking to proceed with an eviction usually to submit a request to lift the automatic stay to the bankruptcy court. Often, a hearing will be set for both parties to state their cases. The landlord must show a valid cause for the eviction, such as overdue rent or a lease violation, with the violation referring to breaches of the lease agreement. If the court deems the landlord’s argument convincing, it may lift the stay, enabling the eviction process to move forward.
Impact on Tenants
This automatic pause is often a much needed lifeline for financially burdened renters. Not only does it allow them more time to sort their finances, but it also gives them an opportunity to make back rent payments or find somewhere else to live. Filing for bankruptcy can also help with rent arrears, as it can eliminate unpaid rent debt after completing the bankruptcy process. Bankruptcy can provide a fresh start by discharging debts, helping tenants move forward and making it easier to secure new housing. Avoiding eviction and resolving debt through bankruptcy can also free up money for other essential expenses.
Special Considerations in Florida
In Florida, laws work in conjunction with federal bankruptcy laws to offer extra safeguards. In particular, under the Florida Consumer Collection Practice’s Act, no party can undertake unlawful collection practices (like illegally trying to evict while the automatic stay is in effect). A landlord’s violation of the FCCPA could result in an independent legal claim against the landlord.
Whether you’re a renter or a landlord, it’s in your best interest to have an in-depth understanding of how these rules will affect your living situation. If you need legal guidance, give us a call today to speak with an experienced bankruptcy attorney.
Curing Rent Defaults Under Bankruptcy
In certain situations, bankruptcy attorneys can help clients navigate the process of curing rent defaults and stopping an eviction proceeding. Tenants could be given the chance to pay rent that is overdue even after declaring bankruptcy. This may mean settling the amount due within a time frame typically of 30 days. But will bankruptcy stop eviction in such cases? The answer depends on various factors including the client’s ability to cure the rent defaults within the given period. A Chapter 13 bankruptcy can stop an eviction proceeding permanently if the client can catch up on the rent owed and cure any defaults.
The client must submit evidence to the court detailing their commitment to paying the rent and will be expected to fulfill this commitment within the specified timeframe. This will allow the client to temporarily stop the eviction proceeding if they follow the repayment plan.
Pros and Cons of Filing Bankruptcy to Stop an Eviction
Pros:
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Instant Relief: Filing bankruptcy to stop eviction may provide immediate relief by stopping eviction proceedings because of an automatic stay.
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Time to reorganize your finances: The temporary stoppage in evictions allows tenants to sort out their finances, and possibly negotiate payments plans or other arrangements with landlords.
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Protection from Collections: Bankruptcy protects tenants from other collection actions, and gives the chance to improve their financial position.
Cons:
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Temporary Solution: This stay can be only temporary and landlords may make motions to end the stay, particularly in the event of a convincing argument to evict.
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Credit Impact: The filing of bankruptcy may result in a negative long-term impact upon credit score, which can affect the potential of the tenant to get housing or credit later on.
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A Guarantee is Not Given: Bankruptcy does not guarantee that the tenant will be able to remain in the rental home, and if the landlord has secured a judgment of possession or the tenant fails to cure rent defaults, the tenant may still be evicted.
Legal Advice and Assistance
Understanding the various aspects of bankruptcy law and eviction laws isn’t always easy. It’s essential to understand and protect your legal rights when facing eviction and bankruptcy. In many cases, bankruptcy can provide temporary eviction relief, but it’s not always guaranteed. Having an awareness of how the automatic stay functions, its exceptions and Florida bankruptcy laws is essential to winning the fight to stay in your home.
If you’re dealing with a possible eviction and thinking about bankruptcy, The Attorney Debt Fighters are here to help you file or consider alternative debt relief options. You may want to review the pros and cons of filing for bankruptcy before making your decision. Contact us today for your free initial consultation with a proven bankruptcy lawyer in Florida. Schedule a free consultation to discuss your case and explore your legal options with an experienced bankruptcy attorney.
Ziegler Diamond Law provides bankruptcy legal services to consumers in Clearwater, Florida, and throughout the Tampa Bay area who are facing home foreclosure, unmanageable debts, debt collector harassment, or other debt-related problems. If you are searching for a debt lawyer in Clearwater, FL, our team can help.
