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Monday, November 3rd, 2008

by Theodore Sliwinski, Esq.

Eviction and Bankruptcy

Past due rent is dischargeable in a bankruptcy case. In other words you can discharge  past due rent in bot a chapter 7  and 13 case. If you file for bankruptcy and if you are still are still renting and apartment or house, then it is important for you to stay current with all of your current rent payments. If you don’t stay current with your rent after filing for bankruptcy, then the  landlord can take the legal position to have you evicted because of your post-petition default of the lease.

However, merely because you owe your landlord back rent doesn’t mean they can immediately just throw you out in the street. A debtor can only be evicted if the landlord has obtained a judgment of possession, and then the constable executed upon a warrant of removal. If a debtor owes back rent, and if he is behind on his rent payments, then this fact alone is not enough for the landlord to forcibly remove him from the rental property. A landlord, or any other party cannot just go to where you live, throw you out, and then change the locks. There is a legal process that must be adhered to.

Therefore, if you have fallen upon hard times, and if you have not paid the rent, then your landlord may take the legal position to try to evict you from your home. If you are being evicted from your home, and if you then file for bankruptcy, then the  automatic stay might provide you with some additional time to remain in your home, but it is minimal. The most recent changes to the bankruptcy laws make it much easier for landlords move forward with the eviction process.

It used to be that when you filed for bankruptcy while you were being evicted, the automatic stay of bankruptcy would stop the eviction process, and buy you plenty of time, sometimes even several months. Not any more. This is especially true if the landlord has already obtained a judgment for possession against you before you have filed bankruptcy. When you file bankruptcy after a judgment for possession has been entered, then the automatic stay of bankruptcy will generally not have any affect on the eviction. In fact, the landlord can usually continue on just as if you had never filed for bankruptcy.

Filing for bankruptcy has no affect in situations wherein a judgment of possession has been entered against a tenant in an eviction case. Filing for bankruptcy also has no effect when the tenant and who is facing a judgment for possession pursuant to which the tenant is reinstated on the lease provided that the judgment amount is satisfied. In other words it has to be paid in full before the automatic stay could remain in effect. Should the judgment for possession not provide for a reinstatement upon the satisfaction of the past due rent or amount due, then it is presumed that the tenant will receive no relief at all from their filing for bankruptcy.

Therefore, in order for a bankruptcy filing to have any effect on a pending eviction case, and if the landlord has already obtained a judgment of possession, then the tenant is required to deposit with the bankruptcy clerk one month of rent immediately upon filing the bankruptcy petition. Moreover, in addition to paying the rent to the clerk, the tenant is also required to file a certification under penalty of perjury stating (1) the judgment permits the tenant to stay in the premises upon satisfaction of the entire judgment amount and (2) the tenant has deposited with the bankruptcy clerk “any rent which would become due during the thirty (30) day period after the filing of the bankruptcy petition.”

When a tenant complies with the aforementioned requirements by tendering the rent to the bankruptcy court clerk, and files the certification on the day that the bankruptcy petition is filed, the tenant will receive thirty days under the protection of the automatic stay.

Should the tenant be interested in staying beyond the initial thirty day period, the tenant has to satisfy the amount stated in the judgment for possession within thirty days following the filing of their bankruptcy petition and must file within those same thirty days a certification with the Court that the tenant has in fact paid this amount. If the tenant complies with this requirement, then it is presumed that the automatic stay remains in full force and effect until modified by order of court. Therefore, in many situations, the best case scenario a tenant can expect is 30 days.

In the scenario wherein the landlord does not obtain a judgment for possession, then the automatic stay might buy a couple of extra days or even a few weeks depending on how aggressively the landlord pursues you. The landlord will usually file a motion to vacate the stay, and request that the bankruptcy court to allow the eviction process to continue.