Does the Automatic Stay in the Bankruptcy Law Prevent a Landlord from Being Able to Evict the Tenant on a Residential Lease?

You are probably aware that when you file a bankruptcy, an “automatic stay” goes into effect right away, which means that none of your creditors can take any further action against you without first getting the approval of the bankruptcy court.  Therefore, if anyone is suing you, that lawsuit has to stop and, if it’s for money damages against you, will most likely be dismissed.  Even if you are in the middle of a divorce action, those proceedings are frozen during the pendency of the bankruptcy action, or at least until an order of relief from stay to go forward is granted by the Bankruptcy Court.

So how does this work if you are being evicted from your leased residence by your landlord for nonpayment of rent?  Does he have to honor the automatic stay and allow you to remain in the leased premises while the stay is in effect?  In fact, if the residential landlord took you to court and got an order allowing him to possession of the rental premises before you filed your bankruptcy, then the automatic stay does not stop him from continuing to evict you.  Keep in mind that the normal eviction process provides that the landlord would serve you with a 3-day notice to leave the premises, and, if you failed to move out within that time, he would then file a complaint for forcible entry and detainer with the municipal court in your local area.  A court date would be set fairly quickly, usually within ten days or so.  At that hearing, if the magistrate/judge decides that the landlord has a right to evict you, or if you don’t appear, an order for possession will be issued at that point.  If you’ve filed a bankruptcy before the court date, then the hearing/order won’t happen.  If the order for possession came first, then he can get you out.

Under the bankruptcy laws, however, you do get one more chance to redeem yourself with the landlord and stay in the leased premises even if he has a judgment.  There is a place on the bankruptcy petition where you must indicate whether you lease your residence, and, if so, 1) whether the landlord has a pending judgment of eviction.  You also must provide the landlord’s name and address.  You can then 2) file a certification form stating that you are permitted to cure the default in rent under applicable law, and 3) you must deposit with the Clerk of the Bankruptcy Court the next 30 days’ rent.  If you fulfill all three of these requirements, you can get a 30-day stay on the eviction proceedings.  Within those 30 days, you must file another certification stating that 1) the applicable law permits you to remain on the property by paying any delinquent rent in full; and 2) the entire delinquent amount has been paid.  So, plainly, you have to deposit the next month’s rent immediately with the court, and pay the full amount of the rent arrearage to the landlord within 30 days after you file.  The landlord has the right to object to your certifications, which then triggers the Bankruptcy Court to set a hearing within 10 days.  If the landlord should win on his objection at the hearing, then the order permitting the eviction to continue must immediately be issued by the Court.

Therefore, this process only works out for the debtor who can, at the time the bankruptcy is filed, pay the next month’s rent immediately, and then bring the arrearage current within the next 30 days.  This is obviously not easy for a debtor who’s already in a financial crisis to meet, and can likely only be accomplished by borrowing the money from a friend or relative.  But it does potentially give a tenant a bit of breathing room to get on sound ground with the landlord while also protecting the landlord’s right to recover and re-rent his premises within a reasonable time period.

Now, the above bankruptcy proceedings only work to protect the tenant who is behind in rent.  It doesn’t prevent a landlord from evicting a tenant who is endangering the property or other tenants, or who is involved in the illegal use of controlled substances.  In order for a landlord to proceed with an eviction action after a tenant who committed these acts has filed bankruptcy, the landlord must file his own certification with the Court stating the specifics as to why he needs to evict the tenant.  If you are such a tenant, then you have 15 days in which to rebut his allegations or to remedy the situation.  If you do file a response, the Court will schedule a hearing to decide whether or not the eviction may continue.

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