Creditor calls and collection efforts stop once your Chapter 7 bankruptcy petition is filed—but what about evictions due to unpaid rent? Can unpaid rents even be discharged under a bankruptcy petition? The answer often depends on what stage the eviction is in and what the bankruptcy trustee will allow. Here's what you need to know.
Can your landlord still proceed with the eviction?
If your landlord hasn't gone to court to get an order allowing him or her to take possession of the property from you, the bankruptcy petition puts an automatic stay on the entire process. In order to proceed, your landlord will have to petition the bankruptcy trustee for permission to evict you.
If your landlord has already gone to court and received an order allowing him or her to take possession, you may be able to halt the eviction. The trustee can (at his or her discretion) permit you to "cure" the past-due rent by paying the arrears if you are able to come up with the funds.
What steps do you have to follow?
In order to halt the eviction, you have to notify your landlord that you've filed a bankruptcy petition and intend to cure the past-due rent. You must also deposit the amount of any current rent that's due within the next 30 days with the clerk of courts. That will put the eviction on hold for the next 30 days. You then have that length of time to repay the entire past-due rent. If you can't, the eviction will proceed.
What if the landlord objects?
If your landlord objects to the stay in the eviction process, the bankruptcy trustee will hold a hearing within the next ten days and decide whether or not to allow the landlord to proceed with the eviction or not.
If your landlord can prove that he or she started the eviction process prior to the point that you filed the bankruptcy petition or that you are endangering the value of the property in some way (for example, through the use of illegal substances on the premises), he or she will likely still be able to proceed with the eviction.
What happens to the bill for the past-due rent?
If you are ultimately obliged to move, the past-due rent becomes part of your bankruptcy petition. Under most circumstances, the debt will be discharged with the rest of your bankruptcy.
It may ultimately be a wiser course of action to allow the eviction to happen, especially if the relationship with your landlord has soured. You can use the money that you would otherwise put toward rent on the security deposit for a new place.
For more information, consider contacting a bankruptcy firm, such as the Law Office of Michael Alfano.