Can I Be Evicted Because of Bankruptcy?

The Census Bureau reports that in Pennsylvania, about 70% of residents are homeowners, while another 20% are renters. Among these many renters, some will file for Chapter 13 or Chapter 7. But could filing for bankruptcy cause you to be evicted? What sort of rights do you have as a tenant?

Unfortunately, as powerful a tool as bankruptcy is in some cases, when it comes to stopping evictions, our Philadelphia bankruptcy lawyers’ hands are often tied. An important factor in determining where the eviction process is at the time of filing. If you file for bankruptcy before an eviction judgment is entered, you might be able to stay. However, if a judgment was entered in favor of your landlord, bankruptcy will not stop the eviction.

If you believe you could be evicted, even if your landlord has not formally begun legal proceedings, you should contact Young, Marr & Associates. Stopping an eviction is challenging. By speaking with our office sooner than later, you keep more options on the table. Do not hesitate to call (609) 755-3115 in New Jersey or (215) 701-6519 in Pennsylvania.

How the Automatic Stay Can Affect Eviction

The short answer to the question of whether or not you can be evicted because of bankruptcy is that it depends. More specifically, it depends largely on whether you filed before or after your landlord obtained an eviction judgment. (A judgment is a document which details the court’s final decision on a legal matter.)

This is due to something called the automatic stay, which places a freeze on any collection actions by creditors from the moment a debtor files for consumer bankruptcy. The stay extends to landlords, meaning that if you are behind on rent but have already filed, your landlord will not be able to initiate the eviction process.

However, it is also important to be aware that creditors — including landlords — may request that the stay be lifted. If the court grants your landlord a lift on the automatic stay, then they will be able to proceed with the eviction actions as originally planned. If a landlord wants the stay to be lifted, they must attend a hearing, which frequently results in a lift being granted within several days. You will have to make a convincing argument in court as to why the stay should not be granted.

If the Eviction Process Started Before Filing Bankruptcy

Landlords now have more power to affect evictions than they did in the recent past. In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) added another layer of complexity to bankruptcy proceedings. (In fact, in 2007 Judge Martin S. Teel, Jr. was quoted as saying BAPCPA’s “many technical requirements” created a “minefield for “pro se filers” in the Third Branch.)

If the landlord had a judgment prior to the filing, they will not be bound by the automatic stay. Additionally, if the tenant seriously violated the terms of their lease (e.g., destruction of property), then the landlord can move forward with eviction regardless of whether or not the stay has been lifted by filing a certification. In this scenario, the landlord must serve the tenant notice of the certification within 15 days.

However, the tenant still has an opportunity to fight back at this stage. Upon receiving this notification, you can counter-serve your landlord with an objection, at which point the courts are obligated to hold a hearing regarding your objection. If during this hearing you are able to demonstrate the issues noted in your landlord’s certification are not actually true (e.g., the landlord claimed property damage when no such damage ever occurred), then the court may side against your landlord and block the eviction from proceeding.

Eviction: Chapter 13 Bankruptcy

When someone files a Chapter 13 bankruptcy, the automatic stay will stop any eviction proceedings. However, this is only true if the case was filed before the landlord obtained an eviction judgment.

Unlike Chapter 7, a filer will have a better chance of staying in the property in a Chapter 13 bankruptcy. However, it is still not guaranteed. If you hope to stay in the property, you will have to keep paying your monthly rent while bringing your arrears current. You might be able to convince your landlord to pay the arrears through your three-to-five-year bankruptcy plan.

If your landlord does not have an eviction judgment, the automatic stay should stop the eviction process. However, staying in your apartment is not guaranteed. There are other ways an eviction could proceed.

Landlord Files a Motion for Relief From the Automatic Stay

The landlord might ask the court for relief from the automatic stay to allow an eviction to move forward. Because a landlord is not required to allow someone to stay in their property for free, the bankruptcy court will often grant these motions when filed.

Landlord Alleges Property Endangerment or Illegal Drug Use

You are not permitted to destroy the property or use illegal drugs on the premises. If you were being evicted for either of these transgressions, filing for bankruptcy will not stop the eviction.

You Have Filed Multiple Bankruptcy Cases

If you filed one or more previous bankruptcy cases in the preceding calendar year, the automatic stay could be in place for 30 days or not at all. While there are motions our Pennsylvania bankruptcy could file, the eviction will likely proceed in this situation.

Even if none of the above come to pass, we will still have to work directly with your landlord. While a provision could be made in the bankruptcy plan to pay any past-due rent, your landlord is entitled to prompt payment. This means your landlord does not have to accept the payment plan set forth in your plan payment. However, terms could be proposed that provide for regular monthly payments and a short timeframe to pay back the arrears. Filing for bankruptcy does not give you the right to remain in the property.

Bankruptcy Trustees and Eviction

Finally, it is worth touching on the role of the bankruptcy trustee in these matters. Assuming eviction has been ruled out as a concern, your trustee may permit you to keep living in your current accommodations. This is because forcing debtors to pay for new housing is often detrimental to the creditors trying to collect the payments they are owed. However, if your living situation is very costly, the trustee may determine that a lower rent situation would be more financially appropriate, at which point your lease could be terminated.

Will Filing for Bankruptcy Erase an Eviction from a Credit History?

Unfortunately, while filing for bankruptcy could eliminate debt, it does not erase negative information on your credit history, including an eviction. A landlord has the right to report late payments and evictions to the three credit bureaus. This information will stay on a report up to seven years from the date of the event. Furthermore, an eviction lawsuit could also be included on a credit report as a public record.

Bankruptcy and Background Checks

When vetting potential renters, a landlord will often hire a company to conduct a background check in addition to pulling a credit report. Background checks are useful for uncovering additional information, including arrests or convictions.

Some companies offer screening reports that list people who have appeared in housing or rental courts throughout the country. These records are not purged or removed if you file for bankruptcy.

Eliminating Erroneous Information from Credit Records

Companies and credit bureaus that provide these screening reports are subject to the Fair Credit Reporting Act. If you are denied a rental because of either a credit report or a renters screening report, you are entitled to a copy of the report and the name of who provided the information.

The company reporting the information is not required to remove the information if it is accurate and verifiable. However, if you successfully dispute inaccurate information, the information must be removed.

Can You Be Evicted for Filing for Bankruptcy if You Are Current on Your Rent?

Above, we discuss in detail filing for bankruptcy to try and stop an eviction. However, what happens if you are current on your rent and are filing bankruptcy for other reasons? Many debtors are concerned that, if they file for bankruptcy, their landlord will evict them even if they have been making timely rent payments. Others are concerned that their landlord will not renew their lease when it expires.

First, it should be noted that filing for bankruptcy is never grounds for eviction. This assumes that you have complied with the lease terms, for example, making every monthly payment and not damaging the property. However, the landlord is not required to renew a lease after it has expired.

While you might believe your landlord will not know about your bankruptcy, the lease is listed in your bankruptcy schedules. Nonetheless, most landlords are only interested in renting an apartment or house. If you have been a good tenant, making every payment on time, they are unlikely to consider bankruptcy as a valid reason not to renew your lease. Truthfully, if you filed for bankruptcy, you have either extinguished or reduced the majority of your debt, making it easier to afford your monthly rent.

On the other hand, if you were a month-to-month tenant, your landlord has the right to terminate your lease at any time as long as https://www.youngmarrlaw.com/bankruptcy/levittown-bankruptcy-lawyer/you are provided a 30-day written notice. In either situation, our Levittown bankruptcy lawyers advise speaking with your landlord if you file for bankruptcy. Letting your landlord know what is happening and that you continue to honor the lease often goes a long way in keeping a working professional relationship. If your landlord believes the information was hidden, they might be inclined to not renew your lease.

Call a Pennsylvania Bankruptcy Attorney at Young, Marr & Associates Today

If you or someone you love is filing for Chapter 7 or Chapter 13, or if you feel you are a victim of creditor harassment, our Pennsylvania bankruptcy lawyers can help. To schedule a completely free and private legal consultation, call the law offices of Young, Marr & Associates at (609) 755-3115 in New Jersey or (215) 701-6519 in Pennsylvania.