Can You File for Bankruptcy to Avoid Eviction in Pennsylvania?
There was a time when you could file for bankruptcy to stop an eviction. Many Chapter 7 filers would use their bankruptcy to stop a sheriff from executing a judgment for possession. While landlords had a right to petition the bankruptcy court to lift the automatic stay that protected the debtor, many were unaware of this right or lacked the conviction to hire a bankruptcy attorney to file the necessary motions. Therefore, Chapter 7 often kept a person in their rental property for the duration of the case.
However, in 2005 the law changed. The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) provided landlords several exemptions from the automatic stay. If a judgment for possession was entered or if the tenant was endangering the property or using illegally using controlled substances, the automatic stay did not apply. These new provisions made it much more difficult for a tenant to stop an eviction through bankruptcy.
Nonetheless, tenants still have rights and certain protections under the Bankruptcy Code. Our skilled Philadelphia bankruptcy lawyers are available to help if you are facing an eviction. However, it is better to be proactive than reactive if you wish to stay in your apartment or rented home. If you believe you are facing eviction, call Young, Marr & Associates at (215) 701-6519 to schedule an immediate consultation.
Rental Arrears and Bankruptcy in Pennsylvania
How helpful filing for bankruptcy will be if you are behind on your rental payments depends on your situation. Whether you will be able to discharge the debt, stop the eviction, or be permitted to bring your rent currents will hinge on where you are in the eviction process. Additionally, the chapter of bankruptcy will also play a significant role.
Chapter 7 and Pennsylvania Evictions
Chapter 7 was intended for individuals with limited income and assets. Through Chapter 7, a debtor can eliminate most of their unsecured debt in four to five months. When you file a bankruptcy case, a legal wall is created between you and your creditors. Commonly referred to as the “automatic stay,” this court injunction stops all collection actions against you, including an eviction. However, there are important exceptions, depending on where you are in the eviction process.
If your landlord has not begun eviction proceedings or if the process is in its early stages, Chapter 7 will prohibit any continuing legal action. However, this does not mean you will be able to stay in the property. The stay will last as long as your bankruptcy is active – usually about four or five months. While any money you owed the landlord will have been discharged, your landlord will likely file an eviction action as soon as your case is closed. A petition to lift the stay could also be filed with the court before the case is closed.
This does not mean you are without a remedy. You have 30 days from the filing date to pay the money you are behind. If you can do this while continuing to pay your monthly rent, you should be permitted to stay in the property. However, your landlord might still refuse to renew your lease at the end of its term.
If your landlord obtained a judgment for possession, the situation is much different. The automatic stay that would normally protect you does not apply. Therefore, even if you file for bankruptcy, your landlord is permitted to continue with the eviction process. To avoid eviction, you should contact our experienced Pennsylvania bankruptcy lawyers sooner rather than later.
Chapter 13 and Pennsylvania Evictions
A Chapter 13 bankruptcy differs from Chapter 7. While you are still able to discharge debt, the primary purpose of Chapter 13 is to restructure your financial obligations. Depending on your income, assets, and debt, you will be required to pay a portion or all your debt within three to five years. This debt could include rental arrears. However, the judgment exception still exists.
If you file for Chapter 13 before the eviction process begins or before a judgment is entered, you will be permitted to pay your arrears through the bankruptcy plan. When a Chapter 13 case is filed, the Bankruptcy Court appoints a Chapter 13 trustee. The trustee administers the case for the court, reviewing the documents the debtor files to determine if they comply with the law. The trustee is also tasked with collecting and disbursing funds paid through your bankruptcy plan.
If your lease has not expired, the trustee has the right to assume or reject it. In most situations, unless your rental payment is deemed excessively expensive, the trustee will not take an interest in your lease. In nearly every case, the trustee will reject the lease.
Once the trustee rejects the lease, you have a decision to make. You can assume the lease. This means you intend to cure the default and continue to pay your monthly rental payments. In most Chapter 13 cases, the rental arrears are included in and paid through the bankruptcy plan. If your plan lists an amount that is lower than what you owe, your landlord could file an objection.
You also have the right to reject the lease. When a debtor rejects a lease, they will owe any unpaid rents, fees, or charges. Whether this money must be paid through your bankruptcy plan depends on your other debt, income, and assets. Our Berks County bankruptcy attorneys will review your unique situation, so you understand your legal obligations.
Call Our Pennsylvania Bankruptcy Attorneys if You Are Facing an Eviction
Being evicted from your home or apartment is a frightening experience. Depending on how quickly you react, filing for bankruptcy could stop the eviction and provide you the tools to pay back the amount you are behind. Landlords have substantial rights under the Bankruptcy Code, so it is crucial to contact our Lower Merion bankruptcy lawyers immediately if your landlord is threatening eviction. Call Young, Marr & Associates at (215) 701-6519.