Can You File for Bankruptcy to Avoid Eviction in Pennsylvania?

People who file for bankruptcy often have numerous debts they can no longer afford, including debt related to rent. While filing for bankruptcy can help protect petitioners from being evicted, these protections are not all-encompassing, and you might still be evicted.

When you file for bankruptcy, the bankruptcy court will impose an automatic stay that prevents creditors, including landlords, from taking adverse legal action against you for unpaid debt. Generally, this means that landlords cannot begin eviction proceedings while the automatic stay is in place. However, if eviction proceedings have already been completed and your landlord obtained a judgment of possession, the automatic stay does not protect you from being evicted. Additionally, landlords may circumvent the automatic stay and evict you under specific circumstances.

For a free, confidential case review, call our Pennsylvania bankruptcy lawyers at Young, Marr, Mallis & Associates at (215) 701-6519.

Does Filing for Bankruptcy Protect You from Being Evicted?

In the past, filing for bankruptcy came with an automatic stay that protected you from eviction as long as landlords did not take legal steps to lift the automatic stay. Now, more restrictions limit the reach of the automatic stay, and landlords can still evict under certain circumstances.

Evictions Under an Automatic Stay

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.

Restrictions on the Automatic Stay

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 illegal 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.

Can Emergency Bankruptcy Stop an Eviction in Pennsylvania?

When filing emergency bankruptcy petitions, petitioners may submit a few key documents to begin their case and take advantage of the automatic stay. Remaining case documents must be filed within 14 days. The automatic stay can help protect petitioners from eviction, but not in every situation.

Landlords Can Lift the Automatic Stay

The automatic stay prevents creditors and others you may owe money to, such as landlords, from initiating legal action to collect the debt. This often means that a landlord cannot begin eviction proceedings if a tenant has not paid rent if that tenant files for bankruptcy.

If the landlord has already begun the eviction process, it must immediately stop once the automatic stay is in place.

The automatic stay is not foolproof. Landlords may file a motion for relief from the automatic stay. If granted, this motion would allow a landlord to move forward with an eviction despite the automatic stay.

Where Are You in the Eviction Process?

A key consideration is where you are in the eviction process. If the process has not started, your landlord may not begin eviction proceedings while the automatic stay is in place unless they take the time and hire a lawyer to file a motion for relief from the automatic stay. In some cases, landlords would rather wait out the automatic stay than initiate costly legal action to get around the stay.

If the landlord already started the eviction process and has obtained a judgment of possession, the automatic stay will not stop the eviction. Legally, the eviction has already occurred, and the automatic stay will not undo it.

Why Are You Being Evicted?

Our Bucks County, PA bankruptcy lawyers must also think about why you are being evicted. If your landlord wants to evict you solely because you have not paid rent, you may have greater legal protections. However, the automatic stay does not apply to situations where a tenant is using illegal drugs on the property or poses a danger to the property (e.g., they are actively harming the property).

If your landlord argues that the automatic stay should not stop them from evicting you because you are using drugs or damaging the property, they must prove it. If they cannot produce evidence of property damage or drugs, they may be unable to move forward with the eviction.

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 current will hinge on where you are in the eviction process. Additionally, the chapter of bankruptcy will also play a significant role.

How Bankruptcy Affects Rental Arrears

Depending on how you file for bankruptcy, your rental arrears, which include unpaid rent to your landlord, may be discharged. Once these debts are discharged, you would no longer be legally obligated to pay them, and your landlord cannot take legal action to collect the debt.

Rental arrears are often discharged when petitioners file for Chapter 7 bankruptcy. When filing for Chapter 13 bankruptcy, debts are reorganized into a payment plan rather than discharged.

Can You Pay Your Arrears?

The automatic stay may give you enough time to regain control of your finances and find ways to pay certain debts. If possible, you may use this time to pay your arrears, which may get your landlord to stop pursuing evictions.

For many, maintaining their residence is of the utmost concern, and it is much easier to handle your bankruptcy case when you know that your home is no longer in jeopardy.

Does Bankruptcy Protect Your Lease?

While the automatic stay can prevent landlords from evicting tenants, it does not protect a tenant’s lease. Even if a landlord cannot evict a tenant while their bankruptcy case is pending, they are not required to renew the tenant’s lease.

Once the lease has expired or has been voided, the landlord may tell you to leave and refuse to renew. For many, once their bankruptcy case is over, they must still find a new place to live.

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.

How Long Does the Automatic Stay Last?

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.

Can You Pay the Landlord?

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.

Filing for Bankruptcy After Eviction

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 may continue the eviction process. To avoid eviction, you should contact our experienced Philadelphia bankruptcy lawyers sooner rather than later.

Chapter 13 and Pennsylvania Evictions

A Chapter 13 bankruptcy differs from Chapter 7. While you can still 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 of your debt within three to five years. This debt could include rental arrears. However, the judgment exception still exists.

Rental Payments and Payment Plans

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.

Your Lease Under Chapter 13

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.

Will an Automatic Stay Stop Your Landlord from Evicting You?

The automatic stay will prevent your landlord from evicting you, but your landlord may get around the automatic stay under certain circumstances. You may be evicted if your landlord has already obtained a judgment of possession. They may also evict you if they have evidence that you were using illegal drugs on the property or pose a danger to the property.

Does Your Landlord Have to Let You Stay in Your Home After Your Bankruptcy Case is Complete?

No. Once your bankruptcy case is over and the automatic stay is lifted, your landlord may choose not to renew your lease or resume eviction proceedings if they have a valid, legal reason to do so. As such, you may need to make arrangements to move once your case is complete.

Can You Negotiate with Your Landlord?

Yes. If your landlord only wants to be paid the rent they are owed, and you have been a good tenant in all other respects, they may agree to forgo eviction if we can convince them that you will make good on your debts. They may even agree to make things easier for you by waiving late fees and other penalties.

Call Our Pennsylvania Bankruptcy Attorneys if You Are Facing an Eviction

For a free, confidential case review, call our Delaware County, PA bankruptcy lawyers at Young, Marr, Mallis & Associates at (215) 701-6519.