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Can Bankruptcy Prevent a Pending Eviction?

When money becomes tight, it typically becomes necessary to choose which bills to pay first, and for many, the priorities become food and transportation. These choices may mean that money for rent may just not be available, and while most landlords will give tenants some leeway when payments are late simply due to the time and expense associated with eviction, at some point, non-payment will spark eviction proceedings. Facing the possibility of being homeless can push some individuals to seek Chapter 7 bankruptcy as an avenue for suspending eviction proceedings, and hopefully, to allow them to free up money from other sources to meet this important obligation. Having the ability to stay in one’s home is an important consideration in the bankruptcy process, and a discussion of when the law will and will not stop eviction proceedings from moving forward will follow below.

Halting Legal Actions Generally

The point of bankruptcy relief is to give a debtor the opportunity to get a fresh financial start, and one important way this is accomplished is through the suspension of all pending legal actions until the bankruptcy court has had a chance to review the situation, referred to as the automatic stay. This suspension of legal proceedings is temporary for certain debts, including evictions, but it does give the debtor a chance to assess the situation and decide how to respond. Eviction proceedings are included in this feature, to a point, as the application of the automatic stay depends upon how far the eviction process has advanced, state law, and whether a dangerous condition existed on the property prior to filing for bankruptcy.

When Evictions Will be Halted

If the bankruptcy is filed before eviction proceedings are initiated, the automatic stay will operate to stop any new filings while the bankruptcy case is pending. However, the block on evictions is likely to be temporary, because the landlord can ask the court to lift the stay so legal action can commence. Unless the debtor has extenuating circumstances to justify keeping the stay in place, the bankruptcy court will typically allow the landlord to move forward with an eviction. What a debtor can do during the time of the automatic stay, in order stay in the property, is pay the amount in arrears, and provide assurances to the landlord and bankruptcy court that future payments will be timely paid. Failure to become current on the rent will likely mean the eviction will be permitted to continue to completion.

When Evictions can Proceed

By contrast, if an eviction suit is already filed, and the landlord was able to obtain a judgment for possession before the bankruptcy petition was filed, the automatic stay will not apply, and the landlord can take steps to execute the order. If the eviction is at an intermediary stage, i.e., notice is given to the tenant or an eviction lawsuit is pending, the automatic stay will be enforced, at least initially, and give the tenant time to gather money together.

The other situation in which the automatic stay does not apply is if dangerous conditions or illegal drugs existed on the property. If these circumstances are present, the landlord can proceed or initiate eviction without the bankruptcy court’s permission, though it will need to provide a certification or evidence of these activities to the bankruptcy judge to support bypassing the automatic stay.

Get Legal Advice

If you have questions about a pending bankruptcy action, talk to an experienced bankruptcy attorney about your options. Getting even a little time to regroup can make all the difference in regaining some stability. Christopher L. Arrington, P.C. helps clients use the Chapter 7 bankruptcy process to start over, and is available to discuss whether this process is right for you. Contact the Danville law firm to schedule an appointment.

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