Evictions and Bankruptcy

Can Bankruptcy Stop An Eviction in California?
(Not permanently, but bankruptcy can get rid of back rent debt accumulated during the pandemic)

Can bankruptcy help stop an eviction? Well, it can delay it, for an extra month or two, in some cases, in some states, if you file early enough in the eviction process. Bankruptcy can, however be a great solution to the problem of "back rent debt" accumulated during the pandemic.
CDC Extends Eviction Ban Through October 3, 2021, But Supreme Court Overturns It
CARES Act Changes to the Bankruptcy Code

Last Reviewed: Fri, Jul 24, 2020

  • Bankruptcy CAN be a great solution to the problem of accumulated back rent, if you're ready to move anyway. 
  • Is Bankruptcy an Eviction Solution? No. A delay at best, on the eve of eviction. 

Bankruptcy Can Get Rid of Back Rent Debt

Bankruptcy CAN be a great solution to the problem of back rent, as explained in this article on Bloomberg Law News.

The Covid-19 crisis has created a unique confluence of events where tenants being evicted or ready to move, have the unsual circumstance of owing a very large amount of back rent. 

That kind of debt is exactly the type of debt bankruptcy is well suited to, especially if the client is planning on moving anyway. 

Bankruptcy Can Delay Eviction, But Not Prevent It

Bankruptcy can delay eviction an extra 60 days, if you file early enough, and your state allows a right to cure. Whatever eviction rights you have come from California’s tenant law on evictions.

Timing is everything...

Each state has wildly different laws. If your state has a right to cure, bankruptcy may be able to extend it. 

How much you may be helped depends a lot on where you are in your state law eviction process, (as explained in this presentation on Eviction and Bankruptcy Remedies given by Bankruptcy Lawyers Cathy Moran, Darya Druch, and Wayne Silver to to the National Housing Law Project, an organization based in San Francisco, California.)

As they point out:

Almost all states require landlords to use legal process to evict tenants. In California it is generally done through a court process known as an “unlawful detainer.” The eviction process usually begins with a termination notice for cause (usually a monetary breach). Receipt of a termination notice is the best time to talk to a bankruptcy attorney, because at that point the tenant has the most bankruptcy options.

A bankruptcy filing prior to the expiration of the allotted time to cure in a termination notice may extend the time to cure an additional sixty (60) days under 11 U.S.C. §108.

California Eviction Resources:

Here's a handy flowchart that shows the eviction process in California

Here are some other helpful links.

Bankruptcy law doesn't add much to those protections, for the simple reason that creditors aren't interested in your lease, chances are, so a landlord can typically get relief from the "automatic stay" that puts a stop to most other kinds of debt collection.

However, consulting with an attorney knowledgeable with debt problems can still help you. It's possible that bankruptcy can be part of an overall financial survival strategy that can keep your home, for example, by wiping out other debts so you can continue to make your rent.

Doesn't the automatic stay help stop evictions? 

Bankruptcy does include something called the automatic stay which does halt collection efforts against you during your bankruptcy. And there was a time that landlords didn't know they could go into court and get "relief" from the automatic stay and proceed with an eviction in most cases. These days, judges routinely allow landlords to proceed with evictions because there is no benefit to your creditors to you maintaining your tenancy -- and the point of the bankruptcy proceeding is to divvy up what you have among your creditors.

The bottom line about bankruptcy and evictions ...

Unless you're lucky enough to live in a state or county that gives you a right to cure an rent deficiency, AND you file early enough and submit the proper paperwork to a bankruptcy court, in most cases a judge will allow an eviction to proceed, regardless of whether you've filed for bankruptcy. In most cases, all the landlord has to do is ask the judge to "lift" the stay, to allow the eviction to proceed, and in most cases the judge will do just that.

In all cases you should see an experienced bankruptcy lawyer as early as possible, to help you get the most out of this process and discuss other debt relief and asset protection options.



Jurisdictional relevance: There are versions of this article for each State.
Selected State: California
CDC Extends Eviction Ban Through October 3, 2021, But Supreme Court Overturns It
CARES Act Changes to the Bankruptcy Code

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