Posted on October 25th, 2014 in automatic stay, Bankruptcy Basics, Bankruptcy Planning, BAPCPA, Chapter 13, Chapter 7, Dischargeability, Procedure | No Comments »
If you are behind on the rent and are hoping to buy some time, or wipe out the obligation to the landlord altogether, under appropriate circumstances, Chapter 7 or Chapter 13 bankruptcy may be a solution. Filing for bankruptcy will usually wipe out the balance due for past due rent as of the date on which the case is filed. Rent for any period after the case is filed won’t be discharged. If the filing of the case is done correctly, you may also be able to buy some more time in the place before you have to move out.
The filing of a bankruptcy petition stops all efforts at collection, including an eviction proceeding. This automatic stay remains in effect until a creditor makes a request to the court and that request is granted, or until the case is closed or dismissed, or when your discharge is granted. Once the Chapter 7 or Chapter 13 bankruptcy case is filed, the eviction action has to stop as soon as the bankruptcy case is filed. Stopping the eviction means the debtor will get some extra time before having to move out.
However, there an exception to the above rule. If there a judgment for possession of the property due to failure to pay rent that was issued before the bankruptcy is filed, it is an exception to the automatic stay. This exception to the automatic stay will not apply if the debtor’s attorney did all of the following:
Specially marked the petition indicating a judgment of possession has been obtained on the rental property;
Provided the name and address of the landlord that obtained the judgment;
Filed with the petition and served on the landlord a certification under penalty of perjury that, under the applicable landlord-tenant law, there are circumstances under which debtor would be permitted to cure the entire monetary default that gave rise to the judgment for possession;
Along with the petition, deposited with the Clerk of the Bankruptcy Court any rent that would become due during the 30-day period after the filing of the bankruptcy petition; and
Within 30 days of the filing of the petition, filed with the bankruptcy court and served on the landlord a further certification (under penalty of perjury) that the entire monetary default has been cured.
If the tenant is being evicted because of a reason aside from failure to pay the rent – for example, conduct causing a health and/or fire risk; use of illegal drugs on property – then there is also an automatic exception from the automatic stay.
This exception applies only to residential property in which debtor resides, if debtor is “endangering” the property or using, or allowing to be used, illegal controlled substances on the property. In order for this exception to apply, the landlord must file with the court, and serve on debtor’s attorney, a certification under penalty of perjury that such an eviction action has been filed, or that debtor, during the 30-day period preceding the date of the filing of the certification, have endangered property or illegally used or allowed to be used a controlled substance on the property.
If such a certification is filed then debtor is required to file an objection with the court and serve such objection on the landlord within 15 days of the landlord’s certification. The court will hold a hearing, and debtor will have the burden of proving that the landlord is incorrect.
If you contemplating filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or are dealing with debt problems in Western New York, including Rochester, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a Rochester, NY, bankruptcy lawyer.