Eviction, Chapter 7 Bankruptcy and Chapter 13 Bankruptcy

I often receive phone calls from people in Rochester and elsewhere in Western New York who are facing a potential eviction involving a commercial or residential lease.  Usually the debtors do not know what their bankruptcy options are and are seeking advice how to proceed.

A bankruptcy filing by the tenant, either residential or commercial, immediately stops any pending eviction proceedings as a result of an “automatic stay.”  Automatic stay, as I have written previously, is a mandatory injunction that arises by operation of law without the need for a hearing or order of the Bankruptcy Court.  The automatic stay stops all of creditor’s efforts to pursue collections, litigation or judgment enforcement.  The automatic stay protect the debtor and the property of the debtor’s bankruptcy estate.  However, with respect to leases, it is critical to know at what stage the eviction proceedings are.

In the case of a lease, whether commercial or residential, the critical issue is whether a writ of eviction has already been issued from the landlord-tenant court. There is a significant body of case law holding that once a writ of eviction has issued from the landlord-tenant court the interest of the tenant in the lease has terminated.  As result, if the lease is considered to be terminated by the bankruptcy court, the tenant can be evicted and the automatic stay will not stop the eviction.  Thus, if a bankruptcy is being considered to prevent to postpone the eviction, it is critical for the debtor to contact a bankruptcy lawyer as soon as the eviction petition is served.

For a tenant who files for bankruptcy, the available options depend upon what chapter (type) of bankruptcy the debtor may be filing.

If the debtor is filing Chapter 7 bankruptcy, it may provide a delay in being evicted, and discharge the tenant from any liability under the lease.  At the same time, the filing will not allow the debtor to either cure the default or give extra time to make payments under the lease.

For an individual debtor who has a lease, and has not kept up with the payments, Chapter 13 bankruptcy can provide the opportunity to cure the arrears (past due rent) over time.  In a Chapter 13 bankruptcy, the arrears can be paid over a 5 year period, depending on the terms of the plan.  If the tenant doesn’t stay current with post-bankruptcy rent, the landlord can seek “relief from the automatic stay” from the Bankruptcy Court to permit the landlord to move forward to evict the tenant in state court.

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, New York, bankruptcy lawyer.