Does Bankruptcy Stop Eviction?
Since the collapse of the housing market in 2007, millions of American households have been faced with the very real possibility of being evicted from their home or apartment. Unlike mortgage foreclosure, eviction can be a very quick process. This, in turn, has left many people wondering if personal bankruptcy can stop eviction.
The answer depends on many factors, including a filer's state of residence, the circumstances of the eviction, whether eviction proceedings have begun, and what chapter of bankruptcy a filer chooses.
If you would like specific feedback about whether filing for bankruptcy might help prevent or delay eviction in your specific situation, please fill out this form to get in touch with a bankruptcy lawyer.
Can Chapter 7 Bankruptcy Stop Eviction?
Chapter 7 bankruptcy moves quickly – filers generally receive a discharge in as little as four to six months. In this time, Chapter 7 might delay eviction in these ways:
- The automatic stay: This legal protection lasts the duration of the bankruptcy case and prevents creditors from taking any collection actions. This means that a landlord may not be able to evict or file a lawsuit against a tenant to collect on rental debts while the automatic stay is active, depending on the circumstances.
- Saving money: While the Chapter 7 case is active (that is, during that four- to six-month period), unsecured debts are typically no longer paid, as they will likely soon be discharged. This often allows a filer to save some money and find room to keep current with their rent.
- Discharge of debt: At the end of a Chapter 7 case, unsecured debts are discharged. Because a renter is merely a tenant in a house or apartment, past-due rent is unsecured, and can often be forgiven by the bankruptcy court.
Can Chapter 13 Bankruptcy Stop Eviction?
Chapter 13 bankruptcy moves more slowly. Filers make payments to creditors over a period of three to five years in order to catch up on past-due debts. In that time:
- The automatic stay: This legal protection works the same way as it does in Chapter 7. The benefit of Chapter 13 bankruptcy is that filers typically have a longer period of court protection in which they may be able to avoid eviction and other collection efforts, though it will depend on whether and when the court lifts the automatic stay.
- The repayment plan: In most cases, a filer may be able to include back rent in the repayment plan, and thus catch up on what they owe. A Chapter 13 may also include debts related to an auto loan, child support, and other sources.
- The debt discharge: Finally, the court often discharges lower-priority, unsecured debts in Chapter 13 cases so that filers can focus on more important ones.
In brief: bankruptcy may be able to stop or delay eviction, but is not guaranteed to; the answer to whether bankruptcy will prevent eviction depends on the specifics of an individual filer’s case.
Is bankruptcy right for you? Connect with a bankruptcy lawyer today and learn your options.