Will Chapter 7 Bankruptcy Stop an Eviction?

Bankruptcy's automatic stay will prevent your landlord from beginning or continuing eviction proceedings during your Chapter 7 bankruptcy. However, there are two important exceptions to this rule, and the landlord can always ask the judge to lift the stay, which courts tend to grant.

When the Automatic Stay Won't Stop an Eviction

Bankruptcy law gives landlords the right to evict a tenant despite the automatic stay in either of the following cases:

• The landlord got a judgment for possession before the tenant filed for bankruptcy (if the judgment was for failing to pay rent, there is a possible exception to this rule, discussed below).
• The landlord is evicting the tenant for endangering the property or for the illegal use of controlled substances on the property.

These exceptions were created by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 and are codified in the automatic stay statute. (11 U.S.C. § 362(b)(22), (b)(23).)

If the Landlord Already Has a Judgment

If your landlord obtained a judgment of possession against you before you file for bankruptcy, the automatic stay won't help you (with the possible exception described below). The landlord may proceed with the eviction just as if you never filed for bankruptcy. (11 U.S.C. § 362(b)(22).)

If the eviction order is based on your failure to pay rent, you may be able to have the automatic stay reinstated. To use this exception, you must file a certification with the bankruptcy court—at the time you file your bankruptcy petition—stating that your state's law allows you to remain in your rental unit and "cure" (pay back) the rent delinquency even after the landlord has a judgment for possession. You must also deposit with the court clerk any rent that will become due during the 30 days after your filing. This exception applies only if your state's law actually permits a post-judgment cure; very few states allow it. To find out whether yours is one of them, ask the sheriff or someone at your local legal aid office. (11 U.S.C. § 362(l)(1).)

If you want to keep your rental, talk to a bankruptcy lawyer. The rules and procedures for reinstating the stay are somewhat complicated. If you don't interpret your state's law correctly, file the required paperwork on time, and successfully argue your side if the landlord objects, you could find yourself put out of your home. A good lawyer can tell you whether it's worth fighting an eviction, and, if so, how to go about it.

Endangering the Property or Illegal Drug Use

Your bankruptcy filing won't stop an eviction if your landlord seeks to remove you because you endangered the property or engaged in the "illegal use of controlled substances" on the property. Your landlord doesn't need to have a judgment in hand when you file for bankruptcy. The landlord can start or continue an eviction action after your filing date if it's based on property endangerment or illegal drug use. (11 U.S.C. § 362(b)(23).)

To evict you on these grounds after you have filed for bankruptcy, your landlord must file with the court and serve on you a certification showing either of the following:

• The landlord has filed an eviction action against you based on property endangerment or illegal drug use on the property.
• You endangered the property or engaged in illegal drug use on the property during the 30-day period before the landlord's certification.

If your landlord files this certification, the landlord can proceed with the eviction 15 days later unless, within that time, you file and serve on the landlord an objection to the truth of the statements in the certification. If you do object, the court must hold a hearing on your objection within 10 days. If you prove that the statements in the certification aren't true or have been remedied, you'll be protected from eviction while your bankruptcy is pending. If the court denies your objection, the eviction may proceed immediately. (11 U.S.C. § 362(m).)

As a practical matter, you'll have a very difficult time proving a negative, that you weren't endangering the property or using drugs. Similarly, once allegations of property endangerment or drug use are made, it's hard to see how they could be "remedied." This is another situation where you'll need a lawyer if you have to fight it out.

Landlords Can Ask the Court to Lift the Stay

Even when none of the above exceptions apply, a landlord can always ask the court to lift the automatic stay to begin or continue an eviction. Many courts are willing to grant this relief because most evictions have no effect on the bankruptcy estate—your tenancy isn't an asset the trustee can convert to cash to pay your creditors. As a general rule, bankruptcy courts are inclined to let landlords exercise their property rights regardless of tenants' debt problems. (11 U.S.C. § 362(d).)