Will Chapter 7 Bankruptcy Stop an Eviction?

Bankruptcy's automatic stay will prevent your landlord from beginning or continuing with eviction proceedings during your Chapter 7 bankruptcy. However, there are two important exceptions to this rule. In addition, the landlord can always ask the judge to lift the stay, and courts tend to grant these requests. (To learn more about the automatic stay, see How the Automatic Stay Protects Bankruptcy Filers.)

When the Automatic Stay Will Not 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 the illegal use of controlled substances on the property.

If the Landlord Already Has a Judgment

If your landlord has already obtained a judgment of possession against you when 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.

If the eviction order is based on your failure to pay rent, you may be able to have the automatic stay reinstated. However, this exception applies only if your state's law allows you to stay in your rental unit and "cure" (pay back) the rent delinquency after the landlord has a judgment for possession. Very few states allow this. To find out whether yours is one of them, ask the sheriff or someone at legal aid (if you have legal aid in your area).

If you really want to keep your rental, talk to a lawyer. The rules and procedure for getting the stay are somewhat complicated. If you don't interpret your state's law properly, file the necessary 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 Use of Controlled Substances

An eviction action will not be stayed by your bankruptcy filing if your landlord wants you out because you endangered the property or engaged in the "illegal use of controlled substances" on the property. And your landlord doesn't have to have a judgment in hand when you file for bankruptcy. The landlord may start an eviction action against you or continue with a pending eviction action even after your filing date if the eviction is based on property endangerment or drug use.

To evict you on these grounds after you have filed for bankruptcy, your landlord must file 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 have endangered the property or engaged in illegal drug use on the property during the 30-day period prior to the landlord's certification.

If your landlord files this certification, he or she 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 landlord's certification. If you do that, the court must hold a hearing on your objection within ten days. If you prove that the statements in the certification aren't true or have been remedied, you will be protected from the eviction while your bankruptcy is pending. If the court denies your objection, the eviction may proceed immediately.

As a practical matter, you will have a very difficult time proving a negative—that is, 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 would be "remedied." In short, this is another area where you'll need a lawyer if you have to fight it out.

Landlords Can Ask the Court to Lift the Stay for Other Reasons

Landlords can always ask the court to lift the automatic stay to begin or continue an eviction on any grounds. Although the automatic stay will kick in unless one of these exceptions applies, the judge can lift the stay upon the landlord's request. And many courts are willing to do so, because most evictions will have no effect on the bankruptcy estate—that is, your tenancy isn't something that the trustee can turn into money to pay your creditors. As a general rule, bankruptcy courts are inclined to let landlords exercise their property rights regardless of the tenants' debt problems.

Excerpted from How to File for Chapter 7 Bankruptcy, by Attorney Stephen Elias, Albin Renauer, J.D., & Robin Leonard, J.D. (Nolo).