Understanding Bankruptcy Eviction: Chapter 7 vs Chapter 13

When searching for a new apartment, bankruptcy can provide powerful protection to renters who have fallen behind on their leases. If you file a Chapter 7, the automatic stay can keep you in your apartment for the duration of the bankruptcy or until the automatic stay is lifted. Rental arrears must be addressed outside of the bankruptcy to remain in the home. In Chapter 13, you can get 3 to 5 years to cure the rental arrears. In Chapter 13, the lease obligations will stay intact. Being evicted or filing for bankruptcy can make getting a new apartment lease more difficult.

The Role of Background Checks in Rental Applications

Besides reviewing applicants’ credit reports during the rental application process, some landlords also perform comprehensive background checks that reveal additional information about criminal history, including eviction records. They designed these checks to help landlords assess the risk of renting their property to a particular individual.

While having an eviction on your record may make it more difficult for you to secure future rental agreements, it’s important not to lose hope. There are steps you can take to rebuild your credit after bankruptcy and show financial stability and responsibility to improve your chances of securing a favorable lease agreement.

By filing for bankruptcy, you may stop an eviction in its tracks; let’s explore how this works. Filing for bankruptcy may help you stop or delay an eviction process using the automatic stay provision. This legal protection temporarily halts collection actions against you, including evictions. However, certain conditions must be met to benefit from this temporary protection; sometimes, it might not apply. The automatic stay is a powerful feature of bankruptcy that goes into effect immediately upon filing your case. It prevents creditors from taking any further action to collect debts without court permission. In eviction proceedings, the automatic stay can provide valuable time for tenants facing imminent removal from their homes. While the automatic stay may temporarily halt ongoing eviction processes, it does not guarantee permanent relief from eviction.

Exceptions to the Automatic Stay in Eviction Cases

In some situations, landlords can bypass the automatic stay and proceed with an eviction despite a tenant’s bankruptcy filing:

• Judgment obtained before bankruptcy: If your landlord already has a judgment for possession before you file for bankruptcy (meaning they have won their case against you), they can continue the eviction process even after your filing.
• Dangerous behavior or illegal drug use: A landlord who believes that a tenant is endangering property or engaging in illegal drug use on-premises can ask the court to lift the automatic stay and allow them to proceed with an eviction based on these grounds.
• Rent not deposited within thirty days: If your landlord has an eviction judgment against you may still save the apartment under Chapter 7 or Chapter 13 bankruptcy, you must file a certification with the court stating that you have deposited 1 month’s rent with the clerk when you file your case. Failing to deposit past-due rent within 30 days of filing bankruptcy could lead to lifting the stay and resuming eviction proceedings. The balance of the past-due rent is due within 60 days of filing the case.

Understanding these exceptions is crucial when considering whether bankruptcy can help stop an eviction. Consult an experienced bankruptcy attorney to determine if this strategy suits your situation.

Filing for bankruptcy can be a powerful method to halt an eviction, but it is important to comprehend the exceptions that may apply in your particular situation. Chapters 7 and 13 provide different options for discharging or repaying debt for those dealing with back rent.

Dealing with Back Rent through Bankruptcy

Depending on your financial situation and the specifics of your case, you may choose between Chapter 7 or Chapter 13 bankruptcy to address unpaid rent. This section will discuss how each type of bankruptcy can help manage back rent and which one might be more suitable for your circumstances.

Discharging Back Rent under Chapter 7

In a Chapter 7 bankruptcy case, most unsecured debts are discharged, meaning they will be wiped out and no longer legally enforceable. This includes past due rent you owe to a landlord at the time of filing. Still, it is important to remember that even if back rent gets discharged under Chapter 7, the landlord can still evict you based on violating the lease agreement.

Creating a Repayment Plan with Chapter 13

If you want to keep living in your rented home while addressing unpaid rent issues, filing for Chapter 13 bankruptcy might be more appropriate. Under this type of bankruptcy proceeding, you create a repayment plan spanning three-to-five years where some or all outstanding debts are paid off.

• Past Due Rent: Your repayment plan should include provisions for paying off any past due amounts owed to landlords as part of your monthly payments.
• Current Rent: It is crucial to continue paying your current rent on time and in full throughout the duration of your Chapter 13 plan. Failure to do so could cause eviction proceedings despite being under bankruptcy protection.

Sometimes, a Chapter 13 repayment plan can help you catch up on back rent without losing your home. However, sticking with the payment schedule for several years requires commitment and discipline. Consult an experienced bankruptcy attorney to determine which type of bankruptcy filing best suits your needs and circumstances when dealing with unpaid rent issues.

Dealing with back rent through bankruptcy can be a complex process, but understanding the basics of Chapters 7 and 13 will help you make informed decisions.

Rebuilding Credit After Eviction And Bankruptcy

Dealing with an eviction and bankruptcy can be a challenging experience, but it’s essential to focus on rebuilding your credit score to improve your chances of securing future rental agreements. Following these strategies will show financial stability and responsibility while establishing a positive payment history.

Establishing a Positive Payment History

The first step in rebuilding your credit after an eviction and bankruptcy is establishing a positive payment history. To ensure a positive payment history, set up automatic payments for all your bills to avoid missed due dates. Set up a system to ensure all your regular payments, such as rent/mortgage installments, energy bills, and credit card dues, are paid on schedule. If possible, set up automatic payments for each bill so you never miss a due date.

You may also consider getting a secured credit card to help rebuild your credit score more quickly. With this card type, you deposit money into an account as collateral for the line of credit extended by the lender (source). Make small purchases using the secured card each month and pay off the balance in full before the due date to avoid interest charges.

Demonstrating Financial Stability and Responsibility

• Create a budget: Develop a realistic budget based on your current income and expenses. Stick to this budget consistently over time so potential landlords can see evidence of responsible financial management.
• Build savings: Aim to save at least three months’ worth of living expenses in case unexpected situations arise (e.g., job loss or medical emergencies). A healthy savings account will show prospective landlords you’re prepared for unforeseen circumstances.
• Pay down debt: If you have any remaining debts after your bankruptcy discharge, pay them off as quickly as possible. This will improve your credit score and show potential landlords that you’re committed to resolving past financial issues.

Besides these strategies, consider providing a letter of explanation when applying for rental properties. In this letter, explain the circumstances of your eviction and bankruptcy while emphasizing the steps you’ve taken since then to rebuild your credit and become financially stable (source). Addressing past setbacks and showcasing positive changes in your financial habits will increase the likelihood of securing future rental agreements despite an eviction or bankruptcy on your record.

Conclusion

Filing for bankruptcy can be a beneficial strategy to stave off eviction and should not be overlooked as an option. You may postpone or halt an eviction through prudent planning and knowing your rights through bankruptcy.

Take control of your financial future by contacting the Law Office of William Waldner for help with bankruptcy and eviction. Our experienced attorneys can help you make informed decisions about moving forward in a way that best suits your needs.