Will Bankruptcy Prevent an Eviction?

In the past, many people filed for Chapter 7 bankruptcy to stop the sheriff from enforcing a judgment for possession (an eviction order). While landlords could come into court and ask the judge to lift the automatic stay and let the eviction proceed, many landlords didn't know they had this right—and many others didn't have the wherewithal to hire attorneys (or the confidence to handle their own cases). In other words, filing for Chapter 7 bankruptcy often stopped court-ordered evictions from proceeding for the duration of the bankruptcy.

Today, things are a bit different. The 2005 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 does not already have a judgment when you file, and he or she wants to evict you for reasons other than endangering the property or using controlled substances (for example, the eviction is based on your failure to pay rent or violation of another lease provision), the automatic stay will prevent the landlord from beginning or continuing with eviction proceedings. However, the landlord can always ask the judge to lift the stay, and courts tend to grant these requests.

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.

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.

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