EVICTIONS AND BANKRUPTCY – POST COVID (Part 2)
How Can Bankruptcy Help
Filing a chapter 7 bankruptcy may only be a temporary stop to an eviction. By filing any chapter of bankruptcy, an Automatic Stay will take effect immediately upon filing. The Automatic Stay prevents any creditor, including a landlord, from taking any adverse action against you. All court hearings or proceedings will stop immediately upon notice of the bankruptcy filing. Assuming your landlord has not obtained an eviction judgment, the Automatic Stay will stop the eviction. However, the stay will only be for a short time. The landlord might go to the bankruptcy court and make a request to remove the stay. This process may be accomplished easily and quickly.
Once the Stay has been removed, the landlord will take action to move forward with the eviction. However, the chapter 7 bankruptcy discharge will eliminate any further past due rent or other charges the landlord may impose upon you. Additionally, you must act quickly to file bankruptcy before the landlord is awarded a judgment against you. Once the landlord has a judgment, even the bankruptcy Automatic Stay will not prevent the landlord from carrying out the eviction. While chapter 7 might be a temporary help, Chapter 13 bankruptcy might be a better option if you can afford to make monthly payments to pay back the rent arrears.
Filing a chapter 13 bankruptcy may help you pay back any past due arrears through a repayment plan. When a chapter 13 is filed, you will be proposing a repayment plan of your debt through monthly payments. A chapter 13 bankruptcy trustee will collect those monthly payments and pay your debt for you including rent arrears and other charges owed to your landlord, which will help you catch up on the rent. In any event, you must be able to remain current with the rent payments after your case has been filed. Another missed rent payment may start the eviction process all over again. If you have already filed bankruptcy, you may not be able to file again right away.
What Happens After I File Bankruptcy? Will I Ever Be Able to Rent Again?
Going through an eviction is hard enough. Then you file a bankruptcy on top of that. Renting again may be challenging. Most landlords will run a credit background check on any new tenant application. You will likely be asked if you have any recent bankruptcy filings. Landlords will check to see if you have any broken leases on your credit as well.
If you can stay in good graces with your landlord and avoid an eviction, or if you filed your case prior to the landlord obtaining a judgment, it’s not as difficult to rent again, even with a bankruptcy on your record. Your bankruptcy discharge will not allow any prior landlord to report a broken lease on your credit report once you file bankruptcy. However, it is possible to rent again after filing bankruptcy, even if you have a bankruptcy and a broken lease on your credit report. You can also begin to rehabilitate your credit rating immediately after filing bankruptcy. Rehabilitating your credit will help you improve your chances of being approved for a new lease.
If you need to file bankruptcy, call us today at 623-777-4760 now to schedule an appointment with us.