Filing bankruptcy can be freeing and give you a new financial start, but it can also be scary, especially when you’re uncertain of the consequences. People usually have questions about their credit score and property, and if they’re renting, they often wonder if filing bankruptcy will affect their lease. It’s obviously best to avoid eviction if at all possible, but for some people, the chance to get out of a lease they can no longer afford might be a welcomed change. No one wants to be caught off guard and have to find a new place to live on short notice, so we’ll work together to make sure you always know what to expect throughout your bankruptcy.
Whether you’d like to move or need the consistency of living in the same place during your bankruptcy, I always advise people to stay current on their rent if they can. Each situation is different and there’s a chance your landlord can legally evict you. But if you’ve been a good renter, they’d much rather keep consistent rental income than to go through the steps of eviction and take a chance on a new renter. If you do fall behind on rent, remember that declaring bankruptcy begins the Automatic Stay. This means your landlord must stop their eviction efforts, which gives you some time to get caught up. If the landlord petitions the court, however, the court could lift the Automatic Stay, which means you’ll need to pay rent or move out.
The Automatic Stay will stop evictions that are in progress, but if you’ve already been legally evicted, you will most likely need to move. If you’re in danger of being evicted and are considering bankruptcy, call me right away. The sooner you take action, the better chance you have of staying put. Sometimes you can work with the court and make payments to them to get up to date and keep your lease. You’ll usually have 30 days to get caught up.
Working With the Trustee
After you’ve filed your case, you’ll meet with the trustee during your 341 Meeting. During this meeting, the trustee will be evaluating your case, asking clarifying questions, looking for fraud, and possibly making decisions about your lease.
With a Chapter 13, you get to decide if you keep your lease or not. If you’d like to end your lease, it is your right to do so, and if you’d like to stay where you are, your landlord usually cannot evict you. However, if you decide not to end your lease, your landlord may have your wages garnished so that they’re ensured to get full rent payments on time.
With a Chapter 7, it’s up to the trustee to terminate or continue your lease. The trustee may allow your landlord to evict you if the court believes your rent amount is unreasonable. If the trustee decides that the rent is reasonable for your budget and area, your landlord may ask you to provide proof that you can afford your rent.
Take Action Now
If you’re considering bankruptcy and are concerned about being evicted, call me right away. Filing quickly may buy you some time to get caught up with payments or it may give you a legal way out of an unaffordable lease. Either way, call me with questions and we’ll get your bankruptcy wrapped up as quickly as possible.