Bankruptcy Options for Renters
Bankruptcy allows renters to quit a lease agreement with no further obligation to pay rent, or, they may continue with the lease agreement and maintain their tenancy.
Renters Filing Bankruptcy
When filing either Chapter 7 or Chapter 13 Bankruptcy, renters are granted an "automatic stay" whereby the landlord may not file for eviction against the tenants due to past due rent.
But landlords needn't be aware that a tenant is filing bankruptcy. Tenants who are current on their rental payments do not list the landlord as a creditor when filing for bankruptcy, therefore, the landlord does not receive a notice of the bankruptcy proceeding.
Behind on Rent?
Rent that is past due is dischargeable when filing either Chapter 7 or Chapter 13 Bankruptcy. The debt can be forgiven entirely with no further obligation to pay.
However, it's likely for a landlord to begin eviction proceedings when back rent is owed. Even when an automatic stay has been granted, the landlord can apply for a motion to lift the stay and continue with the eviction.
If a landlord has already filed for eviction and received judgement against the delinquent tenants, the tenants will not be granted an automatic stay, and the landlord may proceed with the eviction.
Staying Put Through Bankruptcy
Renters that are current on their rent and file either Chapter 7 or Chapter 13 Bankruptcy will experience no issues involving their tenancy; it's likely the landlord will not even know that bankruptcy was filed. The tenants may stay put, and proceed according to the lease agreement.
Renters that are only a one or two payments behind, and where the landlord has not yet filed for eviction, can pay the past due rent and continue with their tenancy.
Even after Chapter 7 or Chapter 13 bankruptcy has been granted, tenants in any scenario will need to stay current on their rent payments in order to avoid eviction.
Schedule an Appointment with an Attorney
Fill out our quick form to make an appointment with a bankruptcy attorney.
Your information will be kept confidential, and your inquiry will be replied to quickly.