Can Bankruptcy Stop Evictions In Minneapolis?

Posted by William Kain on February 6, 2018 at 5:52 PM
William Kain

Bankruptcy-Eviction-MinnesotaDepending on the timing, bankruptcy’s automatic stay often stops eviction actions in Minneapolis, even if the wolves are already gathering at the door.

To fully answer this question, it’s important to understand how the eviction process works in the Gopher State. In most cases, landlords give notice of the defect and an opportunity to cure. Most Minneapolis evictions are based on unpaid rent. Some other common grounds include a lease violation (e.g. an unauthorized pet or roommate), drug activity, prostitution, weapons violations, or some other public nuisance, and a holdover tenancy. This letter is not a legal eviction notice, even if it contains the E-word.

Once the opportunity to cure period expires, which is usually about a week, the landlord can file an eviction complaint and serve the summons on the wayward tenant. There are a lot of procedural matters in this phase. For example, a corporate landlord usually needs and attorney to file an action, even if the corporate entity is really just a tax shelter. And, if an agent files the complaint, s/he must have written authorization from the owner. Furthermore, the tenant must receive the summons at least seven days before the court date. If the complaint is defective, the judge may throw it out, and the landlord must start over.

After a successful trial, the landlord can obtain a writ of recovery and order to vacate. That’s a separate document that the judge must sign. Most eviction-related bankruptcies occur right around this point, because bankruptcy is a last resort for most tenants.

The Automatic Stay

Taking a step back, nearly all the aforementioned scenarios are almost entirely beyond the tenant’s control. An income redirection in another area, perhaps a job loss or a medical bill, often causes a rent delinquency, a friend may need to spend more than just a few nights on the couch, and so on. So, it stands to reason that Section 362 of the Bankruptcy Code applies in most these situations. In most cases, the automatic stay prevents adverse action like:

  • Evictions,
  • Repossessions,
  • Foreclosures,
  • Wage garnishment, and
  • Creditor harassment.

The automatic stay is limited if the debtor filed another voluntary petition within the last year. Special rules also apply in eviction cases, as outlined below.

Bankruptcy and Evictions

Prior to 2005, eviction lawsuits were just like any other lawsuit. Once the automatic stay went into effect, all lawsuit activity stopped immediately, no matter what stage it was in. But Congress changed the rules when it reformed the bankruptcy code. The same legislation that included changes like the means test and credit counselling requirements also modified the interplay between bankruptcy and eviction.

If the landlord obtained a judgement before the tenant filed a bankruptcy petition, the landlord may move forward and obtain an executory writ. As explained earlier, this writ authorizes the sheriff or other officer of the court to evict the tenant.

Things are even more complicated if, like most Minneapolis evictions, the judgement is based on unpaid rent. In some cases, the bankruptcy filing will delay the eviction up to thirty days, giving the tenant more time to catch up on delinquent rent. This exception is very narrow and does not apply very often.

Mediating Disputes

Even if bankruptcy stops the eviction, the landlord may still ask the judge for permission to proceed anyway. That’s because the underlying problem, be it unpaid rent or whatever, is still there. The good news is that, in addition to short-term solutions through the Automatic Stay, Minnesota bankruptcies also offer long-term solutions.

This aspect of bankruptcy is especially important to the lawyers at Kain & Scott. Some bankruptcy law firms do little more than file paperwork. But our attorneys are committed to finding lasting solutions for debtors.

If there is a legitimate dispute between moneylender and borrower as to a debt due or some other aspect of the rental agreement, most judges refer these matters to bankruptcy mediation. Typically, all parties must negotiate in good faith during these sessions. This phrase usually means that the landlord must make a concerted effort to resolve the dispute and make concessions when appropriate. A simple demand to pay the entire amount due by a certain date or else is not a good faith negotiation, and that’s probably the offer the landlord will make if the tenant does not have the protection of the bankruptcy court.

As a result, when the tenant emerges from Chapter 7 or Chapter 13 bankruptcy, the unpaid rent or other issue is often permanently resolved and there is no more immediate eviction threat. In fact, most Chapter 13 debtors can use the debt consolidation payment to catch up on unpaid rent. Even though the amount may only be a few dollars a month, in most cases, the landlord must accept these partial payments.

Bankruptcy helps debtors resolve landlord-tenant disputes on very favorable terms that are unavailable otherwise. For a free consultation with an experienced Minneapolis Bankruptcy Attorney, contact Kain & Scott, P.A. We don't judge you, we help you get your life back! 

Kain & Scott, P.A.
100 South 5th Street #1900 
Minneapolis, MN 55402
(612) 843-0527 

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Topics: Minneapolis Bankruptcy

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