Monthly living expenses can be high, especially rent. If you cannot keep up with rent payments, eventually your landlord could begin a formal process of removing you from your house or apartment; this is known as an eviction. A Chapter 13 bankruptcy can be helpful in stopping the eviction process. Under section 362(b)(22), a landlord may continue an eviction proceeding against a debtor to obtain possession of residential property, but only if a judgment was obtained against the debtor before the filing date.
This is limited to actions for possession of residential property in which the debtor resides as a tenant under a lease or rental agreement and does not apply to actions related to claims for back rent or other, pre-petition monetary judgments. A Chapter 13 bankruptcy can provide a temporary solution for an eviction. Back rent payments can be included as arrears in a Chapter 13 plan. This rental arrears can be paid through Chapter 13 monthly payments and throughout the life of the Chapter 13 bankruptcy. Once the Chapter 13 bankruptcy is over and a discharge is entered, there will be no liability on the past due rental arrears. However, in order to remain in good standing with your landlord, you must be able to keep current on rental payments moving forward, after a Chapter 13 bankruptcy is filed. The benefit of a Chapter 13 bankruptcy when faced with an eviction proceeding, is that it buys the debtor time, to work out a mutually workable agreement with the landlord, and to save up money to ensure that future rent be paid on time. Since automatic stay goes into effect immediately once a bankruptcy case is filed, creditors, including landlords, are not able to proceed any further with collection actions. An eviction is a type of collection action, and therefore, a landlord must cease their efforts to have you evicted. If your landlord has filed a motion to have the automatic stay lifted, you should consult with an experienced bankruptcy attorney on the best action moving forward. A landlord will not be required or obligated to accept a repayment plan with you or work out new terms with you, if you file a Chapter 13 bankruptcy. A Chapter 13 bankruptcy will only be beneficial if you are able to stay current on future rent payments, as well as pay the rent arrears in full, in a Chapter 13 plan.
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To learn more about how a Chapter 13 bankruptcy can help you in an eviction proceeding, you should consult with an experienced bankruptcy attorney. Come visit us at our new location in St. Paul or at our website at LifeBackLaw.com!
