Effect of Bankruptcy on Eviction Proceedings
I receive a lot of calls from tenants who are facing eviction and are wondering if they can file bankruptcy to stop the eviction. However, this is not such a simple question. Under the current bankruptcy code, whether or not an eviction can be stopped requires one to look at both the bankruptcy code as well as state eviction statutes.
When you file bankruptcy, an “automatic stay" goes into effect, immediately halting nearly all collection attempts against the person filing the petition. One of the things that is “stayed" are evictions. Once your bankruptcy petition is filed, either Chapter 7 or Chapter 13, your landlord may not proceed with eviction attempts except under certain circumstances.
However, you must be cautioned against filing bankruptcy for no other reason than to stop an eviction. Some bankruptcy courts consider this to be an abuse of Chapter 7 bankruptcy. If the bankruptcy court finds that this is true, the court can immediately dismiss the bankruptcy and impose other legal and monetary sanctions on you.
If you are not filing for the sole purpose of stopping eviction, then you should consider the following:
If You File Bankruptcy Before Your Landlord Wins Possession
If you have fallen behind on your rent, or you have violated your lease and your landlord is seeking eviction and has not won a judgment for eviction; then bankruptcy automatic stay will stop the eviction proceedings. However, in most cases, this stay will be lifted shortly after you file.
Removing automatic stay. Most likely, your landlord will file a motion in the bankruptcy court that will allow him to “lift" the automatic stay and allow him to proceed with eviction. In most cases, the stay will be lifted within a matter of days and your landlord will proceed with eviction.
Drugs and Damage exception: If your landlord has initiated the eviction process because of the use of illegal drugs and/or causing damage to the property, then your landlord may serve a certification with the bankruptcy court which will cause the automatic stay to be lifted. You have fourteen days to contest this certification; however, you must prove your case in a series of hearings and other proceedings.
If You File Bankruptcy After Your Landlord Wins Possession
If your landlord initiated eviction and has already obtained a judgment for possession then the automatic stay does not stop eviction. Your landlord may proceed with removing you from the property. Although there is a very limited exception to this rule, it does not apply to tenants in Massachusetts.
While bankruptcy cannot prevent eviction in either of the two situations listed above, it will prevent your landlord from collecting back rent. Back rent is an unsecured debt that will be discharged upon the completion of the bankruptcy proceeding.
If you are being evicted from your home, the automatic stay may buy you a few days or a few weeks. However, if your landlord asks the bankruptcy court to lift the stay and let the eviction precede, most likely, the court will agree. It is seldom a good idea to file for bankruptcy solely because you’re being evicted. You’ll be better off looking for a new place to live or fighting the eviction in state court.