Understanding eviction and bankruptcy

Some might think that filing for bankruptcy is a method to protect themselves from being evicted. In some instances, this is the case. However, it is not always so. When there is an eviction threat from the property owner, a tenant who is considering bankruptcy must be aware of the consequences for such an action.

In 2005, the bankruptcy laws were changed to reduce the incidence of fraud and abuse. If a tenant filed for bankruptcy after October 17, 2005 - the date in which the new laws went into effect - he or she will get an automatic stay of an eviction, also known as unlawful detainer. Once there is an automatic stay through the bankruptcy filing, the landlord cannot serve a three-day notice or file to evict. The landlord has the right to file a petition with the bankruptcy court to move forward with the eviction. This is known as relief from the automatic stay.

The automatic stay will be in place until the bankruptcy is completed, closed or dismissed. If the landlord shows the court that there should be relief, it can be lifted before then. With the automatic stay, the landlord can still enforce the eviction if it was granted prior to the bankruptcy petition. The tenant might also be able to keep the stay for 30 days after filing. If the tenant is endangering the property or using illegal substances on the property, then a certification must be filed with the bankruptcy court. Even if this is filed, the stay will generally stay in effect for 15 days. If the tenant does not pay fees, file the necessary schedules or provide the proper financial information, then the case can be dismissed for cause. There cannot be an unreasonable delay that will harm the landlord.

For those who are confronted with eviction from a property because of financial issues, a bankruptcy filing will not automatically solve the problem. When there is an eviction underway and the tenant is also considering bankruptcy, it is important to understand that the eviction might not stop with the filing. Contacting an attorney can be helpful when determining how to handle an eviction.

Source: dca.ca.gov, "The Eviction Process -- A word about bankruptcy," accessed on April 18, 2017

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