Filing for bankruptcy can provide relief by helping you stop or stay an eviction proceeding temporarily. It might even allow you to save up your past due rent and give you time to negotiate an agreement with your landlord to stay.
If you want to stop an eviction by filing for bankruptcy, you'll need to act quickly. Filing for bankruptcy will have the effect that you hope for only if:
If you aren't sure which chapter to file, start by finding out whether Chapter 7 or Chapter 13 will work best for you.
In most states, a landlord must file and win a court case before evicting you (often called an unlawful detainer action). You'll receive a copy of the action and, if you file a response, you'll be given a trial date.
At trial, the landlord must prove the case against you. If successful, the landlord will obtain a ruling from the judge that allows the landlord to evict you, often known as an eviction judgment or a judgment of possession. The landlord cannot evict without the judgment.
Here's the tricky part. Once the landlord gets an eviction judgment, filing bankruptcy won't help most people. Learn more about evictions in How Evictions Work: Rules for Landlords and Property Managers.
A few states allow a renter to clear an eviction in bankruptcy even after the landlord gets a judgment of possession. Here's what you'll have to do.
If you can fulfill the requirements, your rent would be current and your landlord wouldn't proceed with the eviction.
For most people, the key to stopping an eviction is to file for bankruptcy before the landlord gets an eviction judgment. Here's why this works.
When you file for bankruptcy, an order called the automatic stay is put in place (unless you've filed multiple bankruptcy cases within a short period—then it might last for 30 days or not apply at all). The stay stops most creditors from pursuing a collection lawsuit, including pending eviction actions.
The good news is that most bankruptcy cases can be filed online at any time. And, in emergencies, you don't need to file all of the forms. You can file an abbreviated emergency or skeleton filing and file the remaining documents within 14 days.
If you file a bankruptcy case before the landlord gets the judgment of possession, the automatic stay will be put in place and stop the eviction—but not necessarily for long.
The landlord can file a motion asking the bankruptcy court for permission to evict you. The landlord requests permission by filing a motion to lift the automatic stay. The court will typically grant the landlord's request unless you have a good reason why the eviction shouldn't take place.
If your landlord has reason to believe that you're using illegal drugs on the premises or that the property is in danger, it's unlikely that your bankruptcy will stop the eviction lawsuit—even if your landlord hasn't obtained a judgment. Here are the steps the landlord can take:
It's important to understand that while bankruptcy can buy you more time, bankruptcy in itself won't stop the eviction permanently.
However, it can also help in these ways:
You should know that a bankruptcy filing appears on your credit report for up to ten years and can affect your ability to obtain rent, lease, or buy housing for a year or two (or more) after the filing.