If you rent your home, you may be wondering about the effect of bankruptcy on your tenancy. When you file Chapter 7 or Chapter 13 bankruptcy, an automatic "stay" is triggered. This means, creditors can no longer engage in collection activities; they cannot file lawsuits or engage in harassment. However, a bankruptcy stay does not always prevent your landlord from evicting you. There are two instances in which a landlord may evict you in spite of the automatic stay of bankruptcy. An experienced Montgomery bankruptcy attorney can evaluate the probable effect of bankruptcy on your particular situation and if there are better options, point you in the right direction.Alabama Bankruptcy and Evictions
The bankruptcy trustee handling your bankruptcy has more control over your lease if you file under Chapter 7 than if you file under Chapter 13. If a Chapter 7 bankruptcy trustee believes your rent is unreasonable, he can ask the court to terminate your lease to permit the eviction to proceed.
A Chapter 13 bankruptcy allows you to keep more, including the lease on your living quarters. The more effort you put into making a workable repayment plan, the more favorably the court is likely to look upon your repayment plan and your tenancy. However, if you do keep your lease in a Chapter 13 bankruptcy, the landlord may ask the court to treat the back rent as an administrative claim, giving it higher priority than credit card debt, medical debt and other unsecured claims. The court must be convinced you can afford the lease and the Chapter 13 plan must provide for a prompt cure of any delinquency. The court may also provide for a “future default” allowing the landlord to proceed quickly with eviction if you default again after the case is filed.
In spite of a tenant filing for bankruptcy and obtaining an automatic stay, a landlord can evict a tenant in one of two situations: (1) where the landlord gets a judgment for possession prior to the tenant filing for bankruptcy or (2) where the landlord is evicting the tenant for using controlled substances on the property or otherwise endangering it.
In the first situation where your landlord has already obtained a judgment of possession against you, filing for bankruptcy will not help stop the eviction. The landlord can move forward with eviction proceedings, regardless of the stay.
Similarly, a landlord's eviction suit is not stayed if your landlord alleges that you endangered the property or used illegal drugs on the property. This is a difficult situation to be in because it is difficult for a tenant to prove something is not happening and that the landlord is wrong.
A landlord can start proceedings on this basis after you have already filed for bankruptcy by filing and serving a certification that (1) he has already filed an eviction action based on property endangerment or drug use or (2) you have endangered the property or used drugs on the property in the last 30 days. Once the certification is filed, your landlord can proceed with the eviction unless you file and serve an objection within 15 days.
After you file objections, the court must hold a hearing to take evidence. You will have to present evidence that the landlord's certification isn't true or the issue has been remedied. If you can prove the certification is false, the court may protect you from eviction during the pending bankruptcy. But often, courts side with landlords on this issue. This is one of many reasons it is important to retain an experienced attorney to handle your bankruptcy and advocate on your behalf to the court.
You should be aware that a landlord can also ask the court to lift the automatic stay to permit him or her to continue an eviction for any reason. A judge will likely ask you to present good cause for the court to deny the landlord's request.Retain an Experienced Alabama Bankruptcy Attorney
Although debt can feel like an insurmountable problem, especially when you're also worrying about shelter and housing, an experienced Alabama bankruptcy attorney can evaluate the facts and give you long-term solutions to your troubles. Our firm serves clients in south-central Alabama from our offices located in Montgomery, Prattville, and Troy. Call us at (334) 260-0500 or contact us online to schedule a consultation.