Note: This is a guest post contributed by Robert W. Glantz, Esq.
CAN I STAY IN MY APARTMENT?
A common question presented to a bankruptcy lawyer is: “if I file for bankruptcy protection, can my landlord evict me?” And, the answer is: it depends. It depends on many factors, such as whether you file for chapter 7 or chapter 13, whether you are misusing the premises, whether you are past due (and by how much) on your rent and other obligations under your lease, whether you can afford to stay, whether your landlord has already started the eviction process (and how far along the eviction is) and whether or not you want to stay. However, the fact that you have filed for bankruptcy relief alone does not give your landlord the right to terminate your lease, regardless of anything to the contrary contained in the lease agreement.
BANKRUPTCY GIVES YOU AN INITIAL BREATHING SPELL
When you file for bankruptcy protection under Chapter 7, Chapter 13 or another Chapter of the Bankruptcy Code, the automatic stay kicks in (and it is indeed automatic). The automatic stay gives a short breathing spell from the collection efforts of your creditors (including your landlord). In a nutshell, with some exception, the automatic stay prohibits the commencement or continuation of any action that started (or could have started) against you prior to you filing for bankruptcy protection; including an eviction proceeding by your landlord. This breathing spell is meant to give you time to decide whether or not you want to keep the lease in place (if you can) or break the lease and move on as a part of the bankruptcy process.
ASSUMING OR REJECTING THE LEASE
Whether you file for Chapter 7 or Chapter 13, you are entitled to either keep the lease (referred to as “assuming” the lease) or break the lease (referred to as “rejecting” the lease). Although you must make your intentions known regarding a lease at the time you file your bankruptcy case, you do not have to make a final decision until later in the case. In a Chapter 7 you generally have 60 days from the date you filed your bankruptcy case and in a Chapter 13 you have until your Chapter 13 plan is confirmed to decide whether or not you want to keep the lease.
If you decide that you do not want the lease, you can simply reject it, move yourself out and your landlord will only have a claim (limited by the Bankruptcy Code) for lost rent and any other past due amounts and damages under the lease. This lease rejection claim will likely be discharged with the other unsecured claims in your Chapter 7 or Chapter 13. You can base this decision on many factors, including economic reasons or person preferences (it can even be that you simply don’t want to live there anymore). If you decide that you want to keep the lease and stay, then you will need to assume the lease as a part of your bankruptcy process. Assuming a lease requires you to satisfy two requirements. First, you will have to cure all of your prior monetary defaults. Second, you will have to show that you have to show that you can afford the lease, will make timely payments and are not likely to simply default again. In a Chapter 7, you will have to cure the past dues before you assume the lease, which may be difficult if you do not have enough exempt cash or another source to pay the amounts due. In a Chapter 13, you can cure the default over a reasonable period of time through your plan payments.
In either case, filing for bankruptcy, whether it is under Chapter 7 or Chapter 13, gives you an opportunity to examine your lease situation and decide whether staying in your current premises makes sense for you.
Your ability to assume a residential lease is also subject to certain exceptions depending on whether an eviction proceeding has already commenced and how far along it is. Lease situations should be carefully analyzed by an experienced bankruptcy lawyer prior to the filing of a bankruptcy case by an individual.
This “guest blog” has been provided by Midwest Bankruptcy Attorneys LLC. Midwest Bankruptcy Attorneys LLC is a Chicago consumer bankruptcy firm and debt relief agency. They help people file for bankruptcy under the Bankruptcy Code. Their assistance will likely involve you filing for bankruptcy relief under the Bankruptcy Code.
Visit their website here to learn more about them or call them at (312) 836-0455 for a FREE Bankruptcy Consultation.