Bankruptcy Can Stop Evictions
There are situations in which a tenant who is facing eviction may file for Bankruptcy protection. By doing so, the tenant may be enabled to restructure the tenant’s debt to his creditors including his landlord and avoid eviction.
There are basically two types of Bankruptcy filings affecting individual tenants. Most people think of Bankruptcy as the filing of a Chapter 7 Bankruptcy which eliminates many types of debts and may require a liquidation of the individual’s assets. The second significant type of Bankruptcy filing is a Chapter 13 Petition. In a Chapter 13 filing, the individual enters into a plan of reorganization which must be approved by the court.. The plan usually requires that a percentage of all debts be paid over the course of up to five (5) years. Unlike a Chapter 7 filing, a Chapter 13 filing does not require a liquidation of the filer’s assets. A Chapter 13 filing is often used when the filer has property which he/she does not desire to relinquish.
The filing of a Bankruptcy Petition stops all eviction proceedings, due to the fact that there is an automatic stay which becomes effective upon the filing of the petition. However, as a condition of the automatic stay, the tenant will be required to pay all post-petition rent as it comes due. During the Bankruptcy proceeding, the tenant may assume or reject their lease. If the tenant assumes their lease, the tenant must pay all rent arrears owed pursuant to a court order. the court’s order will provide for a series of relatively quick payments under a Chapter 7 filing and up to five (5) years under a Chapter 13 filing.
We are a full service Tenant and Bankruptcy firm and represent clients in all types of Bankruptcy proceedings including Chapters 7, 11 & 13. Issues regarding Bankruptcy tend to be very complicated and time consuming. Parties should speak with an attorney before proceeding. We offer complimentary consultations. You are welcome to schedule your complimentary-no obligation consultation by calling us at 212-921-1600.