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When you file for bankruptcy, something called the "automatic stay" goes into effect. The automatic stay temporarily stops most collection actions, which include evictions. Generally, the automatic stay remains in effect throughout your Chapter 13 bankruptcy case, but there are some exceptions.
Chapter 13 may stop an eviction if:
Even if your landlord has not received a judgment of possession, your landlord may file a motion to lift the automatic stay. The landlord would have to convince the judge that they're being unfairly harmed by not being allowed to move forward with the eviction.
In some situations, you may be able to keep the eviction paused by paying the back rent through your Chapter 13 plan. You would also need to begin paying your regular rent immediately and remain current on future rent payments. In some cases, the landlord may ask that the back rent be treated as a priority debt in your plan.
However, the landlord may not be willing to work with you. If not, it would file a motion to lift the automatic stay. The judge will look closely at whether you can realistically afford both your ongoing rent and your Chapter 13 payment. Your budget would need to reflect sufficient income to cover your expenses, rent, and Chapter 13 payment.
Because state laws tend to vary, it is important to talk to a local bankruptcy attorney if you're behind on rent. Ascend can help you locate a bankruptcy attorney near you. Most attorneys provide free consultations, so it does not cost you anything to talk with a lawyer.
Even if you can't stay in your current rental, bankruptcy might still help you reset financially. Back rent is typically treated as unsecured debt. Therefore, if you can move to another location, you can include the back rent in your bankruptcy case.
Under Chapter 7, you should be able to discharge the back rent payments provided there is no fraud involved in incurring the debt.
In a Chapter 13 case, you would pay a percentage of the back rent payments through your Chapter 13 plan. For example, if you can afford to pay 10 percent to your unsecured creditors, your landlord would receive only 10 percent of the back payments. When you complete your Chapter 13 plan, the remaining amount will be discharged.
If you realize you can't afford rent while in Chapter 13, talk to your attorney right away. A change in your financial situation that makes it impossible to pay rent could mean that you do not have sufficient income to be in Chapter 13. If so, you might qualify to convert your bankruptcy case to a Chapter 7 case.
In many cases, converting to a Chapter 7 case is cheaper and simpler than letting your case get dismissed and starting over.
Refiling a new bankruptcy case under Chapter 7 would require you to take your credit counseling and debtor education courses again. The attorney's fee for refilling a case might be more expensive than converting it. Additionally, the filing fee for converting a Chapter 13 case is much less expensive than the filing fee for a Chapter 7 case.
Yes, you can still be evicted furing Chpater 13 in certain situations. The most common reason? Falling behind on your ongoing rent or not making your Chapter 13 payments. If that happens, the landlord can ask the court for permission to move forward with the eviction.
You could also run into problems if you fall behind on new obligations, such as utilities or property-related expenses.
However, it's essential to note that Chapter 13 bankruptcy offers individuals opportunities to address these challenges. They can request modifications to their repayment plan if they experience financial hardship or seek legal assistance to navigate any disputes with creditors. Ultimately, while eviction during Chapter 13 bankruptcy is possible under certain circumstances, proactive communication with creditors and adherence to the bankruptcy plan can help mitigate such risks.
Even if you're renting, that space is still your home. One challenge of dealing with debt problems is finding a place to live. Filing for bankruptcy relief can help you avoid homelessness. In addition, getting rid of other debts means you have more money to put toward rent or mortgage payments.
If you need to move, you can get rid of your mortgage or back rent through your bankruptcy case. It gives you a fresh start to recover and rebuild after a financial hardship. Doing nothing or trying to handle debt problems without experienced legal advice could make matters worse.
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