Apartment Lease and Bankrutcy, Things You Should Know

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Apartment Lease and Bankrutcy, Things You Should Know

Post  Admin on Thu Mar 19, 2015 3:53 pm

When someone files a petition for bankruptcy, or the legal procedure to eliminate or restructure debt, automatic protections are granted. These protections may cover the persons assets, income, residence and other resources until the bankruptcy case is concluded. A person who is renting a dwelling and files for bankruptcy has some automatic rights under bankruptcy law against eviction, but the landlord can still evict the person, or tenant, under specific circumstances.

Both types of bankruptcy, Chapter 7 and 13 result in an automatic stay, or halt to eviction proceedings currently in motion or filed after the bankruptcy petition. If the property is being damaged by the tenant or used for illegal activity, the landlord can file a document with the bankruptcy court certifying these events occurred and can continue or start eviction proceedings without asking the bankruptcy judge to lift the stay. This certification must also be served on the tenant. If the tenant does not answer within 15 days, the landlord can complete the eviction without further direction from the federal court. In cases when the tenant objects, the bankruptcy judge will decide the matter.

When someone who has a rental lease agreement files for bankruptcy, the lease is automatically affected even if the person is not behind on rent payments or in violation of rental conditions. In Chapter 7, the trustee has to decide within 60 days of the petition filing whether or not the tenant can keep the lease. When the trustee allows the tenant to keep the lease, the landlord has the right to ask the tenant to prove he can make future rent payments in full and on time. If the tenant cannot furnish the required proof or later falls behind on rent, the landlord can ask the bankruptcy court to terminate the lease and the stay against eviction. Under Chapter 13, the debtor has the right to decide to keep or terminate the lease anytime before the repayment plan is confirmed. The landlord can request that the court specify a date by which the lease decision must be made.


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