How Does Filing Bankruptcy Affect Your Eviction Case?

/ Bonnie Varner, LLC/

I would like to initially point out that I am NOT a bankruptcy attorney and this post is only related to my observations and understanding about how a bankruptcy case will affect an eviction matter. If you are considering filing bankruptcy, you should absolutely speak to a bankruptcy attorney about that. If you are thinking about filing bankruptcy as a potential strategy in eviction court, there are some things you should know:

  1. Filing bankruptcy will not stop the eviction action. Homeowners who file bankruptcy may have what is called a “homestead exemption,” which may have the effect of saving your primary dwelling from creditor attack. This does not apply in rental situations because you do not own your rental. If you file bankruptcy and name your landlord as a creditor, the automatic stay that is placed on all creditors by the bankruptcy court will stall that eviction proceeding until that stay is lifted in federal court. Experienced practitioners know how to do this quickly and the delay should only take about two weeks.

  2. Filing bankruptcy may keep you from achieving a favorable settlement in eviction court. Once the bankruptcy stay is in place in federal court, all creditor proceedings are considered void ab initio (which, in layman’s terms, means void from the beginning) until the stay is lifted. That means that, while no trial or judgment can happen until the stay is lifted, no settlements or agreements can happen either. This can obviously be a bad thing. If you file bankruptcy and thereby force your landlord to hire an attorney to lift the bankruptcy stay in federal court, they are a whole lot grumpier with you when it comes to discussing a resolution short of trial.

  3. Filing bankruptcy will not affect whether your eviction is a public record. Federal and state proceedings are separate from one another. If your concern is having an eviction on your background or credit history, filing bankruptcy will not do anything to solve that.

Once again, there are quite legitimate reasons for filing bankruptcy. If you are considering that path, you should absolutely consult with an attorney that specializes in that practice.