Many tenants believe that filing for bankruptcy will automatically stop an eviction, but that isn’t always true. While bankruptcy may delay the process in some cases, there are clear limits that protect a landlord’s right to recover their property. Understanding how bankruptcy and eviction overlap can help landlords stay prepared and respond quickly when a tenant files for bankruptcy.
Key Takeaways
- Bankruptcy may temporarily pause an eviction, but it rarely stops it permanently.
- Landlords can often move forward if there’s already a judgment, illegal activity, or property damage.
- Different types of bankruptcy offer different levels of delay, but neither guarantees tenants protection from eviction.
Table of Contents
- What Is the Automatic Stay?
- When Bankruptcy Won’t Stop Eviction
- Chapters 7 and 13: What Landlords Should Know
- Repeat Bankruptcy Filings
- Practical Tips for Landlords
- Conclusion
What Is the Automatic Stay?
When a tenant files for bankruptcy, something called an “automatic stay” goes into effect. This is essentially a pause on most collection activities, and in some cases, it can temporarily delay an eviction. However, the stay is not designed to let tenants live rent-free, and there are clear exceptions that allow landlords to continue the eviction process.
When Bankruptcy Won’t Stop Eviction
Even with an automatic stay, landlords often have the ability to proceed with eviction under certain conditions. Here are the most common situations where bankruptcy won’t protect a tenant from being removed.
Prior Court Judgments
If a landlord has already received a judgment for possession before the bankruptcy was filed, the eviction can usually continue. The case is essentially finished, and bankruptcy does not undo what the court has already decided.
Illegal Activity or Safety Issues
If a tenant is using the property for illegal purposes—such as drugs, criminal behavior, or activities that endanger other residents—the stay will not shield them. Landlords can still move forward with eviction to protect the property and the community.
Property Damage
Serious property damage caused by a tenant also falls outside of bankruptcy protection. If a tenant is harming the rental, landlords have strong grounds to continue eviction despite a bankruptcy filing.
Chapters 7 and 13: What Landlords Should Know
Tenants may file different types of bankruptcy. In Chapter 7, debts are liquidated, and while it may briefly delay eviction, it doesn’t offer long-term protection. Chapter 13 involves a repayment plan, which sometimes allows tenants to catch up on past-due rent if a landlord agrees. Still, neither type prevents eviction if there are serious issues like illegal activity, property damage, or a prior judgment.
Repeat Bankruptcy Filings
Some tenants try to use bankruptcy repeatedly as a stalling tactic. The law limits protections in these cases—if a tenant has filed bankruptcy more than once in a year, the automatic stay may last only 30 days or not apply at all. This helps prevent abuse of the system and protects landlords from long delays.
Practical Tips for Landlords
- Keep track of whether a judgment for possession has already been issued.
- Document illegal activity or property damage thoroughly.
- Act quickly if a tenant files for bankruptcy—delays may work against you.
- Understand that while bankruptcy may slow things down, it doesn’t erase your rights as a property owner.
Conclusion
Bankruptcy can confuse and delay the eviction process, but it does not give tenants unlimited protection. For landlords, the key is knowing when the automatic stay does not apply and taking the right steps to keep the eviction on track. By staying informed and prepared, landlords can protect their rental property and avoid unnecessary losses.