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Tenant Bankruptcy Affects a Landlord’s Eviction Rights

Tenant Bankruptcy Affects a Landlords Eviction Rights

Whether a tenant has filed for bankruptcy before or after an eviction judgment affects the steps a landlord must take to regain possession of the rental unit.

What If the Tenant Filed for Bankruptcy after an Eviction Order (also called a writ of restitution)?

Prior to 2005, a tenant bankruptcy could impede a landlord’s ability to proceed with a court-ordered eviction proceeding. A tenant could easily stop an eviction by filing for a Chapter 7 or Chapter 13 bankruptcy. Once the tenant filed for bankruptcy, an “automatic stay” prevented all creditors, including landlords, from pursuing the repayment of debt.

In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act changed the prior law. The landlord can now evict a tenant, regardless of an automatic stay, if the landlord had a court-ordered judgment for possession prior to the tenant filing for bankruptcy. The landlord, therefore, can ignore the automatic stay.

If the eviction is for the nonpayment of rent, an exception applies if state law allows a tenant to remain in the rental unit and “cure,” or pay the rent, after an eviction judgment. Most states, however, do not allow this option. In Utah, if you get an order of restitution from the state court prior to the bankruptcy case being filed; then, there is not “stay” on the eviction, and you and proceed. Now, sometimes there are issues with this so you should call an experienced lawyer to speak about your specific circumstances; however, this is the general rule.

If not, then, the tenant should file a certification, or a sworn statement, with the bankruptcy court stating that state law allows a tenant to stay in the rental unit and pay the delinquent rent after the issuance of an eviction judgment; Deposit with the bankruptcy clerk the amount of rent that will be due 30 days from the filing of the petition; and serve the landlord with a copy of the certification.

The tenant has 30 days from filing the certification to pay the amount owed. If the tenant cures the default, the tenant must file a second certification with the bankruptcy court and serve the landlord. A landlord can object to either certification, and the bankruptcy court will hold a hearing within ten days of the objection. If the landlord prevails, the court will lift the stay and the eviction may proceed.

What If the Tenant Has Already Filed for Bankruptcy?

If a tenant fails to pay rent or violates a term in the rental agreement, an automatic stay will prevent the landlord from giving the tenant a termination notice or from beginning the eviction process if the tenant has already filed for bankruptcy. The landlord can proceed with the eviction by asking the federal bankruptcy court to lift the stay. In most cases, the judge will lift the stay because a lease agreement has no effect on the value of the tenant’s estate.

What If There is Illegal Drug Use and Property Endangerment?

If a tenant has already filed for bankruptcy, the landlord can begin eviction proceedings or continue with the eviction process without asking the bankruptcy court to lift the stay if the use illegal drugs occurred on the property or the property was endangered. The landlord must take either of the following steps:

If the landlord filed the eviction action prior to the tenant filing for bankruptcy, the landlord must file a certification with the bankruptcy court stating that the basis of the eviction is for illegal use of drugs on the property or property endangerment.

If the eviction action began after the tenant filed for bankruptcy, the landlord must provide the bankruptcy court with certification that illegal drug use occurred on the property or that the tenant endangered the property within the past 30 days.

The landlord must serve a copy of the certification on the tenant. The landlord can proceed with the eviction after 15 days have elapsed, unless the tenant files an objection with the court and serves the landlord. The court will hold a hearing within ten days if the tenant objects. If the tenant cannot establish that the situation has been remedied or that the landlord’s statement was untrue, the court will allow the landlord to proceed with the eviction.

Landlord Bankruptcy Lawyer Free Consultation

If you are a landlord and you need legal help to evict a tenant who has filed for bankruptcy, please call Ascent Law for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

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About the Author

People who want a lot of Bull go to a Butcher. People who want results navigating a complex legal field go to a Lawyer that they can trust. That’s where I come in. I am Michael Anderson, an Attorney in the Salt Lake area focusing on the needs of the Average Joe wanting a better life for him and his family. I’m the Lawyer you can trust. I grew up in Utah and love it here. I am a Father to three, a Husband to one, and an Entrepreneur. I understand the feelings of joy each of those roles bring, and I understand the feeling of disappointment, fear, and regret when things go wrong. I attended the University of Utah where I received a B.A. degree in 2010 and a J.D. in 2014. I have focused my practice in Wills, Trusts, Real Estate, and Business Law. I love the thrill of helping clients secure their future, leaving a real legacy to their children. Unfortunately when problems arise with families. I also practice Family Law, with a focus on keeping relationships between the soon to be Ex’s civil for the benefit of their children and allowing both to walk away quickly with their heads held high. Before you worry too much about losing everything that you have worked for, before you permit yourself to be bullied by your soon to be ex, before you shed one more tear in silence, call me. I’m the Lawyer you can trust.