Can I Stay in My Apartment if I File Bankruptcy?
Yes, you may be able to stay in your apartment if you file for bankruptcy. In both Chapter 7 and Chapter 13, the automatic stay temporarily stops eviction proceedings. However, staying in your apartment depends on your ability to catch up on rent or include it in a repayment plan.
In Chapter 7, if you are behind on rent, you’ll typically need to get current within 30 days of filing, or your landlord can request to lift the automatic stay and proceed with eviction.
In Chapter 13, past-due rent can be included in a repayment plan, allowing you to stay in your apartment as long as you keep up with rent and repayment obligations.
Rita Kostopoulos, a nationally recognized bankruptcy attorney and founder of Kostopoulos Bankruptcy Law Firm, has over 15 years of experience helping individuals navigate bankruptcy and safeguard their rights. With a deep understanding of bankruptcy law, Rita has successfully assisted hundreds of clients in maintaining their housing while resolving financial difficulties.
Understanding the Automatic Stay in Bankruptcy
One of the most immediate protections you gain by filing for bankruptcy is the automatic stay, a legal mechanism that temporarily halts most collection activities, including eviction proceedings. This means that, in many cases, you can stay in your apartment while the bankruptcy process is underway. However, there are important details to understand about how the automatic stay works:
- Temporary Protection: The automatic stay halts eviction, but it is only temporary. It doesn’t eliminate your obligation to pay rent, and if you fall behind, your landlord can ask the court to lift the stay and proceed with eviction.
- Filing Timing: If you file for bankruptcy before an eviction judgment is issued, the automatic stay can delay the eviction process. If the judgment has already been issued, the automatic stay may not stop the eviction.
Staying in Your Apartment During Bankruptcy: Chapter 7 vs. Chapter 13
| Chapter | Can You Stay in Your Apartment? | Conditions |
|---|---|---|
| Chapter 7 | Yes, temporarily | Must catch up on rent within 30 days or face eviction. |
| Chapter 13 | Yes | Can include past-due rent in repayment plan and stay current on payments. |
Staying in Your Apartment During Chapter 7 Bankruptcy
In Chapter 7 bankruptcy, often referred to as “liquidation bankruptcy,” most unsecured debts are discharged, but your rental obligations remain. Here’s what happens to your lease:
- Assuming the Lease: If you want to stay in your apartment, you can assume the lease, meaning you agree to continue paying rent and fulfill your lease obligations. However, you will need to bring your rent current within 30 days of filing, or your landlord can seek to lift the automatic stay and evict you.
- Rejecting the Lease: If you’re behind on rent and want to move to a more affordable apartment, you can choose to reject the lease, which allows you to terminate the rental agreement and avoid future rent obligations. However, you will still be responsible for any unpaid rent owed before rejecting the lease.
Behind on Rent in Chapter 7
If you are behind on rent, you will typically need to catch up within 30 days of filing for Chapter 7 bankruptcy. Failure to do so could lead your landlord to petition the court to lift the automatic stay, allowing them to proceed with eviction.
Staying in Your Apartment During Chapter 13 Bankruptcy
Chapter 13 bankruptcy allows you to reorganize your debts into a repayment plan, which can be very beneficial if you’re behind on rent. Here’s how it works:
- Repayment Plan: Past-due rent can be included in your Chapter 13 repayment plan, which allows you to spread payments over three to five years. As long as you stay current on both your ongoing rent and the repayment plan, you should be able to remain in your apartment.
- Assuming the Lease: In Chapter 13, you can also assume your lease, meaning you intend to stay in your apartment and continue making rent payments. This gives you more flexibility in catching up on past-due rent while maintaining your lease.
Lease Renewal and Bankruptcy
If your lease is up for renewal during bankruptcy, it’s important to communicate with your landlord. Bankruptcy filings may show up on tenant screenings or background checks, but providing proof of stable income and showing that you’ve kept up with rent payments can help.
How Bankruptcy Affects Eviction Proceedings
Eviction proceedings can be paused or delayed by bankruptcy, but the timing of your filing matters. Here’s how it breaks down:
Filing Bankruptcy Before an Eviction Judgment
If you file for bankruptcy before your landlord obtains an eviction judgment, the automatic stay will temporarily halt eviction proceedings. This gives you time to either catch up on rent or negotiate a repayment plan with your landlord.
Filing Bankruptcy After an Eviction Judgment
If an eviction judgment has already been issued before you file for bankruptcy, the automatic stay typically won’t prevent the eviction. In this case, you may need to negotiate with your landlord for more time to move or other alternatives.
Breaking Your Lease During Bankruptcy
Bankruptcy provides a way for you to break your lease if you can no longer afford your current apartment. This process, called lease rejection, allows you to terminate your lease without penalty for future rent payments.
What Happens if You Reject Your Lease?
- No Future Rent Obligations: By rejecting your lease, you are no longer responsible for future rent payments.
- Paying Past-Due Rent: You will still need to pay any rent owed before rejecting the lease, which can be included in your bankruptcy filing.
What You Need to Know About Renting After Bankruptcy
Filing for bankruptcy can affect your ability to rent a new apartment in the future, particularly within the first few years after filing. Many landlords conduct credit checks, and a bankruptcy filing may be a red flag. However, there are ways to improve your chances of securing a new rental.
Strategies for Renting After Bankruptcy:
- Stable Income: Show landlords that you have steady employment and a reliable source of income.
- Larger Security Deposit: Offering a larger security deposit can help alleviate landlord concerns about your financial situation.
- Co-Signer: Having a co-signer with good credit can increase your chances of getting approved for a rental.
Comparing Chapter 7 vs. Chapter 13 for Renters
The table below highlights the key differences between Chapter 7 and Chapter 13 bankruptcy for renters, making it easier to understand how each option impacts your ability to stay in your apartment.
| Factor | Chapter 7 | Chapter 13 |
|---|---|---|
| Automatic Stay Protection | Temporary; may be lifted if rent is overdue. | Stay remains as long as you follow the repayment plan. |
| Past-Due Rent | Must catch up within 30 days or face eviction. | Can include past-due rent in your repayment plan. |
| Lease Assumption | Yes, but rent must be current. | Yes, rent can be included in the repayment plan. |
| Breaking Lease | You can reject the lease and avoid future rent obligations. | You can reject the lease, but most opt to keep it under a payment plan. |
| Eviction Protection | Temporary until rent is caught up. | More protection against eviction with a repayment plan. |
This comparison table provides a clear overview of the options available in Chapter 7 and Chapter 13 bankruptcy for renters, helping you make an informed decision based on your unique situation.
How Kostopoulos Bankruptcy Law Firm Can Help
Filing for bankruptcy can be a complicated process, but at Kostopoulos Bankruptcy Law, we specialize in helping individuals stay in their homes while navigating bankruptcy. Whether you’re filing Chapter 7 or Chapter 13, our experienced team will help you understand your rights as a renter and guide you through the steps to protect your housing during bankruptcy.
We understand how important your home is, and we are committed to providing the personalized support you need. Contact us today for a free no-obligation consultation, and let us help you secure your financial future while keeping a roof over your head. Call 877-969-7482 today!