You can’t evict me! I filed for bankruptcy!
Landlords often hear this upon serving an eviction notice. Tenants who are behind on rent payments are often under severe financial pressure, and it is quite common for such tenants to seek protection from the bankruptcy courts. In some cases, tenants also see bankruptcy law as a way to delay or avoid eviction. But although a bankruptcy filing will temporarily halt an eviction, it is not a permanent defense.
The Dreaded “Automatic Stay”
When a tenant files a bankruptcy case, an “automatic stay” immediately takes effect, and at that moment, all actions against the tenant to collect money or property must stop immediately. For the landlord, this includes any efforts to collect rent or evict the tenant, including serving or delivering an eviction notice. The moment the tenant has filed for bankruptcy, all communication with the tenant regarding the payment of past-due rent, or possible eviction, must stop. If the landlord disregards the automatic stay, he or she could be held in contempt by the bankruptcy court and face severe penalties. But that’s not the end of the road for the landlord.
There May Be a Way Forward!
One possible route is to wait until the bankruptcy case is concluded. This could take many months—a delay that could be financially disastrous for the landlord. Is there anything else you can do?
There may be! In many cases, the landlord can seek relief from the bankruptcy court by filing a motion to lift the automatic stay. In these cases, the bankruptcy court may allow the landlord to proceed with the eviction while the bankruptcy case is pending. To do this, you will need the assistance of an attorney who understands the bankruptcy process and knows how to file the correct motion to lift the automatic stay.
As a member of the bar of the U.S. District Court for the Northern District of Illinois, I have access to the bankruptcy system in this jurisdiction, and I understand how to best proceed. If you are dealing with a non-paying tenant who has filed, or is about to file, a Chapter 7 or Chapter 13 bankruptcy, please contact me for a free consultation.