Will Bankruptcy Stop an Eviction?
Updated: Apr 5, 2020
In response to the spread of the COVID-19 health threat, California Governor, Gavin Newsom, issued a Stay-At-Home Order around mid-March, 2020, ordering certain businesses to close their doors and for residents to stay home. Resulting in substantial loss of income for many California residents. Understanding the financial impact that staying at home from work has caused, Gov. Newsome further issued an executive order to protect California renters, by suspending eviction proceedings against tenants until May 31, 2020 (unless further ordered).
While Gov. Newsom’s order provides tenants with some temporary relief, if you are a tenant, the order does not relieve you from paying your rent, or prevent your landlord from recovering overdue rent. So what happens after the moratorium on evictions is lifted, and despite your good faith efforts, you’ve fallen behind on your rent? Now your landlord is either threatening to evict you, or has already started the process. You’ve asked your landlord for a compromise, or an extension, but they insist on moving forward. You may be asking yourself, “What if I file for bankruptcy?”
This law firm does not represent tenants in disputes with their landlords, but the following question has been asked in the past, which is the primary focus of this blog: If you file for bankruptcy, will it stop the eviction? It depends.
Filing for bankruptcy stops the eviction process in the state of California, but only if the eviction process has not reached a certain point. When a bankruptcy is filed by a tenant who is at risk of being evicted, the automatic stay provisions of the Bankruptcy Code prevent the tenant’s landlord from “any act to obtain possession of property of the estate . . . or to exercise control over property of the estate.” 11 U.S.C. §362(a)(3). This includes “the commencement or continuation . . . of a judicial, administrative, or other action or proceeding against the debtor [tenant] that was or could have been commenced before [the bankruptcy case was filed.]” 11 U.S.C. §362(a)(1).
Put simply, the moment a bankruptcy case is filed by a tenant, their landlord is prevented from moving forward with either filing an unlawful detainer (eviction) case against the tenant, or moving forward in an unlawful detainer case already filed against the tenant. However, this is on the condition that the tenant still have the right to possess the property when they filed for bankruptcy. The reason being, when a tenant first signs a lease agreement and moves into the property, they have the right to possess and live in that property until the lease ends, and they have either moved out or been evicted from the property through court order.
Bankruptcy Filed Before Unlawful Detainer Case Filed For example, Landlord (L) has served the Tenant (T) a 3-day notice to terminate T’s tenancy. The next day, T files for bankruptcy. T still had the right to possess the property, therefore, L is prevented from moving forward with filing his unlawful detainer case.
Bankruptcy Filed After Unlawful Detainer Case Filed Suppose that T did nothing, then L went to the courthouse and filed an unlawful detainer case against T. Three days later, T files for bankruptcy. In this example, even though L filed an unlawful detainer case, T still had the right to possess the property. Therefore, L is prevented from moving forward with his unlawful detainer case.
Bankruptcy Filed After Unlawful Detainer Case Filed, and After Order is Entered in Favor of L In this last example, L won his unlawful detainer case, and received a judgment in his favor for possession of the property. L files his writ of possession and the sends it to the sheriff. During this time, T files for bankruptcy before the sheriff served them with a notice to vacate. Does the bankruptcy prevent the sheriff from locking T out of the property? No. This is because the judgment entered in the eviction case gave L the right to possession of the property, ending T’s right to possession of the property. At this point, T’s bankruptcy filing does not prevent L from moving forward with a lockout by the sheriff.
In short, filing for bankruptcy will prevent your landlord from moving forward with evicting you, but only if you still had the right to possess the property before you filed. If you no longer had that right when you filed for bankruptcy, the automatic stay provisions of the Bankruptcy Code no longer protect you from eviction.
If you are considering bankruptcy, and at risk of being evicted from your residence, you should speak with a knowledgeable bankruptcy attorney to discuss your options. This office does not represent tenants in a landlord-tenant dispute. This blog is intended to provide information only, and does not constitute an attorney-client relationship; nor does it intend to provide legal advice. Call this office to schedule an appointment for a consult.
Michelle Patterson Law p: (619) 630-5282 e: firstname.lastname@example.org www.michellepattersonlaw.com #bankruptcy #bankruptcylawyer #bankruptcyattorney #stopeviction #eviction #unlawfuldetainer #landlordtenant #debtcollection #debtrelief #SanDiego #LosAngeles #Riverside #OrangeCounty #covid19 #californiastayathomeorder #stayathome