Can Chapter 13 Stop an Illinois Eviction?

This question comes up a lot. Roughly a third of Illinois are renters. And, most landlords have little patience in these areas. Even if they have extensive written contracts, most landlords have only two fundamental rules for tenants: keep to yourself and pay the rent on time.

Normally, bankruptcy’s Automatic Stay applies to adverse creditor actions. In fact, Section 362 of the Bankruptcy Code prohibits any contact between debtors and creditors while the case is pending. However, because of the 2005 bankruptcy reforms, the Automatic Stay provides only limited protection in this area. The extent of protection generally depends on the status of the eviction timeline.

Dispute Phase

Legally, most landlords could file eviction actions if a rent payment is one day late. But they hardly ever exercise this right. Instead, landlords send a series of threatening letters. The tone becomes progressively stronger. What begins with not-so-friendly reminders of past due rent usually culminates with a five-day notice or another official-looking warning.

These letters, no matter how official they look, normally have no legal force and effect. They are designed to intimidate residential or commercial tenants, and in many cases, they achieve that end.

Section 362 fully applies at this stage. Bankruptcy immediately stops such creditor harassment, whether it comes from a landlord or a moneylender. The Automatic Stay does more than give tenants breathing room. It also gives them leverage to negotiate better lease terms. Landlords know that tenants in bankruptcy can simply walk away from unfavorable leases.

Courtroom Phase

In most jurisdictions, both commercial and residential eviction matters go to a justice court or other small claims court. These forums are like Judge Judy without the cameras. Procedure is very informal and there are usually no lawyers. Typically, a judge hears briefly from both sides, asks a few questions, and makes a decision on the spot. However, even if the judge makes a decision and pounds the gavel, that decision is not final, as outlined below.

If the judge has not yet made a decision, the Automatic Stay still applies. Theoretically, if the bailiff called the case and the tenant then filed bankruptcy, the judge must immediately halt the proceedings. But most bankruptcy attorneys do not like to cut things that close.

Unpaid rent is the only issue in most evictions. The rules are a bit different if the issue is something else, such as exceeding the maximum occupancy or having an unauthorized pet.

Execution Phase

In this context, a judgement is little more than a piece of paper. To enforce the judgement, the judge must sign a separate writ of execution. This writ orders the sheriff to clear out the tenant’s belongings and change the locks.

Depending on the circumstances, there could be several days between the court hearing and the writ signature. During this brief window, the Automatic Stay still applies. However, after the judge signs the writ, Section 362 is inapplicable. There is a loophole which might allow the tenant to deposit the disputed rent with the court and stop the eviction. But this loophole is only available in a few situations.

Reach Out to Diligent Lawyers

Bankruptcy can stop the eviction process, but tenants must act quickly. For a free consultation with an experienced Chapter 13 bankruptcy attorney, contact the Bentz Holguin Law Firm, LLC. Convenient payment plans are available.

Resource:

census.gov/acs/www/

/can-bankruptcy-help-with-tax-debt/