Can an Illinois Bankruptcy Stop Eviction?

When compared to inflation, property rents have increased substantially since the 1990s. As a result, there is about one eviction every four minutes somewhere in the United States. Prior to the 2005 legal reforms, bankruptcy petitions always stopped eviction proceedings, just like they always stop home foreclosure, vehicle repossession, and other adverse actions.

But these legal changes substantially limited these protections. Now, bankruptcy petitions only stop evictions under certain circumstances. However, if you are behind on rent and facing eviction, a Chapter 7 or Chapter 13 may still be your best option. That’s especially true today, since the Supreme Court has removed many of the consumer protections in the Fair Debt Collection Practices Act.

Filing Bankruptcy Before Adverse Action

Unlike mortgage obligations, rent obligations are unsecured debt. The debtor does not own any interest in rental property. So, bankruptcy gives people options in these situations, as follows:

• Chapter 7: This form of bankruptcy eliminates past-due rent and other unsecured obligations. Typically, the judge discharges these debts a few months after the petition filing. The downside of a Chapter 7, at least in this context, is that bankruptcy does not eliminate the collateral consequences of debt. The debtor may still be on an eviction dirty list.
• Chapter 13: The wage-earner plan, on the other hand, enables people to pay off rent delinquency over time. Meanwhile, the Automatic Stay may not bar eviction lawsuits altogether. But it the very least, it slows them down. And, at the end of the three or five-year bankruptcy repayment plan, the debtor should have a zero balance with the landlord.

It is almost always better to be proactive in these situations. Such a stance puts you in control of the past-due rent situation. When you receive the first landlord-issued late notice, unless you can afford to take care of it immediately, it’s usually best to file bankruptcy at that point.

Post-Eviction Petitions

In most Indiana cities, eviction is a complicated process. Landlord late notices mean nothing in terms of legal proceedings, even if the notice gives the tenant a certain number of days to pay or vacate the premises.

The first enforceable eviction action usually takes place in justice court. Landlords can file FED (Forcible Entry and Detainer) lawsuits in justice court. The judge holds a brief hearing, and if the judge believes that the tenant owes rent or has otherwise violated the lease agreement, the judge could find in favor of the landlord.

Typically, if debtors file bankruptcy at that point, the Automatic Stay may still apply. But if the judge has already signed an order, the eviction may go through whether or not the tenant files bankruptcy.

Landlords can and do evict tenants for things other than unpaid rent. Some common examples include sheltering people who are not on the lease, keeping pets in violation of the lease, and running a business from a residential space. Typically, judges require a long history of violations and warnings before they sign eviction orders in these cases.

Rely on Dedicated Lawyers

Bankruptcy usually stops evictions, but timing is key. For a free consultation with an experienced Chicago bankruptcy attorney, contact the Bentz Holguin Law Firm, LLC. Convenient payment plans are available.

Resource:

npr.org/2018/04/12/601783346/first-ever-evictions-database-shows-were-in-the-middle-of-a-housing-crisis

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