Potential for avoiding eviction through bankruptcy

Consumers who have financial problems often find they not only have large accumulated debt, but also cannot meet their monthly expenses.  They often fall into the mental trap of thinking that there is an easy way out of debt.  This is not true.  Debt relief is available to qualified people, who try to achieve it for a proper purpose and correctly follow all legal steps.  Renters who find that they are unable to pay rent on time sometimes consider bankruptcy as a vehicle to keep from being evicted.  It is important to understand that in order for this to be a viable consideration there must be a proper purpose for the filing of the bankruptcy and all steps done correctly.  The bankruptcy court generally is not designed to be used to evade legal responsibilities but rather to give debt relief to qualified people.  Filing bankruptcy to get out of paying rent or get more time to gather rent money is not the type of purpose for filing bankruptcy envisioned in the current bankruptcy law.  The Bankruptcy Abuse Prevention Consumer Protection Act of 2005 does not appear to show interest in protecting a tenant who is facing eviction from an apartment.  It is important for a person who is considering bankruptcy to keep in mind that the individual’s factual situation can play a substantial part in whether bankruptcy can be used to help stop eviction.  For example, there is a difference between a tenant who has already lost a case in a state court eviction action and someone who has not been evicted, but is behind in rent.  In the case where a tenant has already lost a case in state court, it is important to view the wording of any judgment to, among other things see if there is any right of reinstatement if all back rent has been paid.  Tenants with a judgment against them who are considering bankruptcy should not expect a bankruptcy to get them out of making rent related payments as set forth by a judgment or other state law.  For example, even if the tenant with a judgment against him or her is otherwise eligible for bankruptcy it should be expected that there is going to be a need to pay one month of rent to the bankruptcy clerk immediately upon filing the bankruptcy petition.  The tenant filing bankruptcy should also expect to file all necessary paperwork to substantiate the request for relief including certification under penalty of perjury as to the existing facts.  This certification should include whether the judgment allows the tenant to remain on the rented property after satisfying the amount of the Judgment.  A tenant filing bankruptcy may get the benefit of the automatic stay in bankruptcy if their facts are appropriate and they meet all legal requirements.  It must be kept in mind that after thirty days passes from the date of the filing of the judgment, the tenant with a judgment against him or her should not expect to be able to remain at the rented property unless he or she fully satisfies the judgment.  If the tenant does satisfy the judgment, then they should expect to file the appropriate paperwork with the court to prove he or she met all legal requirements to be able to stay at the rented property.

The tenant who is contemplating bankruptcy must keep in mind that the above discussion may not apply if their factual situation is not over back rent to be paid, but rather non-monetary issues such as using the property for an illegal purpose.  For example, in a situation where there is illegal use of the property, the  landlord may be able to file a certification that protecting the landlord’s ownership interest in the property from illegal activity supersedes the consumer/tenant’s right to the automatic stay.

The forgoing discussion should send the message that filing bankruptcy is not an easy solution to tenant’s problems with a landlord and must only be done for a proper purpose with a willingness and ability to meet all existing legal requirements.  Even then filing the bankruptcy may only give temporary relief on the rent issue.  A tenant’s protection in bankruptcy is not the same as a homeowner’s rights.  The home may be property included in the bankruptcy estate and therefore protected by law, while the lease may be considered to be an interest that is not included in the bankruptcy estate and therefore may not be afforded protection under the bankruptcy laws.   Renters who need bankruptcy relief should get a bankruptcy evaluation at a Minnesota law firm that offers bankruptcy services.  A Minnesota bankruptcy lawyer can do a bankruptcy evaluation that includes the means test to help evaluate the consumers potential for debt relief.  At the same time the Minnesota lawyer can review the consumers lease situation to see if it is the type that may qualify for some form of relief under existing bankruptcy law.  Filing a bankruptcy simply to evade rent obligation can be considered to be an abuse of prevailing bankruptcy law that would make the consumer subject to sanctions.  Consumers who are tenants should be very careful in making sure to have a complete evaluation of their situation before moving ahead to file bankruptcy.  An experienced Minnesota bankruptcy lawyer can provide valuable legal assistance in helping a consumer to make a proper decision on what course to follow in addressing his or her debt situation.

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