There is nothing else stressful as facing eviction as a tenant. If a tenant fails to pay his/her rent arrears, the landlord can file an unlawful detainer lawsuit to evict the tenant and regain possession of the rental property. Fortunately, a tenant can file bankruptcy ahead of time to stop unlawful detainer actions temporarily to buy some time to fix his/her financial situation to settle the landlord’s rent arrears or negotiate a new lease agreement to stay. For informed and intelligent decisions to avoid eviction, you can reach Los Angeles Bankruptcy Attorney for legal assistance during these tough times.
The Relationship Between Bankruptcy and Unlawful Detainer
Dealing with debts when facing financial hardships is very overwhelming. Bankruptcy provides a way out for many debtors when they are facing a financial crisis. Bankruptcy is a legal proceeding where someone declares himself or his business incapable of repaying debts. There are two types of bankruptcy proceedings for businesses and individuals, which we will discuss in this article. Depending on the type of bankruptcy a debtor files, the court will come up with a payment schedule or have a bankruptcy discharge of some of the debts. If you’re wondering what form of bankruptcy to file, you can consult with a bankrupt attorney for legal guidance.
If you are unable to pay your rent arrears, a landlord can evict you from his/her property. However, eviction should be formal such that the landlord must notify you of the default or rent arrears ahead of time. If you do not make any attempts to repay the rent arrears within a reasonable period, the landlord has a right to file legal proceedings to evict you. Unlawful detainer is a legal proceeding that legally permits a landlord to evict a defaulter tenant. Unlawful detainer proceedings commence when a landlord files an eviction lawsuit against the tenant. If you continue staying in your landlord’s property after the expiry of your lease or after notification to vacate, you are unlawful detaining a property that is not yours.
California's unlawful detainer laws were effective since 1872 to prevent chaos, unnecessary disagreements, and violence. Numerous reasons might provoke a landlord to file an unlawful detainer lawsuit against a tenant, but the worst and most shameful reason is due to rent arrears. To avoid shameful unlawful detainer actions, most tenants opt to file bankruptcy to get temporary relief from the landlord's debt.
In California, tenants can legally declare bankruptcy to stop an eviction by a landlord. If a tenant legally declares bankruptcy when an unlawful detainer lawsuit is already in court, the tenant will be granted an “automatic stay” by the court. Bankruptcy “automatic stay” judge verdict prevents a landlord from filing an eviction suit and allows a tenant to remain in his/her home. An automatic stay is a bankruptcy order preventing creditors like landlords from pursuing any legal actions against their debtors.
Running a business and managing all your finances at the same time can sometimes be overwhelming. To become a good businessman, you must know how to manage debts. However, sometimes regardless of how good you try to manage your debts, due to tough business compensation and economic upheavals, you might be unable to pay some debts. Filing for bankruptcy is a good way to relieve yourself from debts temporarily or make a good payment plan to creditors.
Filing bankruptcy might not always relieve a tenant from eviction after an unlawful detainer lawsuit under certain circumstances because the automatic stay will also expire after some time. To understand the consequences of using bankruptcy as an option to stop unlawful detainer actions, you must contact a reliable bankruptcy attorney like Los Angeles Bankruptcy Attorney to know the best bankruptcy option to file to avoid eviction.
Essential Documents to Show Your Bankruptcy Attorney When Filing Bankruptcy to Halt Unlawful Detainer Actions
The bankruptcy attorney will require certain information for proper legal representation and advice when filing bankruptcy to avoid eviction. Below is a checklist of essential documents you should prepare and avail to your bankruptcy attorney when filing bankruptcy:
Legal Records
Disclosing all your legal history or any other pending lawsuit information to your bankruptcy attorney is very important when filing bankruptcy. If you have a previous legal history involving debts, the bankruptcy attorney can use the court judgment against you to determine the type of bankruptcy petition right for you depending on your financial situation. Any pending lawsuit can also be useful in determining how much you can afford to pay the landlord during this particular time. Below are other helpful legal records when filing bankruptcy:
- Previous attorney files and records
- Previous lawsuits files and records
- Any other court order or divorce decree that requires you to pay maintenance or child support
Financial Records
Financial records are the most crucial information your bankruptcy attorney will require when deciding the best form of bankruptcy to file to avoid eviction. For instance, if your bankruptcy attorney discovers that you have a regular source of income, he/she will most likely advise you to file chapter 13 bankruptcy for a reorganization of rent arrears payment plan. In that case, chapter 13 form of bankruptcy will be beneficial to you since you will retain your property and pay your pending rent arrears over time. Here are essential financial records your bankruptcy attorney will need when filing bankruptcy:
- All recent bills from any creditor you owe or owed money
- Your recent bank statements
- Recent receipts for vehicles whether purchased or leased, student loans or real estate
- Invoices and bills of the past one year
Additional Documents
Additionally, you might also want to provide your bankruptcy attorney with other documents showing the assets you own. Your bankruptcy attorney can be able to determine your level of income after a thorough and proper organization of your assets. Below is a combination list of assets you can show your bankruptcy attorney to verify your income and determine the best bankruptcy option for your case:
- Vehicle titles
- All insurance coverage policies
- Your mortgage or lease
- Any signed promissory notes
- Any prove to show that someone owes you some money
- Any litigation that you have not gotten court judgment
- Canceled check for proof of all expenses you might not be able to document
- The last three years tax returns
With all this crucial information, your bankruptcy attorney will be able to prepare appropriate information necessary when filing bankruptcy to avoid unlawful detainer actions of eviction.
Events Before Unlawful Detainer Actions
In California, a landlord cannot evict a defaulter tenant before submitting a lawsuit in the supreme court within that location. Under California law, a landlord cannot do the following:
- Lock a tenant out of the house
- Disconnect electricity or water
- Clear the tenant personal property
- Change locks
- Kick the tenant out of a rental property
Before the eviction, the landlord must file unlawful detainer actions with the nearest court within the proximity of the property for a hearing. During unlawful detainer hearing, the landlord who is the plaintiff and the tenant who is the defendant will present their pieces of evidence and argue them out before a judge. If the judge finds the landlord's evidence viable to evict the tenant, then he/she will be granted unlawful detainer judgment, meaning he/she can repossess the rental property. However, if the court finds the tenant’s legal defense to be good and reasonable, the judge will rule the verdict against the defendant/landlord meaning the tenant will not vacate the rental property.
The only viable option a tenant has to avoid unlawful detainer actions of eviction is to file bankruptcy ahead of time. Filing bankruptcy will buy a tenant enough time to resolve his financial hardships and clear the rent arrears. There are two types of bankruptcy options that are useful to a tenant seeking to avoid unlawful detainer actions, which we will discuss in this article.
Types of Bankruptcy Options That Can Relief You from Unlawful Detainer Actions in California
When a tenant files a bankruptcy petition, all lawsuit or eviction actions must come to a standstill. There are two helpful bankruptcy petitions a debtor or tenant can file to avoid eviction through unlawful detainer actions. These bankruptcy petitions include:
Chapter 7 (Liquidation Bankruptcy)
Chapter 7 is a type of bankruptcy that is applicable sometimes when avoiding eviction. Chapter 7 bankruptcy is also known as liquidation bankruptcy. If your criminal defense attorney advises you to take this option of bankruptcy to avoid eviction, then it means it is the right one for you, depending on your current financial situation. Chapter 7 bankruptcy is always a good option for debtors with low income and few assets. During chapter 7 bankruptcy, the debtor, in this case, the tenant agrees to sell all his or her assets to pay his rent. Unfortunately, if you have a regular steady income which is too high, you will not qualify for chapter 7 bankruptcy.
As per California bankruptcy law, a debtor must submit all his/her monthly expenses, debts, and assets to the respective bankruptcy court for review. If a tenant qualifies for chapter 7 bankruptcy, the court will order an automatic stay that halts legal proceedings by the landlord against the defendants/tenant, such as unlawful detainer actions. When the bankruptcy court orders an automatic stay, the landlord will not file an unlawful detainer lawsuit again. If he/she has already filed, those eviction legal proceedings might have to stop. Automatic stay order applies even in chapter 13 type of bankruptcy. If a landlord fails to respect the automatic stay order, there might be harsh financial consequences.
Penalties for violating an automatic stay order could lead to penalties, damages, and costly fines, which is not a good thing to the landlord. The only way a landlord can get relief from this court order of automatic stay is by filing a motion for relief in the bankruptcy court. Most landlords will prefer to wait for automatic stay order expiration to continue with unlawful detainer lawsuit because this whole process is costly and time-wasting,
The court assigns a third party, often known as the trustee, the responsibility to sell the debtors assets to repay the creditor. Tenants who file bankruptcy can either assume or reject the lease. Assuming the lease means the tenant will repay all the landlord debts and must also make a three months’ rent deposit with the court. On the other hand, rejecting the lease means the tenant will have to vacate the rental property, but he/she will still be liable for all the debt that he/she was indebted to the landlord before filing for bankruptcy.
Chapter 13 (Reorganization Bankruptcy)
Unlike in liquidation bankruptcy, in chapter 13 bankruptcy, a debtor does not have to sell his/her property in exchange for some debt discharge. In chapter 13 bankruptcy, a debtor can still keep his property, but he/she will have to follow the court-approved plan for debt repayment to the creditors within three to five years. Chapter 13, bankruptcy is suitable for debtors with steady and regular income. If a tenant chooses chapter 13 bankruptcy, he/she will have to stick to the court-approved debt repayment plan and stay current on all rent arrears. Typically, chapter 7 or reorganization bankruptcy is for debtors who cannot qualify for chapter 7 bankruptcy due to their current income status.
Before filing for Chapter 13 bankruptcy, you must enroll for some credit counseling for 180 days prior. A credit counseling agency will help the debtor formulate a debt management plan which the debtor must submit in the bankruptcy court when filing bankruptcy or 15 days after. To know if chapter 13 bankruptcy is a suitable option to avoid unlawful detainer actions, you might want to hire a bankruptcy attorney to assess your financial position and goals before embarking on this major financial decision. Most bankruptcy attorneys will always advise tenants to choose this form of bankruptcy if there is a regular income and to avoid losing their property or a place, they have been calling home for many years.
Circumstances When Unlawful Detainer Actions Will Halt Bankruptcy’s Automatic Stay Verdict
An automatic stay verdict applies in chapter 7 and chapter 13 bankruptcy unless the tenant has filed multiple bankruptcy proceedings within a short period. An automatic stay bankruptcy judgment is also limited to a period of 30 days, after which the landlord may file an unlawful detainer lawsuit to evict you off his/her property. A landlord may also choose to ignore the automatic stay order under the following circumstance:
Relief from an Automatic Stay Motion
A landlord can counter a bankruptcy ruling of the automatic stay by filing a motion for relief with the bankruptcy court. Automatic stay relief motion is a landlord's request to regain control of the unlawful detainer actions which will allow him/her to commence or continue with eviction actions for possession of his/her property.
The Landlord Already Obtained Unlawful Detainer Judgment
An automatic stay bankruptcy verdict will not be valid if the landlord has already obtained unlawful detainer judgment, and eviction actions are already underway. Therefore, to get protection from bankruptcy automatic stay order, you need to be prompt when filing bankruptcy.
The Tenant Has Caused Some Damage on the Property
A tenant is exempted from automatic stay order if he/she causes some damages in the rental house. If a landlord’s reason for eviction is because of some damages the tenant caused on his/her property, then the automatic stay bankruptcy order might not be valid. Therefore, the landlord will still have legal rights to continue with the unlawful detainer actions.
Endangering Property/Illegal Drug Use
When a tenant engages in some illegal activities such as drug use, the landlord has the right to file unlawful detainer actions even if the tenant has an automatic stay bankruptcy verdict. Also, if the tenant endangered the property in any way within the last thirty days, he/she will still face unlawful detainer actions of eviction.
A Tenant Filing Bankruptcy in Bad Faith
The judge will dismiss a bankruptcy case if the tenant is filing in bad faith, for instance, if the tenant is willfully negligent in clearing his/her rent arrears and other debts. To get an automatic stay order when filing for bankruptcy, you must retain a bankruptcy attorney to help you in preparing all the essential information and pieces of evidence necessary to convince a bankruptcy judge the need for an automatic stay bankruptcy protection.
A tenant can object all these landlord claims within fifteen days. Otherwise, if he/she does not object, the allegations, the landlord has the right to continue with the eviction proceedings to possess his/her property. If you want to object to these allegations, you must seek the services of a skilled bankruptcy attorney to help you gather pieces of evidence and information necessary for protection from eviction through bankruptcy.
Find a Los Angeles Bankruptcy Attorney Near Me
Facing unlawful detainer actions can be very stressful and shameful to a tenant to the extent of filing bankruptcy to avoid being homeless after eviction. For informed and knowledgeable decisions during these tough times, we invite you to contact Los Angeles Bankruptcy Attorney at 424-285-5525 to know your options when filing bankruptcy to avoid eviction.
