It used to be that families who were facing eviction and had no other place to go had a final resort — file a bankruptcy petition to buy just a little more time to either work things out with the landlord or move. However, since the advent of the Bankruptcy Abuse Prevention Consumer Protection Act on October 17, 2005, bankruptcy has had much less to offer to residential tenants who are at risk for eviction from their apartments. The new provisions relating to evictions codified within Title 11 of the United States Code at Sections 362(a)(22), 362(a)(23), 362(l) and 362(m) are arguably the harshest changes offered by the new law where consumers are concerned.
If the new provisions are to be summed up, they essentially force the residential tenant to “put up or shut up”. At the same time, it should be emphasized that these harsh provisions have limited application — they only apply to tenants who have “lost” in a state court eviction proceeding and who are facing a “judgment for possession” pursuant to which the tenant is reinstated on the lease provided that the judgment amount is satisfied, i.e., is paid in full. (If the judgment does not provide for reinstatement upon satisfaction, it is presumed that the tenant gets no relief at all from the bankruptcy filing.)
In order for the the bankruptcy filing to have any effect on a looming eviction in which the landlord has a state court judgment which is capable of being satisfied as described above, the tenant must pay one month of rent to the bankruptcy clerk immediately upon filing the bankruptcy petition. In addition to paying the rent to the clerk, the tenant must file a “certification” under penalty of perjury which states that (1) the judgment permits the tenant to stay in the premises upon satisfaction of the entire judgment amount and (2) the tenant has deposited with the bankruptcy clerk “any rent which would become due during the thirty (30) day period after the filing of the bankruptcy petition”.
If the tenant complies with the above requirements, i.e., pays the rent and files the certification (and serves the certification on the landlord), on the day that the bankruptcy petition is filed, the tenant is given a thirty day reprieve. In other words, the tenant gets the benefit of the bankruptcy “automatic stay” for a period of thirty days from the date that the bankruptcy petition is filed.
If the tenant is interested in being able to remain in the apartment beyond the initial thirty day period, the tenant must satisfy the amount stated in the judgment for possession within thirty days following the filing of the bankruptcy petition and must file within those same thirty days a certification with the Court that the tenant has in fact paid this amount. If the tenant does this, it is presumed that the automatic stay remains in full force and effect until modified by order of court.
Different rules apply to tenants who are at odds with their landlords over non-monetary issues. Because this site focuses on financial issues and bankruptcy, I will not focus on these rules. Briefly, Section 362(a)(23) limits the application of the automatic stay in cases where a landlord “seeks possession of residential property” from a tenant due to allegations that the tenant has “endangered” the property or has used “illegal substances” on the property. This section appears to permit a landlord to file a “certification” at any time during the pendency of the tenant’s bankruptcy case regarding the circumstances giving rise to a potential “social eviction” and will cause the automatic stay to be lifted without any further notice or order of court fifteen days after the filing of such certification unless the tenant files an appropriate objection as detailed by Section 362(m).
The bottom line is that if tenants who are facing eviction due to monetary default fail to “win” at the state court level, they will not see much relief in the bankruptcy court; if they do obtain some semblance of relief, it will be very expensive.
This blog has been written in part as a response to Mazy Hedayat’s recent post entitled “how to get kicked out of your home or apartment”. I wanted to make clear that the rules regarding extension of the automatic stay in cases where there there has been a recent previous dismissal do not apply to tenants of residential property as suggested by Mr. Hadayat.