If you have an unexpired residential lease agreement you will need to list it on your bankruptcy schedules and state your intention to “assume” or “reject” the lease. Lease agreements are listed on Schedule G. If you are current with your lease payments, this is the only place your lease will need to appear on your forms, other than the Statement of Intention. All you will need is your landlord’s name and contact information, which can typically be obtained from your lease contract, to provide to your attorney.
If you are behind on your lease payments, you will want to also list the amount you owe at the time of the bankruptcy filing, as a debt on Schedule E/F. You will again need the landlord’s name and mailing address as well as the amount you owe. You can also list broken leases here, for example if you have already moved on to a new house or apartment and the old debt remains.
You do not have to let your landlord know ahead of time that you are filing bankruptcy. However, your landlord will be notified by the bankruptcy court after your case is filed. So, it may be a good idea to give them a heads up, as they may not know how it impacts them when a tenant files for bankruptcy.
If you are keeping “assuming” the lease, you will need to keep paying your full rent (including any late fees) while you are in your bankruptcy and beyond until the lease term is concluded.
If you are using bankruptcy as an opportunity to get out of the lease early and you have already moved out of the property, then you do not have to keep making your payments. But, if you are still living in the property, you will want to continue to pay rent for the time that you live there after your case is filed. This is a post-petition obligation and the discharge won’t apply to it.
Can you be evicted?
There are two scenarios:
This is the easy one. So long as you are current on your rent payments and haven’t violated any other terms of the lease agreement, you cannot be evicted simply for filing a bankruptcy.
If you are behind on rent payments when you file your case, the “automatic stay” of § 362 of the Bankruptcy Code will provide temporary relief from your landlord. Under the automatic stay landlords must immediately stop any collection or eviction actions pending. They cannot terminate the lease, declare you in default or obtain an eviction judgment against you after the bankruptcy is filed and must also stop all other communications with you, such as letters, bills and other efforts to collect rent.
But this relief is only temporary. If you want to stay in the home or apartment (keep the lease), you’ll need to make arrangements to catch up on the back rent. Otherwise, the landlord can ask the court to “lift” the automatic stay so they can move forward with an eviction proceeding. The court will grant relief for cause, which typically is lack of adequate protection or not making monthly rent payments.
Note: The situation is different if your landlord has already obtained an eviction judgment against you before you filed your bankruptcy case. In that case, the bankruptcy law will protect you from eviction only if certain requirements are met. At the time your bankruptcy petition is filed, you have to certify to the court - under penalty of perjury - that state law allows you to cure the default that led to the eviction judgment in the first place. Additionally, you have to deposit all money that comes due within 30 days from your filing date with the clerk of the court. If you can’t do both, your landlord can move forward with the eviction process.
Will bankruptcy effect your ability to renew an existing lease or obtain a new lease?
This is a question we get asked a lot. A bankruptcy filing should not impact your ability to renew your current lease. However, many landlords use credit checks when deciding whether to offer or renew a lease agreement. It is entirely up to the landlord whether to renew your rental agreement when the term is up. This is true whether someone files bankruptcy or not. But if you have maintained good on-time payments you should not have anything to worry about.
While some landlords may not want to rent to people with a bankruptcy on their credit. There are plenty who will. Some landlords may require two months security deposits to help them deal with perceived risk. It may be helpful to explain to them that by filing bankruptcy and discharging your other debts, you will now have more of your income to dedicate to rent payments, thus making it more likely that you will be able to make your rent payments. If you are worried about this, sometimes it is better to lock-in on a new lease agreement prior to filing bankruptcy if your credit is good or decent, as often times landlords only run credit checks during the application process and therefore, the bankruptcy won’t yet be on your credit.
Our experienced bankruptcy attorneys have handled thousands of bankruptcy cases and have seen it all. If you have questions about your situation, give our office a call at (850) 438-6603 for a FREE consultation and we would be happy to assist you today.