Of course, your specific situation will also determine which chapter to file. For example, if you do not have any monthly income, or insufficient monthly income, making a Chapter 13 monthly payment will be impossible. Or, if you prefer to file a Chapter 7 but have high income, you may not qualify for a Chapter 7 and may need to consider a Chapter 13. (If you are in this situation and do want to leave the rental, you can still do that in a Chapter 13.)
As with many other parts of life, timing is everything. Waiting until after an eviction is filed, or even after a judgment has been entered, limits your options. It’s best to be proactive. An eviction has several steps:
- A verbal request for late rent;
- A 3-day “Pay or Vacate” notice;
- Filing of an eviction lawsuit. A hearing will be scheduled at least 10 days after the petition is filed;
- Eventually, a judgment will be entered. There can be no action for 5 days after the judgment is entered;
- Writ of Possession: 24 hours after the court issues a writ of possession, the renter and possessions are removed from the rental.
The best time to file a bankruptcy – the time that gives you the most options – is during or before the Pay or Vacate notice. At this point, there is nothing filed with the courts, so your next landlord will not see any “red flags.” Moving to a new rental will be easiest at this point. Furthermore, filing a bankruptcy before any court action simplifies the proceedings considerably.
If an eviction petition has been filed, but no judgment has been entered, filing your bankruptcy will stop a judgment from being entered. Your next landlord will not see anything about the eviction petition on a credit report, but if they check court filings, they may see a “red flag” on the court website. A bankruptcy can still stop collection from the landlord, and if you so choose, give you time to catch up on rent.
Once a judgment has been entered, you can still file your bankruptcy to buy yourself some time to either catch up on rent (through a Chapter 13) or to move. The judgment will likely show on a credit report, which future landlords will see. This could limit your options as you search for a new home to rent. Bankruptcy cannot remove the judgment from your credit report—it only addresses the debt coming from that judgment.
Bankruptcy can help if you have fallen behind on rent. With eviction moratoria across the state ending on December 31st, it is best to be proactive, and call us today for a free consultation.