Facing eviction can be a stressful experience, especially when dealing with financial difficulties. Filing for bankruptcy might offer temporary relief from eviction.
Understanding how bankruptcy affects eviction proceedings can help tenants make informed decisions.
Automatic stay in bankruptcy
When someone files for bankruptcy under Chapter 7 or Chapter 13, an automatic stay goes into effect. This stay immediately stops most collection activities, including eviction proceedings. The automatic stay provides temporary protection, giving tenants some breathing room to address their financial situation.
Limitations of the automatic stay
The automatic stay has its limits. If a landlord has already obtained a judgment for possession before the bankruptcy filing, the eviction may proceed. In New Jersey, if the eviction is due to illegal drug use or property endangerment, the automatic stay does not apply. Landlords can also file a motion to lift the stay, allowing the eviction to continue.
Chapter 7 bankruptcy and eviction
Chapter 7 bankruptcy involves liquidating assets to pay off debts. While it can eliminate unsecured debts, it doesn’t usually provide a long-term solution for eviction. The automatic stay might delay the process, but unless the tenant can catch up on rent or reach an agreement with the landlord, eviction may still occur after the bankruptcy case ends.
Chapter 13 bankruptcy and eviction
Chapter 13 bankruptcy allows individuals to reorganize their debts through a repayment plan. Tenants can include past-due rent in this plan, which may help them catch up over time. By making regular payments and staying current on rent, tenants might avoid eviction. Cooperation from the landlord is often necessary in these cases.
Communicating with the landlord
Open communication with the landlord can make a difference. Discussing the financial hardship and exploring possible solutions may lead to an agreement that prevents eviction. Landlords might be willing to work with tenants who show a commitment to resolving their debts.
Understanding your rights
Knowing how bankruptcy affects eviction in New Jersey empowers tenants to make informed choices. While bankruptcy can offer temporary relief, addressing the underlying financial issues is essential for long-term stability.