Can I still evict when tenant files for bankruptcy

My tenant has filed for bankruptcy. Can I still proceed with an eviction action against the tenant?

In these situations where the tenant claims to have filed bankruptcy, a landlord must determine if that is actually the case. Oftentimes, it is at the eviction hearing that the tenant notifies the landlord for the first time that he or she has filed for bankruptcy. If the tenant cannot produce a case number or a document proving that he or she has actually filed for bankrutpcy, the landlord should attempt to proceed with the eviction hearing. Tenants often confuse talking to a bankruptcy lawyer with filing for bankruptcy. It may not be clear to the tenant that they still have to pay the bankruptcy lawyer before the bankruptcy filing will take place.

If the tenant has indeed filed for bankruptcy then the bankruptcy proceeding will bring the eviction action to a stop. If the landlord has already been awarded restitution at the eviction hearing, the tenant can still file for bankruptcy and stop the eviction process. Basically, the landlord is in a race with the tenant. The landlord must get the tenant out of the premises (in a lawful manner) before the tenant files for bankruptcy. If the tenant files for bankruptcy while he or she is still in the premises, the tenant can stop the eviction proceedings.

If the tenant has filed for bankruptcy, the landlord should continue/postpone the eviction hearing to a later date. The landlord must then petition the bankruptcy court to allow the landlord to proceed with the eviction. The landlord does this through filing a Motion for Relief from Automatic Stay with the bankruptcy court. The bankruptcy court charges a filing fee in order to file the Motion for Relief from Automatic Stay which adds to the landlord’s eviction costs.

The tenant generally has 21 days (may differ from jurisdiction to jurisdiction) to file a response to the Motion for Relief from Automatic Stay. The landlord may reply to the response if one is filed. The tenant may choose to not file a response but the landlord must still wait until the 21 day period for the response ends before submitting a proposed entry to the bankruptcy court. In the meantime, the eviction action is still hanging out there in limbo. As a result, the landlord may have to postpone the eviction hearing more than once while the bankruptcy court rules on the Motion for Relief from Automatic Stay.

Is there any recourse to the landlord if the the tenant fails to file a response to the landlord’s Motion for Relief from Automatic Stay? I’ve actually had a landlord ask me this question before. He was obviously frustrated with the delays associated with the bankruptcy filing but there is no recourse if the tenant chooses not to file a response to the landlord’s motion. In fact, if the tenant fails to file a response then it has merely made the landlord’s victory in the bankruptcy court that much closer to a reality. If no response is filed after 21 days then the landlord should submit a proposed entry to the bankruptcy court awarding him the relief that he sought.

The same landlord who wanted recourse for the tenant’s failure to respond found the following on the internet:

“Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”), if a residential landlord already has a judgment for possession by the time the tenant files for bankruptcy, the automatic stay does not prevent the landlord from continuing to evict the tenant after 30 days after the petition was filed [unless the debtor cures any deficiency in rent and deposits with the clerk of the Bankruptcy Court the rent coming due during that 30 day period]. Specifically, the Code provides, in Section 362(b)(22), that the automatic stay shall automatically cease 30 days following the bankruptcy filing date to permit landlords to continue any eviction, forcible entry and detainer “FED”, or similar proceeding against a debtor-tenant where the landlord has obtained a judgment for possession against the debtor-tenant prior to the bankruptcy filing.”

Many of our internet law researchers focus on language that they want to hear to the exclusion of any other language. When interpreting the law, you have to pay attention to the meaning of every word in the statute. The landlord wanted to use this language to suggest that the eviction action could continue 30 days after the tenant filed for bankruptcy. However, the language in the statue above indicates that in cases where a residential landlord has already obtained judgment for possesion of the premises. We had not obtained judgment for possession of the premises so the statute was inapplicable in our case. Furthermore, even if we had obtained judgment, the bankruptcy filing causes an automatic stay of 30 days to the eviction proceeding. Guess what? In Ohio, your eviction judgment is generally only good for 30 days. So, unless you obtain leave from the eviction court to the contrary, your eviction judgment would be no good after 30 days anyway.

Additional language came to light as well concerning bankruptcies and tenancies:

“In some circumstances a landlord may complain to the bankruptcy court that the tenant is endangering the property or using controlled substances illegally on the property. The landlord must file a certification to the bankruptcy court and the tenant has 15 days to respond. The court must hold a hearing within 10 days. If the landlord is successful in this complaint, the court will lift the automatic stay and allow the eviction process to continue.”

The landlord argued that the tenant thus did not have 21 days to respond (despite clear language in the local rules for the bankruptcy court) to our Motion for Relief from Automatic Stay but only 15 days. Again, this is another case where the landlord focused on only the language that was helpful to him. He ignored the prerequisites of (1) the tenant endangering the property or (2) using controlled substances illegally on the property. Neither was the case in our eviction.

Once the landlord receives the approved entry from the bankruptcy court granting relief from the automatic stay, he should bring that entry to the eviction hearing and proceed with the eviction of the tenant.

If you find yourself in a similar situation, you can purchase our sample motion for relief from automatic stay as a guide to use in your own filing. Be advised that different bankruptcy jurisdictions may have different requirements and you should consult the local rules for the bankruptcy court in which your tenant filed. Those local rules are often found on the bankruptcy court’s website. Our sample motion for relief from stay comes in Word and PDF formats and after purchase you will receive a CD containing all relevant forms to your physical mailing address. Most orders are processed the same or next business day.