Can Filing For Bankruptcy Prevent Eviction?

Filing for bankruptcy can be a difficult decision, but it can also provide relief for individuals and families facing financial hardship. One potential benefit of bankruptcy is the ability to stop an eviction from occurring. However, the specific circumstances and type of bankruptcy that is filed can affect whether or not the eviction process can be halted.

Can Bankruptcy Prevent Eviction?

When an individual or family falls behind on their rent or mortgage payments, the landlord or lender may seek to evict them from the property. This can be stressful, especially if the individual or family has nowhere else to go. In some cases, filing for bankruptcy can provide a temporary or permanent solution to the eviction process.

Filing For Chapter 13 Bankruptcy

One type of bankruptcy that can potentially stop an eviction is Chapter 13 bankruptcy. This type of bankruptcy is also known as a “wage earner’s plan,” as it is designed for individuals with a regular income who are able to pay off some or all of their debts over time. Under Chapter 13 bankruptcy, the individual must propose a repayment plan to the court that outlines how they will pay off their debts.

If the court approves the plan, it will also place an automatic stay on all collection efforts, including evictions. This means that the landlord or lender must stop all attempts to evict the individual until the repayment plan is completed.

However, the automatic stay provided by Chapter 13 bankruptcy is not permanent. If the individual fails to make the required payments under the repayment plan, the automatic stay can be lifted and the eviction process can resume. Therefore, it is important for individuals seeking to use Chapter 13 bankruptcy to stop an eviction to carefully consider whether they will be able to make the required payments under the repayment plan.

Filing For Chapter 7

Another type of bankruptcy that can potentially stop an eviction is Chapter 7 bankruptcy. This type of bankruptcy is also known as a “liquidation bankruptcy,” as it involves the sale of the individual’s assets and the use of the proceeds to pay off their debts.

In some cases, the individual may be able to keep certain exempt assets, such as their home or car. Exempt assets are properties the debtor can keep and are not part of the assets the bankruptcy trustee sells.  However, if the individual is unable to make the required payments and is facing eviction, Chapter 7 bankruptcy may not be an effective solution.

It is also important to note that the specific circumstances of the eviction can affect whether or not bankruptcy can stop it. For example, if the eviction is based on nonpayment of rent or mortgage payments, bankruptcy may be able to halt the process. However, if the eviction is based on other reasons, such as breaking the terms of the lease or engaging in illegal activity, bankruptcy may not be able to stop it.

Let Austin Bankruptcy Lawyers Help

Bankruptcy can potentially stop an eviction, but the specific type of bankruptcy and circumstances of the eviction must be considered. Chapter 13 bankruptcy can provide an automatic stay on all collection efforts, including evictions, but the stay is not permanent and can be lifted if the individual fails to make the required payments under the repayment plan.

Chapter 7 bankruptcy may not be an effective solution for stopping an eviction, especially if the individual is unable to make the required payments on their assets. It is important for individuals facing eviction to carefully consider their options and seek the advice of a bankruptcy attorney before making a decision.

Austin Bankruptcy Lawyers provides legal assistance in filing for bankruptcy, especially Chapter 13 and Chapter 7. The firm’s team of bankruptcy lawyers can assist you and help you navigate the sometimes confusing bankruptcy process. They can provide options and advice on which chapter of bankruptcy can help you prevent eviction and what can assist you in getting relief from financial struggles.