Filing for bankruptcy can get you immediate protection for many actions taken by creditors, including a landlord who you may owe rent to. This protection is called an “automatic stay.” Landlords, similar to most other creditors, are covered by this automatic stay because the law stops “any act to obtain possession of [your] property” or “to exercise control over [your] property.” See United States Bankruptcy Code Section 362(a)(3).
What most individuals filing for bankruptcy don’t understand is that the term “property” includes much more than just physical objects that you own, like vehicles and furniture possessions. The meaning of property in bankruptcy law is much broader. The term includes “all legal and equitable interests . . . in property as of the commencement of the [bankruptcy] case.” Section 541(a)(1) of the Bankruptcy Code.
Your protected “legal and equitable interests” include “leasehold” interests. These “leasehold” interests include your contractual right to possess and occupy your residential rental property. As such, when you file bankruptcy, your landlord is immediately estopped from taking away your right to live in your rented home under the automatic stay protection.
Exceptions to the Automatic Stay Protection
Just like any other rule and law, there are some exceptions. The automatic stay does not kick in if you no longer have any “legal or equitable interest” in the rental property at the time of your bankruptcy filing. In other words, bankruptcy only protects what you have interest in at the time of filing.
This is made clear in the automatic stay statute. The exception says that the automatic stay does not apply if the landlord has gotten “a judgment for possession of such property” against you before you file bankruptcy. ” Section 362(b)(22) of the Bankruptcy Code. Once there’s a court determination that the rental property belongs to the landlord, it’s no longer yours.
However, if your landlord has not filed any legal actions against you for eviction, you still have a protected interest that will be covered by an automatic stay protection as soon as you file for bankruptcy. The bottom line is that timing is everything and it is important for you to immediately consult with an experienced Central Valley Bankruptcy attorney to protect your legal rights.
Call an Experienced Central Valley Bankruptcy Attorney
If you are considering Chapter 7 bankruptcy, it is in your best interest to consult with an experienced bankruptcy attorney to help you learn your legal rights and options, especially with respect to Chapter 7 bankruptcy.
For more information or to schedule a complimentary consultation with Central Valley bankruptcy attorney Gurjit Srai, please call 209-323-5558, or complete our online form.