House & Apartment

The following question was originally submitted to John Roska, a lawyer Someone who represents clients in courts or who gives legal advice and writer for the weekly column "The Law Q&A" in the Champaign News Gazette. The article has been updated to include changes in the law and additional information. 

Question

I was on the verge of filing to evict some tenants when I got a notice that they’d filed for bankruptcy. The notice seems to say I can’t go ahead with an eviction A court case brought by a landlord to get a tenant to move out . Is that right? How can I get them out?

Answer

Welcome to the “automatic stay.” It “stays”—or stops—any attempt to recover money or property from someone who’s filed for bankruptcy. There are ways to get around it legally, but big dangers if you violate it. Be careful.

The automatic stay has been called “an instrument of awesome breadth and power.” It provides a time-out that at least temporarily avoids crises like foreclosures, evictions, or disconnections. Often, that instant breathing room is the main reason to file for bankruptcy.

The stay is a legal injunction A court order to make someone do something or stop doing something from the bankruptcy court that automatically stops almost all collection activity and other legal proceedings against the debtor A person who owes money to someone else at the debtor's property. As the name suggests, it’s automatic and is triggered the moment a bankruptcy case is filed. 

In emergencies, a short, bare-bones bankruptcy petition (noun) A written request to a court (verb) To request from a court can be filed just to get the automatic stay. Then, the debtor must complete the regular filing within 14 days. If they don’t, their case is dismissed Cases dismissed with no further action anticipated. , and the stay is “dissolved.” (Getting a stay becomes harder after previous bankruptcy filings have been dismissed.)

The automatic stay applies to “pre-petition” debts, and (usually) everything the debtor owns or is renting. That means the stay doesn’t stop you from collecting new debts incurred after someone files for bankruptcy. (Just be sure it’s a completely new debt.)

Freezing the debtor’s property, or “estate All of the property a person owns at their death ,” so that the bankruptcy court can try to repay all creditors equitably, is another big reason behind the automatic stay. It prevents creditors from scrambling to grab all they can, ahead of others.

Creditors listed in the bankruptcy petition get written notice of the bankruptcy filing and the automatic stay. Because the stay is automatic, creditors are bound by it even before they know about it. The bankruptcy court can undo anything done in violation of the stay, for example, by making creditors return money or property. 

Even creditors left off the bankruptcy petition, and who therefore don’t get written notice of the bankruptcy case, are subject to the stay. That’s all part of preserving the debtor’s estate.

The automatic stay affects all creditors, then, even before they know about it.

Creditors can ask a bankruptcy judge to “lift” or "modify To change or adjust " the stay so that they can collect their debt or take certain other actions. Requesting relief from the stay requires filing a motion A request to the judge to make the court or a party in the case do something before the bankruptcy court. This is a formal request to which the debtor or other creditors may respond. This can get tricky because you must follow the proper procedures for bringing a stay relief motion. But if you don’t get the stay lifted, you’re usually bound by it. This also means you're stuck on hold until the debtor completes their case and gets their discharge, or until their case is dismissed.

The main exceptions to the coverage of the automatic stay in individual debtor cases are criminal cases, and “domestic support obligations.” Usually, these are child support Money paid by a parent to help another parent support a minor child or an adult child with a disability cases. An exception for landlords is if they got an eviction before bankruptcy was filed. They can enforce Taking legal steps to make someone do what the court tells them to do an eviction order they already got, but can’t try to get one without lifting the stay.

Bankruptcy judges come down hard on people who willfully violate the stay. They will impose penalties on top of just restoring the status quo. Violating the stay can be surprisingly easy. The best course of action before doing anything once you learn that a tenant A person who rents a space has filed for bankruptcy relief is talk to a lawyer.