According to the National Council of State Housing Agencies (NCSHA), 170,000 to 250,000 Arizona renters are at risk of being evicted due to the ongoing COVID-19 crisis. With the state’s unemployment rate at nearly 8% and a little over two months left of the Center for Disease Control and Prevention (CDC) extended eviction moratorium, thousands of families in Arizona are facing significant financial hardships in the coming year.
If you are considering filing for bankruptcy during these tumultuous times, you probably have many questions. One of your most pressing concerns may be whether or not you’ll lose your home or be evicted. Learn more about bankruptcy and eviction in Arizona from the Phoenix bankruptcy attorneys at Lerner and Rowe Law Group.
Can Bankruptcy Prevent My Landlord From Evicting Me?
Currently in Arizona, no evictions can begin processing until after the federal eviction moratorium expires on March 31, 2021. Until then, at least, renters won’t have to contend with an eviction.
When you file for bankruptcy, you’ll be granted what is called an automatic stay in bankruptcy. An automatic stay goes into effect regardless of whether you file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. Automatic stays essentially put a halt to any attempts by your creditors of collecting on a debt you owe, including back rent.
In order to evict a tenant in the first place, landlords must obtain a judgment against them. If you file for bankruptcy before the eviction moratorium expires, you’ll already have protection—albeit temporarily—from being evicted by the time the moratorium ends and your landlord can obtain a judgment.
How long the automatic stay will prevent an eviction depends on the type of bankruptcy you file and whether or not you intend to continue living in your current rental (and resume making rent payments).
Note: If you are facing eviction, filing for bankruptcy isn’t your only option. Read more about eviction prevention assistance in Arizona.
How Long Will Chapter 7 Bankruptcy Delay an Eviction?
When it comes to bankruptcy and eviction in Arizona, filing for Chapter 7 is strictly a temporary fix. Although the automatic stay can buy you precious time to get your affairs in order and have your debt discharged, they are not impenetrable.
A landlord who obtains a judgment against you for nonpayment of rent can petition the court to lift the automatic stay in order to evict you sooner. In many cases, the court will grant that request. Thus, although your bankruptcy case may take four to five months to resolve, you could still be subject to an eviction within a matter of weeks depending on how quickly your landlord files their petition.
For renters who just need some extra time to find a new place to live, filing for Chapter 7 may be the right choice. In addition to discharging your other unsecured debts, you’ll likely also be able to discharge any back rent you owed your landlord, too.
However, for those who want to stop (and not just delay) an eviction, you will likely have a better outcome by filing for Chapter 13 bankruptcy.
Can Chapter 13 Bankruptcy Actually Stop an Eviction?
In some cases, filing for Chapter 13 bankruptcy can stop an eviction and potentially allow you to stay in your rental. But in order to do so, you’ll need to have a plan in place to begin making payments on back rent, which is not dischargeable in a Chapter 13 bankruptcy.
Unlike in Chapter 7 bankruptcies, landlords will have a much harder time getting the courts to lift an automatic stay once you’ve filed for Chapter 13. That means you have a much better chance of stopping the eviction for the remainder of your lease term. However, this will require the ability to begin making rent payments ASAP and a commitment to paying off accumulated back rent through a restructured repayment plan, to be determined during the bankruptcy process.
Should I File For Bankruptcy to Avoid an Eviction?
Filing for bankruptcy is a major financial decision, and one that shouldn’t be made lightly. While bankruptcy proceedings may be able to help you discharge some of your debts related to past due rent or give you some extra time to catch up on payments, filing bankruptcy only to avoid an eviction probably isn’t worth it unless you have other debts or finding another place to live is impossible.
Here are some other questions to ask yourself before you choose bankruptcy to stop an eviction:
- How much longer is the lease? Once your lease is up, your landlord is not required to renew it for any length of time. If your lease is ending soon, fighting an eviction may not be worth the time and expense.
- Can you actually afford your rent? If you got behind on payments but recently got a new job or another source of income, Chapter 13 may be a viable option for getting caught up on payments and avoiding an eviction.
- Do you have anywhere else you can live? If you can afford a cheaper apartment or house to rent, or if you are able to move in with family or friends, this could save you more money than filing for bankruptcy.
- Do you have any other debt? This is pretty much the most important question to ask yourself before seriously considering bankruptcy. If you have significant credit card debt, outstanding medical bills, student loan debt, or are facing vehicle repossession, bankruptcy could be instrumental in helping you get your finances back in order.
Do I Need a Lawyer to File For Bankruptcy in Arizona?
Consulting with an experienced bankruptcy lawyer is key to successfully filing for bankruptcy. Having an attorney on your side means you’ll never miss a filing deadline or be left out of the loop as your case progresses.
When you schedule a consultation at Lerner and Rowe Law Group, our bankruptcy specialists will review your case at no cost, and with no obligation to hire us. Bankruptcy is not a one-size-fits-all option, and we’ll make sure you have all the facts before you make your decision.
Worried about your ability to pay for a bankruptcy attorney? We offer affordable payment plans and $0 down bankruptcies to help lessen the financial impact. Call our offices today at 602-667-7777 (Phoenix) or 520-620-6200 (Tucson) to find out more. You can also connect with one of our LiveChat agents who are standing by to answer your questions. Or you can fill out this simple form to request your complimentary case review.