You’re behind on your rent.
With the recent upheaval stemming from the COVID-19 pandemic, many consumers are falling further and further behind on their monthly obligations. While the state of California has a temporary moratorium on eviction, the back rent owed must be paid or an eviction can proceed once the moratorium has ended.
If you do not satisfy the back rent owed, the debt will remain due even after an eviction has taken place. This means the landlord could sue you for what’s owed and proceed with a wage garnishment or bank levy if he obtains a court judgment.
This leaves many consumers wondering what they can do when the California state moratorium on eviction ends and months of unpaid rent comes due.
So, What are my Options in Bankruptcy?
The good news is that back rent is considered a dischargable debt in a bankruptcy filing. However, what your best options are will greatly depend on whether you plan on remaining in the property and what you can afford. While you may be able to discharge your responsibility to pay back the rent you owe in a bankruptcy filing, the debt must be paid if you plan to remain in the property.
I Can’t Afford to Stay in the Property and Need to Move:
If you’ve determined that remaining in the property is not feasible, a Chapter 7 bankruptcy filing may be the best option. As long as you qualify to file for Chapter 7 bankruptcy, you can simply walk away from the back rent you owe and the landlord will not be able to pursue you in the future. While Chapter 7 bankruptcy may grant you some extra time in the property, this protection from eviction is temporary and, unless you are able to able to get current on what you are behind, your landlord may have the right to ask for early relief from your bankruptcy filing so they can proceed with eviction. As such, under most circumstances, a Chapter 7 bankruptcy filing may not be the best solution if you plan on staying in the residence.
I’m Behind, but I’d Like to Stay in the Property:
If you plan on staying in the property, a Chapter 7 filing can only help you if you are able to get 100% current on the owed back rent within 30 days of filing your case. Unfortunately, this is not be a feasible solution to most consumers. As such, a Chapter 13 bankruptcy filing may be a better option. Chapter 13 is a type of bankruptcy that consolidates your debts. In a Chapter 13 bankruptcy, you may be able to pay back the amount you are behind over time so that you can stay in the property. As long as you make all your bankruptcy payments to promptly cure the back rent and remain current on any future rent payments, you are protected from eviction proceedings.
I’d Like to Stay in the Property, but I’m not Sure If I can Afford it:
At the end of the day, the best course of action is what is financially best for you as a consumer. Even if you wish to remain in the property, discharging the back rent and walking away may be the best option depending on your finances. If you are unsure how to proceed, but know you need relief from the back rent you owe, a qualified bankruptcy attorney will be able to best address your concerns and advise you accordingly. What is best for one person may be different than what is best for you.
If you are considering filing for bankruptcy, reach out to a local bankruptcy attorney in your area. Winterbotham Parham Teeple, a PC practices throughout Southern California, including Riverside County, Los Angeles County, San Bernardino County and Orange County. If you live in the area and need a free consultation to discuss what would work best for you, feel free to visit our website or call us directly at (800) 400-9000.