What is an automatic stay?
ANSWER:
An automatic stay is an order for relief to stop creditors from trying to collect debts from the debtor or collect the debtor’s property without the Bankruptcy Court’s approval. The automatic stay stops all collection efforts, all eviction proceedings in process, and eviction actions filed after the bankruptcy petition. There can be serious consequences for landlords who violate an automatic stay.
The facts and circumstances of the debtor’s bankruptcy case determine the applicability of the automatic stay. The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) (2005) set out new rules that provide some protection to landlords. Under the new rules any landlord who receives a court ordered judgment for possession prior to the tenant filing for bankruptcy is exempt from the automatic stay and is allowed to proceed with evicting the tenant.
However if the tenant files a bankruptcy petition prior to the landlord obtaining a judgment order for eviction, the automatic stay is in effect. The landlord is prevented by the stay to have any contact with the tenant regarding past due rent that is owed before the filing date of the bankruptcy.
The automatic stay does not apply to those tenants engaging in illegal drug use on the premises or endangering the rental property in some manner. In these situations a landlord can initiate or proceed with an eviction action without asking the Court to lift the stay, provided that the landlord follows specific legal procedures.
If the landlord has filed an eviction action based upon illegal drug use on the property or property endangerment but does not yet have a court judgment, the landlord must file a certification with the Bankruptcy Court stating the circumstances for the eviction action and serve legal notice of the certification on the tenant.
If the tenant has filed the bankruptcy petition before the landlord initiates an eviction action based on illegal drug use or property endangerment, the landlord must provide the Bankruptcy Court with certification that illegal drug use or endangerment occurred on the rental property within the past 30 days. Legal notice of the certification must be served on the tenant.
If the tenant fails to file an objection with the Court within 15 days of being served, the landlord can proceed with an eviction.
A tenant who objects to the eviction must file with the Court and serve the landlord with a sworn statement stating the landlord’s certification is not true. The Court should then hold a hearing within 10 days. At this hearing the tenant must convince the Court that the situation the landlord describes either did not exist or has since been remedied. If the Court rules for the tenant, the landlord may not proceed. If the landlord wins, the landlord may proceed with the eviction.