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Federal Eviction Moratorium Update

September 28th, 2020 at 7:00 am

The current federal eviction moratorium comes with a number of qualifications and conditions. Be aware of them. It’s a limited but helpful tool.

 

Our last three weekly blog posts have been about the new Agency Order temporarily stopping many residential evictions. This Order by the Centers for Disease Control and Prevention (“CDC”) went into effect on September 4, 2020. It expires on December 31, 2020, when all unpaid rent will be due and evictions can resume.

Three weeks ago we described this eviction moratorium. Two weeks ago we discussed how renters could get more benefit from the moratorium with a Chapter 7 “straight bankruptcy.” Last week we got into how Chapter 13 could help significantly more. This week we provide additional important practical information.

Exceptions to the Eviction Moratorium

The CDC’s evictions ban did not cover all possible evictions. As a renter you need to make sure that you qualify and take the right steps to avoid being disqualified.

First, as emphasized last week, you must complete and give your landlord a Declaration form to trigger the eviction ban. Otherwise you do not qualify for the moratorium.

Second, you sign that Declaration under penalty of perjury. If you are not truthful, you’d expose yourself both to criminal liability and to eviction. So make sure you meet the stated income and other qualifications.

Third, the Declaration requires you to make “timely partial payments” as much as you can afford. You can’t necessarily just stop monthly payments altogether. In fact “timely” indicates that you should try to make partial payments when the regular rent payments are due each month. But what determines whether and how much you can afford to pay? The CDC’s Agency Order says you must use your “best efforts.” The “partial payments [are to be] as close to the full payment as the individual’s circumstances may permit, taking into account other nondiscretionary expenses.” This is all quite vague. But if you can afford to pay something and you don’t, your landlord has potential grounds to evict regardless of the moratorium.

Fourth, the Declaration makes you liable not just for rental payments, but also for “other obligations that I may have under my… lease agreement… .” This includes “fees, penalties, or interest for not paying rent…  on time… .”  These “may still be charged or collected.” Presumably this means landlords can collect these additional charges only after the moratorium expires, so starting January 1, 2021. But don’t lose sight of these add-ons—they can really add up.

Evictions for Other Reasons

The Agency Order states clearly that even if you otherwise qualify and deliver a truthful Declaration, your landlord could still try to evict you “for reasons other than not paying rent….”

Some but not necessarily all such reasons include:

(1) Engaging in criminal activity while on the premises; (2) threatening the health or safety of other residents; (3) damaging or posing an immediate and significant risk of damage to property; (4) violating any applicable building code, health ordinance, or similar regulation relating to health and safety; or (5) violating any other contractual obligation, other than the timely payment of rent or similar housing-related payment (including non-payment or late payment of fees, penalties, or interest).

85 Fed. Reg. 55,294 (Sept. 4, 2020).

You need to be mindful of these other reasons for eviction that defeat the moratorium. However, also note that landlords face a significant risk if they violate the Agency Order by trying to wrongfully evict you. These include significant fines ranging from $100,000 to $500,000 per event, and even possible imprisonment. These penalties should discourage frivolous attempts by landlord to evict with invalid justification.

Expired or Lack of Lease Agreement, Subtenants

Three common situations are not addressed directly by the Agency Order.

First, you may have signed a month-to-month lease agreement with a one-year term, but continued on after that one year. The landlord and you essentially assume that you both continue to be bound by the lease agreement. But legally it’s clearly expired. Assume you’re not paying rent because of the moratorium, but the landlord has somebody else who can afford the rent. Can the landlord evict you without violating the moratorium because you have no valid lease agreement? It’s certainly plausible.

Similarly, what if your lease agreement expires at the end of this month? Presumably the landlord is under no obligation to renew or extend the agreement. So he or she may be able to evict you in spite of the moratorium.

What about verbal lease agreements? Or month-to-month ones in which both parties can legally end that lease at any point. Seems like the landlord could have the right to end the agreement and evict in spite of the moratorium.

Finally, many people are subtenants who are not on the original lease agreement. So they don’t have a direct relationship with the property’s landlord. Similarly, a number of residents may live under a lease signed only by one of the housemates. If you don’t have renter’s rights because you are not the legal renter, the moratorium does not apply to you. If the renter on the agreement does something allowing the landlord to evict him or her, the moratorium will not likely help you.

Conclusion

The federal eviction moratorium gives you a potentially helpful additional tool during these intensely challenging times. But you have to act to qualify for it. And there are various conditions and exceptions you’ve got to be aware of.

In addition, the eviction moratorium is just one tool of many. It may best be used in conjunction with a range of bankruptcy tools. See a bankruptcy lawyer to find out how to use all the available legal tools to help you meet your goals.

 

What Is an Automatic Stay in a Texas Bankruptcy?

April 30th, 2020 at 1:24 am

TX bankruptcy lawyer, Texas chapter 13 lawyer, Texas chapter 7 lawyer, For most people, filing for bankruptcy is a last resort. It can be easy to dig yourself into a pit of debt that you are unable to climb out of. Once the bills start becoming due, it can feel like an ocean wave washing over you, with you struggling to stay above water. Not paying your bills can cause creditors to resort to collections actions, such as wage garnishment and repossession. Once you file for bankruptcy, however, all of those collections actions must stop. This is what is known as the automatic stay.

Understanding the Automatic Stay

The automatic stay is a provision in the U.S. Bankruptcy Code that temporarily halts collections attempts from all creditors. The automatic stay goes into effect immediately after you file for bankruptcy and prevents any and all creditors from contacting you about debts you may have with them. The automatic stay does not last forever. As soon as your bankruptcy case is finished, the automatic stay is lifted.

What Can the Automatic Stay Prevent?

The automatic stay is meant to stop creditors from performing a variety of collections activities while you are going through with your bankruptcy. This was meant to help keep things fair among creditors, to prevent one creditor from settling their debts over another, but it also helps the person filing for the bankruptcy. Here are a few things the automatic stay can prevent from happening:

  • Foreclosure or eviction: The automatic stay prevents the completion of a foreclosure on your home or eviction from a place you rent. However, the automatic stay does not prevent foreclosure or eviction from happening. Your creditor can file a petition for the foreclosure to proceed, and mortgage debt is not discharged with a Chapter 7 bankruptcy, leaving you still responsible after the bankruptcy is over.
  • Wage garnishments: If you have had creditors garnish your wages, they are not permitted to do so during the time that the bankruptcy case is open. You should be receiving your full wages once the automatic stay is in place, as long as the garnishment is not for secured debt.
  • Repossessions: The automatic stay can also help prevent repossessions from happening on property that you do not fully owe yet, such as vehicles. Auto debt is also not discharged in Chapter 7 bankruptcies, which is why you must work out a repayment plan with your lender. As soon as the bankruptcy is over, your lender can repossess your vehicle if you have not worked out a repayment plan.

Our San Antonio, TX Bankruptcy Attorney is Here to Help

In some situations, creditors can be aggressive and intrusive into your life. If you have filed for bankruptcy, you should not be experiencing any collections actions against you. If you have creditors who are still trying to collect, you should speak with a skilled Boerne, TX bankruptcy lawyer. At the Law Offices of Chance M. McGhee, we can help you through your bankruptcy case. To schedule a free consultation, call our office today at 210-342-3400.

 

Sources:

https://www.investopedia.com/terms/a/automaticstay.asp

https://upsolve.org/learn/what-is-automatic-stay-bankruptcy/

Landlord’s Power over Bankruptcy to Evict Bad Tenants

February 14th, 2018 at 8:00 am

A landlord can take possession of a rental fast if you’re endangering the rental property or illegally using a controlled substance there. [

 

Bankruptcy Stopping Eviction

Two blog posts ago we got into how bankruptcy can stop a residential eviction.  Basically, you can stop an eviction if you file a bankruptcy case before the landlord gets a judgment of possession. That’s a court’s decision that the landlord has the right to take possession of your rental. That means you no longer have a property right that bankruptcy law can protect. So after this judgment, the eviction can go forward (except under some unusual circumstances discussed in that earlier blog post).

Special Reasons to Evict

However, there’s a way for a landlord to quickly evict you even if you do file bankruptcy before the judgment of possession. The landlord could accuse you of one of two kinds of bad behavior:

  • “endangerment of [the rental] property”
  • “illegal use of controlled substances on [the] property”

(See Section 362(b)(23) of the U.S. Bankruptcy Code.)

The Procedure If a Landlord Accuses You of These

The landlord can file with the bankruptcy court a certification asserting one or both of such bad behavior. That certification would state, under penalty of perjury, either that:

  • within the prior 30 days you have “endangered [the rental] property” or else have “illegally used or allowed to be used a controlled substance on the property”
  • an eviction proceeding had been filed asserting such facts

(Again, see Section 362(b)(23) of the Bankruptcy Code.)

Defeating the Landlord’s Certification

If you take no action in response to the landlord’s filed certification, 15 days later it can proceed to evict. If the landlord started the eviction before you filed bankruptcy, it can finish it. If it hadn’t started before, it could now start and complete the eviction. Your bankruptcy’s usual protection against the landlord taking possession of your rental property would no longer apply. (See Section 362(m)(3).)

However, if you dispute what the landlord states in its certification, you can file an objection to it. You and your bankruptcy lawyer must file the objection at the bankruptcy court within 15 days of the certification’s filing.  You’d have to object “to the truth or legal sufficiency of the certification.”

The bankruptcy court then holds a hearing within 10 days. It rules on whether “the situation giving rise to the [landlord’s] certification… existed or has been remedied.” If the court is convinced that the “situation… did not exist or has been remedied,” the automatic stay protection continues.

Otherwise, the court allows the landlord to immediately proceed with eviction. 

(See Section 362(m)(1 and 2).)

Conclusion

Bankruptcy stops a residential eviction if the landlord hasn’t already gotten a judgment of possession. But if the landlord has grounds that you were a bad tenant as outlined above, then you can be evicted even if your bankruptcy filing happens before the judgment. You can fight back and still win if the facts are in your favor. If so then you are protected from eviction during the 3-4 months of your Chapter 7 bankruptcy case. That would hopefully give you time to catch up on your rent or cure whatever else is wrong. Or if necessary Chapter 13 would likely give you much more time to catch up or cure.

 

Stopping Eviction from Your Rental through Bankruptcy

February 9th, 2018 at 8:00 am

Filing bankruptcy can stop a residential rental eviction. But only if you file your bankruptcy case is before a judgment of possession.  

 

Our last blog post was about stopping the collection of unpaid spousal and child support by filing bankruptcy. Chapter 7 doesn’t stop collection of this special kind of debt. Chapter 13 does, but only temporarily unless you meticulously follow a number of requirements.

Today we get into the special rules about another very special kind of debt: unpaid residential rent. Somewhat similar to spousal and child support, if you meet certain requirements your bankruptcy filing can stop certain landlord collection actions—in this case, evicting you. But an eviction does not stop if you wait too long. Here’s how it works.

Keeping Possession of Your Rental

Bankruptcy’s “automatic stay” law makes it illegal for your creditors to take many actions against you and your property. There is a list of the kinds of actions that creditors can’t take as of the moment you file bankruptcy. Included on that list is for a creditor “to obtain possession of [your] property” or “to exercise control over [your] property.” (See Section 362(a)(3) of the United States Bankruptcy Code.)

Your “property” in this statute doesn’t just include the physical, tangible things that you own. “Property” has a much broader meaning. It includes “all legal and equitable interests… in property as of the commencement of the [bankruptcy] case.” (Section 541(a)(1) of the Bankruptcy Code.) “Property” includes intangible things like your rights in something of value.

This includes any “leasehold” interests you hold. That’s your right to occupy or keep possession of your rental property. The automatic stay stops your landlord from “obtain[ing] possession of” or “exercise[ing] control over” your rental residence. Your landlord’s attempt to evict you is stopped by your bankruptcy filing.

Crucial Timing

However, there is a crucial condition to this protection. Your landlord can’t take possession of the rental only if you do actually still HAVE a right to the possession. If you no longer have a right to possess the rental at the moment you file your bankruptcy, it’s too late. The automatic stay no longer helps you.

If you’ve legally lost the right to possess the rental, then you no longer have that “property” to protect.

How and When Do You Lose Your Right to Possession?

Each state has different rules about how and when a residential lease is terminated. So you need to discuss this with an experienced local bankruptcy lawyer.

The Bankruptcy Code does provide a little more help. It says that an eviction is NOT stopped if the landlord “has obtained before the date of the filing of the bankruptcy petition, a judgment for possession of such property against the debtor.” (Section 362(b)(22).)

Has your landlord gotten “a judgment for possession” of your rental? If not, an immediate bankruptcy filing will stop the eviction. For example, if your landlord has threatened to, or even has begun, legal action to remove you from rental premises, but has NOT yet gotten a judgment for possession of the premises, your bankruptcy filing will stop that proceeding. It will stop the landlord from removing you, at least for now. But if the landlord HAS gotten a judgment for possession, filing bankruptcy will not stop the eviction.

A Final Possibility

However, even if your landlord has just gotten a judgment for possession there is one final possible escape. There is a procedure in bankruptcy which might allow you to avoid eviction. When filing bankruptcy you and your lawyer can file a special certification. It must assert the following.

  • You are “permitted [under state law] to cure the entire monetary default that gave rise to the judgment of possession.”
  • This cure of the default is allowed under your state’s law even after the landlord received a “judgment for possession.”
  • You deposit with the bankruptcy court clerk the full amount of any rent due, including up through 30 days after filing the case, and certify that you’ve done so.

If the landlord does not object, the automatic stay goes into effect and you can stay in the rental.

If your landlord does object, the bankruptcy court holds a hearing within 10 days about this. The court decides whether the landlord’s objection is valid or not. If valid, the landlord can immediately proceed with the eviction. If the objection is not valid you can stay in the rental. (Section 362(l)(1-4).)

Conclusion

Bankruptcy stops a residential eviction if the landlord hasn’t already gotten a judgment of possession on the rental. Under very limited circumstances even after such a judgment you might be able to beat the eviction. But by then the odds are stacked quite high against you. It makes infinitely more sense to file bankruptcy before an eviction starts, and certainly before the court decision goes against you.

Be aware that eviction proceedings are usually very fast. If you expect one, or it’s already been filed, you need to see a bankruptcy lawyer immediately.

 

The “Endangerment of Property” and “Illegal Use of Controlled Substances” Automatic Stay Exceptions

October 28th, 2016 at 7:00 am

A landlord can take back possession of a rental quickly if you’re endangering the rental or illegally using a controlled substance there.

 

Our last blog post was about an exception to the protections of the “automatic stay” for residential tenants. Basically, you can stop an eviction if you file a bankruptcy case BEFORE the landlord gets a judgment of possession. That’s a court determination that the landlord has the right to take possession and evict you. After this judgment, filing bankruptcy doesn’t stop an eviction, except under some unusual circumstances discussed in our last blog post.

However, there’s a whole separate procedure allowing a landlord to quickly evict you even if you’ve filed bankruptcy, if you’re accused of one of two kinds of bad behavior:

  • Endangerment of the rental property
  • Illegal use of controlled substances on the property

Allows Landlord to Take Possession without a Judgment of Possession

Generally, when a residential landlord starts an eviction proceeding, or an “unlawful detainer” or “F.E.D” action, if successful the landlord receives a judgment of possession. But it doesn’t necessarily need that if it believes that either the “endangerment” or “controlled substances” exceptions apply. So be very careful if you are a tenant and there’s any chance of being accused of one of these two behaviors.

How Landlord Raises these Exceptions to the Automatic Stay

Here’s the procedure you need to watch out for.

The landlord can file with the bankruptcy court a certification under penalty of perjury, at any time. That certification would state that in the prior 30 days you have “endangered [the rental] property.” Or else you have “illegally used or allowed to be used a controlled substance on the property.” Or else the certification would state that an eviction proceeding had been filed based on these facts.  The landlord must serve a copy of this certification on you. See Section 362(b)(23) of the United States Bankruptcy Code.

Defeating the Landlord’s Certification

You can file an objection to the landlord’s certification within 15 days of its filing. If you don’t within 15 days, then automatically the landlord is allowed to proceed with its eviction action. If it started the eviction before you filed bankruptcy, it could finish it. Otherwise it could start and complete its eviction. Your bankruptcy’s automatic stay against the landlord taking possession of your rental property would protect you no further. Section 362(m)(3).

But if you do file a timely “objection to the truth or legal sufficiency of the certification,” the automatic stay protection may continue. The bankruptcy court holds a hearing within 10 days. It “determine[s] if the situation giving rise to the [landlord’s] certification… existed or has been remedied.” If the court is convinced that the “situation… did not exist or has been remedied,” the automatic stay protection continues. Otherwise, the landlord can immediately proceed with eviction. Section 362(m)(1 and 2).

 

The Residential Lease Exception to the Automatic Stay

October 26th, 2016 at 7:00 am

Filing bankruptcy can stop an eviction, unless the landlord has already gotten a judgment of possession. Don’t wait—timing is crucial.

 

 

The “automatic stay” prevents a creditor from taking collection action against you once you file a bankruptcy case. This applies to a landlord to whom you’re behind on rent payments. In particular it can apply to preventing a landlord from removing you out of a residential rental. But there are special rules about this in the form of a limited exception to the automatic stay.

Protecting Your Possession of Your Rental Residence

The automatic stay forbids your creditors from taking any of a list of actions against you and your property. One of the kinds of forbidden actions on that list is “to obtain possession of [your] property” or “to exercise control over [your] property.” (See Section 362(a)(3) of the United States Bankruptcy Code.)

Your “property” doesn’t just include the tangible objects that you own. The term is much broader than that. It includes “all legal and equitable interests… in property as of the commencement of the [bankruptcy] case.” (Section 541(a)(1) of the Bankruptcy Code.)

That includes “leasehold” interests—your right to “possess,” or occupy, your rental property. The automatic stay stops your landlord from taking away your right to your rental, for a period of time anyway.

Timing Is Crucial

But you must still have that right to possess at the point in time that you file your bankruptcy. A key phrase in the statute just quoted above refers to protecting the property that’s yours “as of the commencement of the [bankruptcy] case.” You must have a right to possess your rental at the moment you file your bankruptcy case.

When Do You Lose Your Right to Possession?

Each state has different procedures about how a residential lease is terminated. They have different laws about when tenants lose their right to be in the residence. Those different state laws can make it difficult to determine when precisely the tenant loses the right to possession. So it can be hard to tell when the automatic stay would and would not stop a landlord from evicting a tenant.

The exception to the automatic stay about residential leases tries to clear this up.  

It says that an eviction is NOT stopped if the landlord “has obtained before the date of the filing of the bankruptcy petition, a judgment for possession of such property against the debtor.” (Section 362(b)(22).)

So if your landlord has taken legal action to remove you from rental premises and has NOT yet gotten a judgment for possession of the premises, your bankruptcy filing will stop that proceeding and will stop the landlord from removing you. If that judgment for possession has been entered in favor of the landlord, then it’s too late for bankruptcy to stop the eviction.

A Possibly Helpful Exception to the Exception

However, the Bankruptcy Code provides a procedure which, if you follow rigorously, might enable you to still beat an eviction. You and your bankruptcy lawyer must file, with your initial petition, a certification stating the following.

  • Under state law you are “permitted to cure the entire monetary default that gave rise to the judgment of possession.”
  • Your state’s law allows that cure even AFTER the landlord received a “judgment for possession.”
  • You certify that you have in fact “deposited with the [bankruptcy] clerk” any rent due, including up through 30 days after filing the case.

As long as the landlord does not object, the automatic stay applies and you can stay in the rental.

If your landlord objects, the bankruptcy court holds a hearing within 10 days to determine whether the objection is valid. If the court upholds the objection, the landlord can immediately proceed with the eviction. If the court rules in your favor—that the state law allows for curing the default and you have in fact paid what is required—then you can stay in the rental. (Section 362(l)(1-4).)

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