Can Bankruptcy Stop an Eviction in Virginia?

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Falling behind on rent can move quickly from missed payments to an unlawful detainer lawsuit and a scheduled eviction. Bankruptcy may be able to stop or delay an eviction and, in some situations, Chapter 13 can provide a way to catch up on past-due rent and remain in the property.

Whether bankruptcy can help depends heavily on where you are in the Virginia eviction process when the bankruptcy case is filed. If you have received a notice from your landlord, been served with an unlawful detainer, or already have an eviction scheduled, it is important to address the situation as quickly as possible.

What Happens to an Eviction When You File Bankruptcy?

Filing a bankruptcy case normally creates an automatic stay that stops most collection activity. If a landlord has not yet obtained a judgment for possession, the automatic stay may stop an ongoing eviction proceeding while the bankruptcy case is pending.

However, bankruptcy does not automatically stop every eviction. Federal bankruptcy law contains an important exception when a landlord obtained a judgment for possession before the bankruptcy was filed. Special procedures may still be available in certain nonpayment-of-rent cases, but the timing and requirements are very specific.

That is why the date of the bankruptcy filing in relation to the eviction case can make a major difference.

Can Chapter 13 Help You Catch Up on Rent?

Chapter 13 can be particularly helpful when the problem is past-due rent and the tenant wants to remain in the property.

Depending on the circumstances, a Chapter 13 case may allow a tenant to propose a repayment plan that addresses rent arrears while continuing to make the ongoing rent payments required under the lease.

In order to keep a rental property, however, simply filing Chapter 13 is not enough. The debtor generally must be able to remain current on rent going forward and address the existing lease default as required by bankruptcy law.

A Chapter 13 attorney can evaluate the lease, the amount owed, the status of any unlawful detainer case, and whether a workable cure is still available.

What If the Landlord Already Has a Judgment for Possession?

A judgment for possession does not necessarily mean it is too late to use bankruptcy to stop an eviction, but special rules apply and the timing becomes critical.

Ordinarily, the automatic stay does not stop an eviction when the landlord obtained a judgment for possession before the bankruptcy case was filed. However, federal bankruptcy law provides a special procedure that may temporarily stop an eviction based on nonpayment of rent when state law still gives the tenant a right to cure the default.

In the Richmond area, when this procedure is available, the debtor generally must deposit approximately one month’s rent with the Bankruptcy Court Clerk at the time the bankruptcy case is filed—technically, the amount of rent that will become due during the 30 days following the filing. The debtor must also file the required certification with the bankruptcy petition.

The debtor then has 30 days after filing the bankruptcy case to cure the entire rent deficiency that resulted in the judgment for possession and file a second certification with the Bankruptcy Court.

Virginia law generally allows a tenant facing eviction solely for nonpayment of rent to redeem the tenancy by paying the amounts required by law before the eviction is completed. That right is what can make this bankruptcy procedure available even after a judgment for possession has been entered.

This procedure does not apply in every eviction case. For example, the analysis may be different if the landlord obtained possession for reasons other than nonpayment of rent. Because the required payment and certifications must be handled when the bankruptcy case is filed, anyone who already has a judgment for possession or a scheduled eviction should speak with a bankruptcy attorney before filing.

What If the Sheriff Has Already Scheduled the Eviction?

There may still be options, but there is very little room for delay. We need to determine whether the eviction is based solely on unpaid rent, whether Virginia’s right of redemption remains available, how much must be paid to cure the default, and whether the special bankruptcy procedure described above can still be used.

Virginia law generally permits a tenant in a qualifying nonpayment case to stop a scheduled eviction by paying the required amounts at least 48 hours before the scheduled eviction. Bankruptcy may provide an additional route when the requirements of federal and Virginia law are satisfied.

If an eviction has already been scheduled, contact an attorney before filing a bankruptcy case, because the additional rent deposit and certifications may need to be submitted with the initial filing.

What Happens to Past-Due Rent If You Move Out?

Bankruptcy can still help even when keeping the rental property is no longer the goal.

Past-due rent is generally treated as an unsecured debt to the extent it is not entitled to some different treatment under the Bankruptcy Code. Depending on the case, Chapter 7 may discharge qualifying rental debt, while Chapter 13 may allow that debt to be addressed through the repayment plan.

This can be useful when someone has already moved, has a money judgment from a former landlord, or owes rent and other lease-related charges after an eviction.

Chapter 7 vs. Chapter 13 When You Are Behind on Rent

Chapter 7 can be useful for eliminating qualifying debts to a former landlord, but it generally does not provide a long-term repayment mechanism for curing rent arrears while keeping a lease.

Chapter 13 provides more flexibility when the debtor wants to remain in the property and needs time to address an existing default. Whether that is possible depends on the lease, the eviction status, the debtor’s income and budget, and the amount required to cure the arrears.

Talk to a Richmond Bankruptcy Attorney Before the Eviction Date

Eviction and bankruptcy law are extremely sensitive to timing. Someone who still has options today may have significantly fewer options after a judgment for possession is entered or an eviction is completed.

If you are wondering whether bankruptcy can stop an eviction in Virginia, the answer depends heavily on the timing and status of the eviction case. Kane & Papa represents individuals throughout the Richmond area in Chapter 7 and Chapter 13 bankruptcy cases. If you are behind on rent, have been served with an unlawful detainer, or have an eviction scheduled, contact us as soon as possible so we can review the status of the case and explain whether bankruptcy may help.