Can You Stay In Your Rental After Declaring Bankruptcy?

Bankruptcy is designed to help Americans struggling with debt get on top of their financial troubles and start fresh. But one of the most immediate concerns for many debtors is how bankruptcy would affect their current rented home. Can you stay in your rental? Will you be forced to leave? And can you rent another home after bankruptcy? 

Here are some answers to help you find peace of mind. 

Can You Stay in Your Home?

Your first worry may be whether or not you can stay where you are if you get bankruptcy protection. There's good news for many debtors. Bankruptcy does not automatically mean you're kicked out of your rental, and the automatic stay prevents future collection action. 

In addition, many debtors prioritize their rent because they need a place to live. This helps you because your ability to stay there is unlikely to be impacted if you're current on rent. 

What If You Owe Past Due Rent?

What if you haven't been able to keep up with the rent? In this case, your ability to stay depends on your particular debt. Chapter 7 debtors may be able to prevent eviction if they can get current on their rent within a short period after filing. 

However, if you can't do this, that old debt will generally be discharged. But discharge often comes at the price of the lifting of the stay and permission for your landlord to pursue eviction if needed. 

How Can Chapter 13 Help?

Chapter 7, or liquidation, bankruptcy isn't the only choice. You may be better off opting for Chapter 13, or a repayment plan. Bankruptcy allows you to stretch out debts like past due rent over a three- or five-year period. You'll need to reaffirm your lease and continue to keep up with the current rent as well, but this can keep you in your current home. 

Can You Rent Something Else? 

What if you do have to leave your rental? Perhaps you simply can't keep up with current payments or the past-due debt is too hard to pay off. Don't despair. You can usually still rent another apartment or house even with bankruptcy on your record. 

First, prepare to discuss your bankruptcy with potential landlords. You may need to explain proactively why you declared bankruptcy and how your financial situation has improved afterward. 

In addition, some landlords can look favorably upon tenants who have declared bankruptcy because they've gotten rid of payments that compete with the rent and they aren't being harassed by creditors.

Where to Start

No matter what your concerns about bankruptcy are, the best place to begin is to learn more about your options. Meet with a bankruptcy attorney in your state today. For more information, contact a bankruptcy attorney near you.