Prior to the enactment of the 2005 Bankruptcy Abuse and Consumer Protection Act, the filing of a bankruptcy generally operating as a stay of eviction proceedings. In bankruptcy, this is referred to as the automatic stay. Today, the bankruptcy filing:
- Does not stay or stop an eviction order or a judgment for possession;
- If there is no judgment for possession or eviction the bankruptcy filing generally means the eviction is at least temporarily stopped or stayed;
- The bankruptcy filing does not stay eviction proceedings if the eviction is being sought due to tenant’s illegal use of controlled substances on the property, or other actions that endanger the property;
- Even if an eviction order is granted, a bankruptcy filer may have the automatic stay reinstated, provided the applicable State law allows the tenant to pay or cure the amounts owed to the creditor or landlord;
- Florida law permits a tenant, who is in dispute with a landlord over rent or the appropriate rent to be paid, to contest the amount claimed by the evicting landlord, and deposit the tenant’s claimed appropriate rent;
- Florida statute 83.60(2) permits a tenant to pay into the registry of the court, the accrued rent as alleged in the complaint, or as determined by the court. The statute does not appear to grant the tenant an opportunity to cure the arrears owed after the eviction order is granted.
- Despite an instance wherein the debtor in bankruptcy does not have the protection of the automatic stay, there is nothing precluding the debtor from entering an agreement with the landlord or creditor, which would typically involve the debtor paying any arrears owed, either in full or over a period of months, along with normal rental payments as they become due. This is an option often employed by a debtor seeking to accept a lease in bankruptcy and providing prompt cure of arrears. This concept also relates to the bankruptcy law concept of adequate protection.
- Bankruptcy code section 362 (11 USC 362) governs the automatic stay. Bankruptcy code section 362(a)(3) states that the filing of the petition operates as a stay of any act to obtain possession of property of the estate or to exercise control over property of the estate
- Bankruptcy code section 362(b)(22) lists an exception to the automatic stay where the lessor has obtained before the filing of the bankruptcy petition a judgment for possession of the property against the debtor. This exception applies to residential property in which the debtor resides as a tenant. Bankruptcy code section 362(b)(22) is subject to section (l)
- Subsection (l) of section 362 states that subsection (b)(22) applies on the date that is 30 days after the date on which the bankruptcy petition is filed if the debtor files with the petition and serves upon the lessor a certification under penalty of perjury that:
- Under nonbankruptcy law applicable in the jurisdiction, there are circumstances under which the debtor would be permitted to cure the entire monetary default that gave rise to the judgment for possession, AFTER that judgment for possession was entered
- The debtor has deposited with the clerk of court, any rent that would become due during the 30 day after the filing of the bankruptcy petition
- Bankruptcy code section 362(b)(23) states that the automatic stay does not operate against an eviction action for possession of a residential property wherein the tenant resides under a lease or rental agreement where the eviction is based upon:
- Endangerment of such property
- The illegal use of controlled substances on the property
- In order for the eviction to continue pursuant to Bankruptcy code section 362(b)(23), and for the automatic stay to be inoperable, the lessor must file with the court, and serve upon the debtor:
- A certification under penalty of perjury that the eviction action has been filed
- That the debtor during the 30 day period before the date of the filing of the certification, has endangered property OR used or allowed to be used a controlled substance on the property
- Subsection (m) of Bankruptcy code section 362 provides that the automatic stay can remain in effect under section 362(b)(23) provided the debtor can prove to the court that the conditions that are alleged to exist, meaning either endangerment of the property or the illegal use of controlled substances upon the property, either did not exist OR have been remedied. Subsection (m) provides in detail, the procedure for such debtor to claim the protection of the automatic stay.
Jay Weller is a bankruptcy attorney with offices in Tampa, Clearwater, Port Richey, and Lakeland, Florida. Weller Legal Group has represented many thousands of clients in the greater Tampa Bay region, beginning in the year 1993.
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