Bankruptcy Can Help You Stop an Eviction or Help You Transition to a New Residence
Written By: Cort Walker
The coronavirus pandemic and its impact on the local (Raleigh, NC) and national economy has financially devastated many individuals and families. Evictions and, as a result, homeless families are a very real threat for 2021. Many tenants across eastern North Carolina have been unable to pay their residential or commercial rent for months. This has put a financial strain on landlords, as well, who will be seeking to evict tenants and collect on the debt in the new year 2021 when moratoriums and state court closures lift.
Effective September 4 through December 31, 2020, the federal Centers for Disease Control and Prevention (CDC) issued an Order providing a halt to certain residential evictions to prevent the further spread of COVID-19. A residential tenant must provide a signed Declaration form to his or her landlord to assert the protections of the CDC Order.
North Carolina has created its own form, available here: North Carolina CARES ACT AFFIDAVIT
Also, presently in North Carolina summary ejectment trials or eviction hearings, are not being held because of the Order of Chief Justice Cheri Beasley suspending non-essential, in-person court proceedings until no sooner than January 14, 2021. A copy of the Order is available at the North Carolina Court’s website.
Although there is a temporary reprieve from residential tenants being evicted from their homes, neither the CDC Order nor Chief Justice Beasley’s Order relieves anyone from the actual legal obligation to pay rent payments under the terms of residential lease agreements. Landlords may still charge late fees, penalties, or interest because of the failure to pay rent on a timely basis. For many tenants, the delinquencies on rent payments are adding up and they are wondering how to deal with the looming evictions when the CDC Order expires and the state court system re-opens.
A bankruptcy case under either Chapter 7 or Chapter 13 can help offer some relief from unpaid rent bills and stop an eviction. In some cases, the eviction can be stopped temporarily while a person relocates within a reasonable time and in some cases, the eviction is canceled and resolved permanently.
It is very important to know that if a tenant wants to stop an eviction, the bankruptcy case must be filed before the state court magistrate judge holds the eviction hearing and enters the order granting the eviction (also called a “Judgment In Action For Summary Ejectment”). Too often, tenants call the bankruptcy attorneys at Sasser Law Firm too late when the eviction has already been granted and then want to know if filing a bankruptcy case can keep them in the property.
If a tenant’s goal is to stay in the residence and catch-up on the rent payments, then a Chapter 13 bankruptcy case can often help by providing a reasonable period of time for the payments to be made while the tenant is protected from eviction by the automatic stay of federal bankruptcy law.
If a tenant’s goal is to move to a different residence within a reasonable time without being burdened by a lot of debt from the unpaid back rent, then a Chapter 7 bankruptcy case can often help by discharging or wiping out the legal obligation to pay the past due rent.
Every person’s financial situation is different, so calling Sasser Law Firm or coming in for a free consultation before the eviction is granted by the state court is extremely important. Don’t wait, we can help you explore your legal options today.