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California Eviction Law and Personal Bankruptcy

Rental Realities [CC BY 2.0 (https://creativecommons.org/licenses/by/2.0/)], via FlickrThe bankruptcy process helps people who cannot make all of their required debt payments with their available income. It allows them, in Chapter 13 cases, to create a manageable payment schedule, or to pay down their debts by liquidating assets in Chapter 7. At the end of the case, the court may grant a discharge of some or all remaining debts. Of course, payments on debts, such as mortgages, credit cards, and student loans, are not the only regular financial obligations people must maintain. Most people also have monthly bills for utilities, cellular phones and internet, and other services. People who do not own their homes must also pay rent, which can be a tricky aspect of personal bankruptcy.

A recent article in the Los Angeles Times described ways that tenants can “game” the eviction system. In addition to various courtroom tactics, the article mentioned bankruptcy as a means of delaying eviction. This only tells one small part of the story. If stalling an eviction is an individual’s primary goal, a bankruptcy filing is perhaps the least efficient way of doing it. The automatic stay in a bankruptcy case, 11 U.S.C. § 362, has the effect of staying any pending court case, including most evictions, but the relationship between bankruptcy and eviction under California law is much more complicated than that.

The legal term for eviction in California is an action for “unlawful detainer.” Cal. Civ. Pro. Code § 1161. A tenant commits unlawful detainer if they continue to occupy leased premises after the expiration of the lease, or if they default on their rent obligation and fail to vacate the premises three days after the landlord gives written notice with instructions on how to cure the default. The landlord must file a verified complaint alleging unlawful detainer and, if the eviction is based on a default, stating the amount of rent owed. Id. at § 1166. Eviction cases occur on a faster timeline than other lawsuits. The tenant must file an answer within five days of receipt of the complaint, or risk a default judgment. Id. at §§ 1167, 1169.

The automatic stay in a bankruptcy pauses any pending litigation and prohibits the filing of any new causes of action against the debtor without the permission of the bankruptcy court. This includes pending or prospective actions for unlawful detainer. It does not, however, include proceedings to recover leased property if the lease expired before the debtor filed a bankruptcy petition, or if it expires while the bankruptcy case is pending. 11 U.S.C. § 362(b)(10).

Once a bankruptcy case is underway and a trustee has been appointed, the extent of a trustee’s authority over a residential lease depends on the type of bankruptcy filing. In general, trustees have the authority to assume or reject any executory contract or unexpired lease of the debtor. 11 U.S.C. § 365(a). A Chapter 7 trustee has more direct control than a Chapter 13 trustee, with the authority to ask the court to terminate a lease within 60 days of the commencement of the case. Id. at § 365(d)(1). A Chapter 13 debtor has more power to object to a trustee’s plan to reject a lease.

Eviction lawyer Devin Sawdayi has represented individuals and families in the Los Angeles area in Chapter 7 and Chapter 13 bankruptcy cases since 1997. To schedule a free and confidential consultation with a member of our team, contact us today online, at (800) 474-6050, or at (310) 475-9399.

More Blog Posts:

Bankruptcy Court Considers Whether to Lift Automatic Stay for Foreclosure-Related Proceedings, Los Angeles Bankruptcy Lawyer Blawg, May 11, 2015

Automatic Stay Does Not Prevent an Eviction Authorized in an Earlier Bankruptcy Case, Los Angeles Bankruptcy Lawyer Blawg, March 7, 2014

Evictions During Bankruptcy Under California Law, Los Angeles Bankruptcy Lawyer Blawg, November 29, 2013

Photo credit: Rental Realities [CC BY 2.0], via Flickr.