One of the most common questions I hear from clients is:

“Can I file Chapter 7 bankruptcy if I’m behind on my rent?”

The answer is yes, but what happens next depends on several important factors, including whether you want to stay in your home, whether your landlord has already started eviction proceedings, and whether an eviction judgment has already been entered.

Let’s walk through the different situations.

Back Rent Is Usually Dischargeable

In most cases, unpaid rent that accumulated before filing Chapter 7 bankruptcy is considered an unsecured debt. Just like credit cards, medical bills, and personal loans, back rent is generally dischargeable unless there are unusual circumstances such as fraud or intentional property damage.

That means if you move out, you will typically no longer be personally liable for the unpaid rent that existed before filing bankruptcy.

However, bankruptcy does not automatically give you the right to continue living in the property without paying rent.

If You Want to Stay in the Rental Property

This is where many people misunderstand what bankruptcy can do.

If your goal is to remain in your apartment or rental home, Chapter 7 bankruptcy generally cannot force a landlord to let you stay if you are substantially behind on rent.

Most landlords simply want the rent brought current.

Unlike a Chapter 13 bankruptcy, Chapter 7 does not provide a repayment plan that allows you to catch up missed rent over time.

As a practical matter, if you want to remain in the property, you should expect that the landlord will require payment of the past-due rent before agreeing to continue the tenancy.

Some landlords are willing to work with tenants after a bankruptcy filing. Others are not. Bankruptcy gives you relief from personal liability for the debt, but it generally does not require a landlord to continue a lease when rent has not been paid.

Month-to-Month Leases

A month-to-month tenancy presents additional issues.

Because the tenancy renews each month, a landlord usually has the ability under Michigan law to terminate the tenancy by providing the required notice, assuming the landlord complies with state law.

Even if the back rent is discharged in bankruptcy, a landlord may decide not to continue renting the property going forward.

Bankruptcy protects you from collection of discharged debt, but it does not create a permanent right to occupy rental property.

What If the Landlord Already Has an Eviction Judgment?

Timing is critical.

If your landlord has already obtained a judgment for possession before you file bankruptcy, your options become much more limited.

Under the Bankruptcy Code, the automatic stay generally does not stop an eviction based upon a pre-petition judgment for possession. Congress specifically limited the automatic stay in these situations.

There are limited exceptions under federal law if state law allows a tenant to cure the monetary default after judgment and the debtor follows specific bankruptcy procedures. Those situations are uncommon and require immediate legal advice because strict deadlines apply.

If the landlord already has an eviction judgment, filing Chapter 7 should not be viewed as a way to stop the eviction.

What If Eviction Has Been Filed But No Judgment Has Been Entered?

This is a different situation.

If the eviction lawsuit has been filed but no judgment for possession has yet been entered, the automatic stay created by the bankruptcy filing will generally stop the eviction proceeding temporarily.

That does not necessarily mean you will be allowed to stay indefinitely.

The landlord may ask the bankruptcy court to lift the automatic stay or may continue with the eviction after obtaining appropriate relief from the bankruptcy court.

Again, the practical outcome often depends on whether the tenant can become current on the rent.

What If You Plan to Move Out Shortly After Filing?

This is one of the best situations for many Chapter 7 debtors.

Suppose you owe several months of back rent, cannot afford to catch up, and already intend to move into another residence within the next few weeks.

In many cases, filing Chapter 7 allows you to:

• Eliminate your personal liability for the unpaid rent.
• Obtain protection from collection activity while the bankruptcy is pending.
• Move into your new residence.
• Receive a discharge that permanently eliminates the discharged rent obligation.

This can provide a fresh financial start without the burden of thousands of dollars in unpaid rent following you for years.

Keep in mind that rent becoming due after you file bankruptcy is generally not discharged. You remain responsible for any post-petition obligations you incur before moving out.

Can a Landlord Collect After Bankruptcy?

If the unpaid rent is discharged, the landlord generally cannot:

• Sue you for the discharged rent.
• Garnish your wages.
• Levy your bank account.
• Send the debt to collections.
• Continue collection efforts after receiving notice of your discharge.

The bankruptcy discharge provides a permanent injunction against attempts to collect discharged debts as personal liabilities.

Every Landlord Situation Is Different

Every lease is different. Every eviction case is different. And timing can make all the difference in the outcome.

Questions I ask every client include:

• Are you on a written lease or month-to-month tenancy?
• How much rent is owed?
• Has the landlord filed for eviction?
• Has the court entered a judgment for possession?
• Do you want to stay or are you planning to move?
• When is your anticipated move-out date?

The answers determine the best strategy.

Speak With an Experienced Michigan Bankruptcy Attorney

If you’re behind on rent, don’t assume it’s too late to file bankruptcy—or that bankruptcy will automatically solve your landlord problems.

Sometimes Chapter 7 is the perfect solution. Other times, waiting a few weeks or considering Chapter 13 may produce a much better result.

The key is getting legal advice before making a decision.

For more than 30 years, I have helped thousands of Michigan residents understand how bankruptcy affects landlords, leases, evictions, and back rent. If you’re facing eviction or overwhelming debt, I’d be happy to discuss your options and help you determine the strategy that gives you the best opportunity for a fresh financial start.

Walter Metzen
Board-Certified Consumer Bankruptcy Specialist
Law Offices of Walter Metzen, P.C.
Serving clients throughout the Eastern District of Michigan