How New Bankruptcy Laws Affect Residential Leases?

Can a Landlord Continue Eviction after the Filing of Chapter 7?
Under Section 362(b(22) and 362(1), 30 days after the petition is filed, a landlord of residential property who has obtained a pre-petition judgment of possession of the property against the debtor has the right to continue the eviction action, unless the debtor complies with certain payment and certification requirements. In order to extend the stay beyond the 30-day period, the debtor must (1) certify that he can cure the default and deposit one month’s rent with the clerk of the bankruptcy court.

Under Sections 362(b)(23) and Sections 362(m), a landlord of residential real property can obtain expedited stay relief if the landlord files with the court and serves upon the debtor a certification that within 30 days of the filing of the certification the debtor has endangered the property or used or allowed to be used an illegal substance on the property.

Any creditor, secured or unsecured can seek relief from the stay for cause. The Code does not specify cause. Cause exists for granting relief from the stay when a creditor’s interest in property is not being adequately protected while the stay is in effect, and therefore the continuation of the stay likely will injure the creditors. The question of adequate protection is one of the most commonly litigated issues in bankruptcy law. Any creditor or party with an interest in property can seek relief from stay alleging lack of adequate protection.


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