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Evictions and Bankruptcy

| Feb 24, 2021 | Bankruptcy |

If you are watching the news, you may be hearing that there is a housing crisis right around the corner. When we hear those words, we usually think about a crisis for homeowners, and some of us maybe have flashbacks to the Great Recession over decade ago. But this time around, the crisis will affect renters.

Due to the Covid pandemic, lawmakers have put a moratorium on evictions. This has been extraordinarily helpful for millions of people. With unemployment so very high, people have not been able to pay rent. Low-income earners are more than twice as likely to have lost their jobs than high-income earners (33% vs. 14%).[1]  For Black and Hispanic people, those numbers are even higher: 38%-42% have lost jobs since the pandemic. Black people make up 35% of evictions, while being 13% of the population—a severe disproportionality. Without a moratorium on evictions, these same people will be forced to couch-surf with generous friends and family, live in their cars for a time, or even live on the streets.

The moratorium is set to expire in just over a month—March 31, 2021—and there is no clear solution in place. On April 1, 2021, renters will have thousands of dollars of rent suddenly due—a cruel April Fool’s Day, but certainly no joke. I shudder to think of all the landlords marching to the courthouse on April 1 to file eviction proceedings.

If you are facing an eviction, bankruptcy can help in these ways:

  1. It can clear up available funds so you can pay your rent by eliminating credit card and medical debt;
  2. It can get you out of the lease without paying back rent;
  3. In some circumstances, you can create a repayment plan to catch up on your rent over 3-5 years.

It is vitally important to know, however, that these options are available only before your landlord has received an eviction from the courts. Once that eviction order is entered, the landscape changes dramatically.

Please don’t hesitate to contact me for a free consultation if you think you may be facing eviction once the moratorium lifts next month.

 


[1] Vesoulis, Abby, Time, Millions of Tenants Behind on Rent, Small Landlords Struggling, Eviction Moratoriums Expiring Soon: Inside the Next Housing Crisis, 2/18/21, https://time.com/5940505/housing-crisis-2021/