What happens to unpaid rent in bankruptcy?

Why are back rent and the tenancy separate questions?

Back rent is money owed. A debt for which the creditor holds no security is an unsecured claim, and a Chapter 7 discharge covers debts that arose before the case was filed unless an exception applies.2 1

Your lease is an ongoing agreement. Discharging the old debt does not by itself give you the right to stay, and rent that comes due after you file is a new debt the discharge does not cover.1

Will filing bankruptcy stop an eviction?

It depends on how far the eviction has gone. Filing triggers the automatic stay, which stops most collection actions and covers acts to take possession of property. The timing of any judgment for possession is the fact that matters most.2 3

Repeat filings weaken the stay. If you had a bankruptcy case dismissed within the past year, the stay in a new case generally ends after 30 days unless the court extends it, so a new filing soon after a dismissed case may give much less protection.3

What if the landlord already has an eviction judgment?

Then the stay does not protect the tenancy on its own. There is a narrow route for tenants whose state law lets them stay by paying everything that is overdue, and it has firm deadlines.3 4

1. With your petition, file Official Form 101A and serve a copy on your landlord. In it you certify that state or other nonbankruptcy law gives you the right to stay by paying the entire delinquent amount.3 4
2. Deposit with the bankruptcy court clerk the rent that would come due during the 30 days after you file. Doing both keeps the stay in place for those 30 days.3 4
3. Before the 30 days end, pay your landlord the entire delinquent amount stated in the eviction judgment, then file Official Form 101B and serve it on the landlord.3 4
4. If your petition shows an eviction judgment and you do not file the certification, the exception applies immediately and the landlord can continue.3 4

Whether your state lets a tenant cure after a judgment is a question of state law. Ask a lawyer or a legal aid office before you rely on this route.

What happens to the lease in Chapter 7?

Back rent from before filing is generally discharged with your other debts. Chapter 7 does not involve a repayment plan, so it gives you no built-in way to catch up on the arrears over time.1 5

The lease itself is dealt with separately. If the trustee does not take over a residential lease within 60 days after the case is filed, or within extra time the court grants, the law treats the lease as rejected. What that means for your right to stay depends on your lease and state law, so ask a lawyer.6

What happens in Chapter 13?

A Chapter 13 plan may provide for keeping (assuming) a lease. A lease that is in default can be assumed only if the default is cured, or adequate assurance is given that it will be promptly cured, along with adequate assurance of future performance under the lease.7 6

Because the law asks for a prompt cure, do not assume back rent can be spread over the whole plan. If you do not keep the lease, the back rent is paid with your other unsecured debts, which a plan does not have to pay in full.7 6 8