Will Filing Bankruptcy Affect My Apartment Lease?

How Does Bankruptcy Affect My Lease?

If you’re up to date on your rent and plan to stay in your rental, bankruptcy likely won’t cause any major changes. You’ll generally be able to keep your lease as long as you continue paying rent on time and following the terms of your rental agreement.

This article explains how bankruptcy impacts your lease, the information you’ll need to include in your bankruptcy forms, and what typically happens to residential leases during a Chapter 7 bankruptcy case. For a deeper dive into this topic, check out our Guide to Leases in Bankruptcy. 

Listing Your Lease on Bankruptcy Forms

You’ll list your lease on Schedule G of your bankruptcy forms. Schedule G is specifically for “unexpired leases and executory contracts,” which include active rental agreements. If you’re current on your rent payments, this will be the only place your lease appears. To complete this section, you’ll need your current landlord’s name and contact information.

If you’re behind on rent, you’ll also include the unpaid rent as a debt on Schedule E/F. For this, you’ll need your landlord’s name, mailing address, and an estimate of how much back rent you owe. Make sure all information is accurate, as this ensures your landlord is properly notified about your bankruptcy case.

Do I Need to Tell My Landlord I’m Filing Bankruptcy?

No, you aren’t required to notify your landlord ahead of time that you’re filing for bankruptcy. However, after you file, the court will send your landlord a copy of Official Form 309A, which provides notice of your bankruptcy case. If your landlord is an individual rather than a large property management company, giving them a polite heads-up can be a good idea and may help avoid confusion. You might let them know that you’re filing to get back on track financially and that you intend to keep paying rent and following the lease terms.

What Happens to My Lease After Filing Bankruptcy?

Filing bankruptcy doesn’t automatically cancel your lease or force you to move out. What happens next depends on whether you want to stay in your current rental or use bankruptcy as an opportunity to break the lease and find a new place. Either way, it’s important to understand your responsibilities under the lease agreement after filing, especially when it comes to paying rent. Here’s what you need to know based on your plans:

If You Plan to Stay

If you’re keeping (“assuming”) the lease, you’ll need to continue paying your full rent as outlined in your lease agreement. This includes any fees, such as late payments, and any other obligations specified in the lease. Staying current on rent is critical if you want to keep the lease and avoid potential issues with your landlord.

What Does It Mean to “Assume” a Lease in Bankruptcy?

When you file for bankruptcy, "assuming" your lease means formally deciding to keep the lease agreement and continue honoring its terms. While you don’t have to fill out a separate form to assume the lease in Chapter 7 bankruptcy, you need to stay current on your rent payments and follow all the terms of the lease. If you’re behind on rent but want to assume the lease, you’ll need to work out a plan to catch up on the overdue amounts with your landlord. Keep in mind that landlords can sometimes request bankruptcy court approval to reject your lease if you’ve violated its terms, so staying current is critical.

If You Plan to Move

If you’re using bankruptcy to break your lease and plan to move out, you don’t have to keep paying rent after you leave. However, if you’re still living in the property after filing, you must pay rent for the time you remain there. This is considered a post-petition obligation, meaning it isn’t included in your bankruptcy discharge and will still be your responsibility.

What Happens to Your Security Deposit in Bankruptcy?

Security deposits can sometimes become a tricky issue in bankruptcy. If you’re staying in your rental and continuing with the lease, your landlord will likely hold onto your security deposit as usual to cover potential damages or unpaid rent. However, if you break the lease as part of your bankruptcy and move out, your landlord may be able to use your security deposit to cover unpaid rent or damages. 

The rules on this vary by state, so it’s a good idea to check your local laws or ask a bankruptcy attorney for guidance. Make sure your landlord accounts for any deductions from your deposit and returns any remaining balance to you, as required by state law.

Can I Be Evicted After Filing Bankruptcy?

Filing for bankruptcy doesn’t automatically mean you’ll lose your home. Whether or not your landlord can evict you depends on whether you’re current on rent payments and on your plans for the lease. Bankruptcy laws offer some protections, but the specifics depend on your situation and which type of bankruptcy you’re filing.

If You’re Current on Rent

If you’re up to date on rent and haven’t violated any terms of your lease, your landlord can’t evict you simply because you filed for bankruptcy. The Bankruptcy Code — federal bankruptcy law — protects tenants from being penalized for filing, so as long as you continue paying rent on time and following the lease terms, you can stay in your home.

If You’re Behind on Rent

If you’re behind on rent when you file for bankruptcy, the automatic stay temporarily prevents your landlord from moving forward with eviction proceedings. It also stops other debt collection activities. This gives you some breathing room to figure out your next steps. Those will depend on whether you want to stay in the home or move out.

Again, if you want to stay in the home and keep your lease, you’ll need to make arrangements to catch up on the back rent. Since bankruptcy eliminates many debts, it’ll free up some income, which can help you get current.

If you don’t want to bring the lease current, your landlord will need to ask the bankruptcy court to “lift” the automatic stay. Once the stay is lifted, they can move forward with the eviction process.

What if There’s Already an Eviction Judgment?

If your landlord already has an eviction judgment against you before you file for bankruptcy, the rules are a bit different. In this situation, bankruptcy law may protect you from eviction, but only if you meet specific requirements. If you can’t meet these requirements, your landlord can proceed with the eviction without needing permission from the bankruptcy court.

To qualify for protection under the automatic stay after an eviction judgment, you must:

1. Certify to the court — under penalty of perjury — that state law allows you to fix (or “cure”) the default that led to the eviction judgment.

2. Deposit any rent due within 30 days of filing your bankruptcy case with the clerk of the bankruptcy court.

If you don’t meet these conditions, the landlord is allowed to move forward with the eviction process. This makes it critical to act quickly if you’re facing an eviction judgment and want to explore whether bankruptcy protections apply. It may be beneficial to get legal advice from an experienced bankruptcy attorney. Upsolve can help you schedule a free consultation with a lawyer near you.

Will Bankruptcy Affect My Ability to Renew My Lease?

Filing for bankruptcy shouldn’t automatically prevent you from renewing your lease or getting a new lease. However, many landlords use credit checks when deciding whether to offer or renew a lease agreement, and a bankruptcy filing could appear on your credit report. Ultimately, the decision to renew your lease is up to the landlord, whether or not you’ve filed for bankruptcy.

If your landlord is an individual (rather than a business or property management company), it can be helpful to explain that your bankruptcy might actually improve your financial situation and make you a more reliable tenant. After bankruptcy, your disposable income is no longer tied up in debt payments or at risk of garnishment, which can make it easier for you to pay rent on time.

If you’re planning to move to a new apartment or home, being upfront about your bankruptcy with potential new landlords can also work in your favor. Combined with a strong rental history, a security deposit, a steady employment history, and proof of stable income, this honesty can help reassure landlords that you’ll be a responsible tenant, even if your credit history isn’t perfect.

How Bankruptcy Impacts Your Credit

Filing for bankruptcy can lower your credit score and will appear on your credit report for up to 10 years. This might sound discouraging, but it’s important to remember that bankruptcy also wipes out debts — including credit card debt, medical bills, and even some student loans — that may have been causing missed payments or defaults. If you haven't made timely payments or you had accounts in default, this seriously harms your credit over time, which is why many people see their credit improve after filing bankruptcy. Many people see improvement within a year of filing as they start rebuilding with a clean slate.

Let’s Summarize…

Bankruptcy is meant to give you a fresh start without losing essentials, including a place to live. If you’re renting and you’re up to date on your monthly payments, you should be able to stay in your home or apartment without any issues. If you’re behind on rent, you’ll need to make a plan to catch up on payments if you want to stay in your home and keep your lease.

If you’ve decided Chapter 7 bankruptcy is right for you, Upsolve may be able to help. Take our quick screener to see if you’re eligible to use our free filing tool. Upsolve is a nonprofit that’s helped thousands of people get rid of almost $700 million in debt.