Catch Up Back Rent in Chapter 13 Bankruptcy
If you rent your Michigan home and are behind on your rent payments, back-rent owed to your landlord is an unsecured debt that is dischargeable in either a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. In other words, if you are leaving the rental home, a Chapter 7 or Chapter 13 bankruptcy will discharge the debt entirely, and your landlord will not be able to collect it from you after your bankruptcy. A Chapter 13 bankruptcy, however, will also enable you to continue living in your rental home if you propose to repay the back rent owed entirely through the Chapter 13 payment plan.
Back Rent in Chapter 13 Bankruptcy Can Be Repaid in Full
Although a bankruptcy filing will temporarily stop an eviction, if rental payments are not made current, a landlord still has the right to evict you, although they may have to file a motion with the bankruptcy court called a motion for relief from the automatic stay against collections in order to get the court's permission to proceed with the eviction. If back-rent is owed, this is usually an easy motion for a landlord to have approved by the bankruptcy court. A landlord cannot continue to try to collect discharged rent payment debt from you---but they do have the right to move you out of their property. If you want to stay in a rental home, a Chapter 13 bankruptcy will afford you an opportunity in some cases to do so if you are unable to bring your rent payments current on your own. In a Chapter 13 bankruptcy, you make payments to your creditors to certain degrees depending on what sort of debt it is: secured debt (e.g., mortgage payment), priority unsecured debt (e.g., income taxes or child support arrearage), lease payments, or unsecured non-priority debt (e.g., credit card and medical bill debt). You pay secured and priority unsecured debts 100% of what they are owed (unless they are secured debts for property being surrendered in the bankruptcy), a percentage anywhere from 0% to 100% of non-priority unsecured debt, depending upon what you can afford to pay relative to your household expenses. Your rental lease payments will be paid in full, monthly, as a lease or executory contract either directly or through your Chapter 13 plan, depending on various particulars, with the back rent owed to be repaid within a set number of monthly payments.
Paying Back Rent in Chapter 13 Bankruptcy: The Bottom Line
There are additional pre-filing steps required to halt an eviction more than temporarily, but, otherwise, a 100% payment to the landlord through the Plan will get you through the Chapter 13 with continuing rental payments timely made and prior back-rents owed paid in full--on a schedule imposed upon the landlord by the Bankruptcy Court. If you are a Michigan resident and would like to explore your options for a Chapter 7 or Chapter 13 bankruptcy with an experienced Michigan bankruptcy attorney, please contact us at (866) 674-2317 or click the button below to schedule a free, initial consultation.
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