Bankruptcy 101: Tenant's Guide to Bankruptcy

What is bankruptcy?

Bankruptcy is a court process that may help people who have too much debt as well as the people or businesses who are owed those debts. The person filing for bankruptcy is called the “debtor.” The people or businesses the debtor owes money to are called “creditors.”

Filing for bankruptcy protects the debtor from collection activity. This is called an “automatic stay.” Depending on which type of bankruptcy case, it can also help them get rid of some of their debts.

• Chapter 7 Bankruptcy: The debtor must have very low income and assets. The debts may be “discharged,” or canceled. This means you no longer owe them, but most of their property is sold sold to pay off the debts.
• Chapter 13 Bankruptcy: The debtor agrees to a repayment plan to try and pay off the debts. The debtor also gets to keep most of their property.

What does bankruptcy have to do with tenants?

• Bankruptcy for tenants before an eviction case is filed
• Bankruptcy for tenants after an eviction case has been filed
• Bankruptcy as a way to maintain or restore utility service
• Anti-discrimination protection for tenants in public and subsidized housing

What are the risks involved with filing for bankruptcy?

• Credit will be damaged.
• Other people who co-signed may be held responsible for some debt.
• Lose property.
• Other potential risks