What to Know About COVID Moratoriums and Bankruptcy

Whether you are a landlord, a renter, a commercial tenant, or a homeowner, if you live in New York you need know your options when it comes to the various COVID moratorium and if bankruptcy is an option.

What to Know if You’re a Renter

If you are one of the 8 million households in the US who are behind on your rent, time is running out. The US Supreme Court https://time.com/nextadvisor/in-the-news/eviction-moratorium-ended-supreme-court/ recently rejected extending the federal eviction ban. On September 2nd, New York State’s eviction moratorium was extended to January 15, 2022 (see Governor Hochul’s announcement here – https://www.governor.ny.gov/news/governor-hochul-signs-new-moratorium-covid-related-residential-and-commercial-evictions-law. It is more than likely that this latest extension will also be challenged in court.

Depending on how much back rent you owe, your relationship with your landlord, and whether or not you wish to retain your lease, declaring bankruptcy may be an option for you. However, you will have to start the bankruptcy process before your landlord is awarded an eviction judgment.

If you want to stay where you are, your finances are starting to get better, and you have a sympathetic landlord, you may want to look into Chapter 13 bankruptcy. Chapter 13 allows you to come up with a multi-year plan that repays your past debts (not just your rent) over time. Find more information here https://www.ny-bankruptcy.com/services/bankruptcy-solutions/bankruptcy-chapter-13/

If you accept that you must leave, you are still struggling financially, and your landlord is ready to evict you due to non-payment of rent, Chapter 7 bankruptcy may be your only option. Declaring Chapter 7 bankruptcy will immediately delay the eviction process with an automatic stay (note that your landlord can challenge this with a motion for automatic stay relief). With an automatic stay, you can get upwards of 4-6 months of where the landlord cannot evict you due to non-payment of rent.  If you would like to learn more about each step of the Chapter 7 process, click here https://www.ny-bankruptcy.com/services/bankruptcy-solutions/bankruptcy-chapter-7/

Speaking with a local bankruptcy attorney will give you a better overview of your options depending on your specific situation.

Documents for filing bankruptcy Chapter 13

What to Know if You’re a Residential Landlord

Most of the media seems to focus on the struggles of tenants during the pandemic, overlooking the fact that landlords are hurting as well. Just because your tenants stopped paying rent, doesn’t mean that all of your expenses (utilities, taxes, mortgage payments) stopped as well. And while both state and federal governments are promising to expedite payments through the  Emergency Rental Assistance Program, who knows how long that will take (Gov. Hochul unveils tweaks to COVID rent relief program as end of eviction ban looms https://www.nydailynews.com/news/politics/new-york-elections-government/ny-hochul-rent-relief-covid-eviction-moratorium-20210824-u3d4gzlm5rdifg7shhk3jxuaa4-story.html.

As noted earlier, if the tenants who owe you back rent declare bankruptcy, you may be prevented from starting most eviction processes. If your tenant declares Chapter 7 bankruptcy, they can stay up to six more months without paying rent – which you may be able to challenge in court. If your tenant is declaring Chapter 13 bankruptcy, they are agreeing to pay your back rent over a period of time as determined by the courts. But even here you have options.

If you are a landlord struggling to collect back rent and/or your mortgages and debts are getting too large to hand on your own, reach out to a local bankruptcy lawyer to see if Chapter 13 bankruptcy is right for you. Here are some basics for you to know – https://www.ny-bankruptcy.com/how-does-chapter-13-bankruptcy-work/

What to Know if You’re a Commercial Tenant

Many people talking about the eviction moratorium forget that these were also for commercial tenants, as well as residential. And now that these moratorium are over, landlords will be looking for their back rent. If you own a business, have been renting commercial space, and owe a substantial amount of rental payments, Chapter 11 may be an option for you. Check with your local bankruptcy lawyer to learn more about your options, including the SBRA program for small business https://www.ny-bankruptcy.com/my-business-is-drowning-in-debt-what-can-i-do/

What to Know if You’re a Homeowner

So many people have been concentrating on the end of the eviction moratorium, they overlooked the end of the foreclosure moratorium as well. While this doesn’t necessarily mean an avalanche of foreclosure notices, it does mean that if you are far behind on your mortgage payments, your time to do something about it is running out.

We have already covered what do you if you were already in a COVID-related mortgage forbearance plan https://www.ny-bankruptcy.com/my-covid-mortgage-forbearance-is-ending-now-what/ . But if you are just starting to look at options you need to act now.

There are a number of ways you can deal with an impending foreclosure (see New York State’s Department of Financial Services list of options https://www.dfs.ny.gov/consumer/hetpopts.htm

One of these options is Chapter 13 bankruptcy. However, a Chapter 13 reorganization is an involved and potentially lengthy bankruptcy case and requires special knowledge and expertise. Make sure you speak to a bankruptcy attorney to see if it’s the best choice for you.

Reaching Out for Help

If you live in New York, and you’d like to talk directly to someone who specializes in creative, case-specific, out of the box, legal solutions to help guide you effectively through the bankruptcy process, reach out to New York bankruptcy attorney Ronald D. Weiss, P.C. for a free consultation. He can walk you through the process of getting the help you need. Call 631-271-3737 and take the first step to a fresh start.

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