146. Unlawful Detainer And Bankruptcy

§5.07 Effect of Defendant’s Bankruptcy

A landlord may not prosecute a UD action against a tenant who has filed a bankruptcy petition unless the landlord petitions the bankruptcy court for relief from the automatic stay and the court grants that relief. [See 11 USC §362(a), (d).] On the other hand, a tenant may not wait to file a bankruptcy petition until the landlord has obtained a judgment and writ of possession on the UD action. [See CCP §715.050; Lee v Baca (1999) 73 CA4th 1116, 1119–1122.] Although the automatic stay provisions prevent the landlord from enforcing money damages, they do not prohibit the landlord from regaining possession of residential premises from a bankruptcy debtor-tenant who is wrongfully holding-over.

The practical effect of bankruptcy is as follows:

On receipt of a notice of stay, if you determine the bankruptcy was filed before service of the notice to quit or before the UD action was filed, you should dismiss the case and require service of a new notice after the landlord obtains leave from the bankruptcy court.

• If the tenant files for bankruptcy after the UD complaint is filed but before judgment, the landlord must obtain relief from the stay to go forward with the litigation regarding possession (without the award of a money judgment). Common practice is to continue the case for 30 days so the landlord may obtain relief from the stay.
• If a judgment of possession is obtained before the tenant files for bankruptcy, there is no automatic stay [see 11 USC §362(b)(22)] and the eviction may proceed.