Rent Stabilized Leases in Bankruptcy in New York City
If you are considering filing for bankruptcy in New York City and have a rent stabilized lease you could be at risk of losing your home and could be receiving your fresh start on the street. Not every bankruptcy trustee agrees with selling rent stabilized leases, but filing bankruptcy incorrectly will put a rent stabilized lease on the line. Simply put, filing Chapter 7 bankruptcy is not guaranteed to protect a rent stabilized lease in bankruptcy. Only Chapter 13 has the positive ability to protect a rent stabilized lease. Many large bankruptcy law firms are only interested in filing Chapter 7 cases and may not make their clients fully aware of the danger Chapter 7 presents to a rent stabilized lease.
In a straight Chapter 7 case in New York City your rent stabilized lease can be considered an asset like any other non-exempt property you have that can be liquidated to repay your debts to your creditors. Any bankruptcy petitioner has the right to convert their case from a Chapter 7 to a Chapter 13, but if you are trying to convert your case for the sole purpose of keeping your rent stabilized lease out of the estate then you will have a real fight on your hand from the bankruptcy trustee. They will try to cover their loss through your Chapter 13 repayment plan. That is to say, if you convert your case to a Chapter 13 the trustee will make you pay the amount the landlord offered them for your lease through your Chapter 13 repayment plan. You’ll be able to keep your home, but will likely have to pay the trustee an arm and a leg if they decide to go after your rent stabilized lease. If you play it safe and file Chapter 13 from the beginning the trustee won’t be able to get at your lease.
Chapter 13 is not for everyone in need of bankruptcy protection. Sometimes it might be worth the risk for our clients to file Chapter 7 even with the possibility of losing a rent stabilized lease. We are happy to file whatever bankruptcy our clients are most comfortable with after they hear all of their options. We just feel our clients should know the risks going in, and shouldn’t be the victim of a surprise eviction. If you need affordable bankruptcy assistance and have a rent stabilized lease in New York City please Contact the Law Offices of William Waldner online or at 212.244.2882 to arrange a free bankruptcy consultation today. Our law firm only practices bankruptcy law and maintains a 99% Chapter 7 Bankruptcy discharge record in New York City as of 8/31/16.
**** DISCLAIMER: This article is intended for educational purposes only. By reading no attorney-client relationship has been created. Prior results do not guarantee a similar result for future clients.