Can Filing Bankruptcy Help With a Steep Rent Increase?

 

How To Make Your Financial Situation Work With Increased Rent

Our Arizona bankruptcy lawyers address the rent increase in Arizona.  Our debt relief attorneys take a look at bankruptcy as a possible solution to rent increases in AZ.  Read on to learn about the debt relief options that Arizona Zero Down Bankruptcy provides for people throughout Arizona.

Arizona’s housing market has been booming recently. With home values skyrocketing, landlords have in turn been increasing how much rent they charge. For many renters, seeing their monthly rent increase by the hundreds or even thousands of dollars can mean a total budget overhaul. In fact, this member of My AZ Lawyers saw their rent increase by about 30% (and 40% for new tenants) this year, well in line with the state average of 30% for 2021. This unit had a roach problem and central air, which the tenant wasn’t even aware was a thing until move in day. Additionally, sharp rent increases can also lead to complex overcrowding, as people are forced to share smaller units due to high rental prices. This can cause issues like utilities problems and inadequate parking availability. Overall, we’re getting a reduction in rental quality of life with a drastic increase in price. If you’re an Arizona renter scrambling to figure out how to make your financial situation work with increased rent, you may be wondering if bankruptcy can help. Read on to see some factors you should consider. If you have additional questions, call our firm at 602-609-7000 for your free consultation.

Break a Lease

One benefit of filing bankruptcy is that you have the option to surrender leases without the typical associated penalty fees. Many people use this opportunity to surrender a vehicle on which they owe more than it’s worth, but it can also similarly be used when someone can no longer afford their rent. This can help you avoid an eviction, which will stay on your record and make it more difficult to rent for years.

Discharge Back Rent

If you plan to or already have moved out of your apartment, you may have an unpaid rental balance with your former landlord. This is typically unsecured debt, which is dischargeable in bankruptcy. If you qualify for Chapter 7 bankruptcy, you can use it to wipe away unpaid rent along with your credit cards, medical bills, and more. If you file Chapter 13 bankruptcy, your debts will be reorganized into a payment plan based on your disposable monthly income. Unsecured debts, including unpaid rent, are among the tier of debts paid in your payment plan. That means that if you have enough disposable monthly income to pay off the mandatory debts in your plan, but can only partially pay off unsecured debts, they will be discharged at the end of your payment plan anyway.

Get Rid Of Wage Garnishments & Interest Payments With An Arizona BK Lawyer

Filing bankruptcy doesn’t mean you have to give up your rental lease. Maybe you aren’t ready to leave your rental unit, but need to free up more of your income to be able to pay a rental increase. The good news is that once you file your bankruptcy petition, you are protected by what is known as the “automatic stay.” This will stop most types of wage garnishments, which if you have one, could be a significant drain on your income.

Most types of wage garnishments are capped at 25% of your income. The court, under limited circumstances, will decrease certain types of wage garnishments to 15%, but only if the debtor can prove severe financial hardship. Some common types of wage garnishments, like student loans, are capped at 15% of your income already. However, domestic obligation wage garnishments have much higher limits. Therefore, if you have other dependents, your wages can be garnished up to 50%. This limit increases to 60% if you have no other dependents. If you are more than 12 weeks behind on child support, either limit can be increased by 5%. Filing Chapter 7 bankruptcy won’t stop a child support wage garnishment. Only an Arizona Chapter 13 bankruptcy with a plan that arranges for full repayment of child support arrearages will stop a child support wage garnishment.

Another way to free up income so you can pay increased rent is by getting rid of interest payments on debts with which you are struggling. Because bankruptcy will clear away your credit cards and other unsecured debts, this could eliminate a significant amount of interest you pay each month. This can free up income that can be used towards paying your rent and other living expenses.

Stop An Eviction With a Bankruptcy Filing In Arizona

The automatic stay does more than just stop wage garnishments. It can also stop an eviction, depending on its stage of the process upon filing. If your landlord hasn’t filed eviction paperwork with the court and served it on you yet, a bankruptcy can stall eviction proceedings. Because the automatic stay stops collections and lawsuits against you, most evictions will be halted as well. There are only two exceptions to when the automatic stay won’t stop an eviction. The first is when the landlord has already obtained a judgment for possession before the bankruptcy is filed. The second is if you are using the drugs or endangering other people on the property. In the second scenario, the landlord will need to submit an affidavit describing the illegal activities in which you are engaging.

Keep in mind that the automatic stay won’t stop an eviction forever. Filing Chapter 13 bankruptcy will spread your past-due rent out over 3-5 years. But if you file Chapter 7 bankruptcy, you won’t be able to discharge your back rent and keep your apartment. If you don’t resolve your rental balance during your Chapter 7 bankruptcy, which typically lasts 3-6 months, your landlord can proceed with the eviction after your case has been discharged.

Will I Ever Be Able To Rent Again After Bankruptcy?

It’s true that a bankruptcy filing isn’t exactly a gold star on your credit history. A Chapter 7 bankruptcy will remain on your credit report for 10 years from the filing date. A Chapter 13 bankruptcy will remain on your credit report for 7 years from the filing date. But just because a bankruptcy will show up on your credit report doesn’t mean that you’ll never be able to rent again. However, landlords use tenant screening report services that blacklist people who have been evicted for several years. A bankruptcy can show that you have alleviated your debt situation and have more income available to pay your rent on time, if you have an otherwise clean rental history. It might even improve your credit score, making you a more attractive potential tenant.

Reliable Arizona Bankruptcy Attorneys With Affordable Payment Options

   A rental increase can impact your financial situation across the board. If you’ve been affected by Arizona’s skyrocketing rental rates, bankruptcy might be able to help. The best way to know for sure is by reviewing your situation with an experienced Arizona bankruptcy lawyer. Our team offers compassion and patience combined with the knowledge and experience necessary to achieve the best possible outcome in your bankruptcy. We do so at bargain rates with payment plans available for qualified clients. You may be eligible to file your case for as low as ZERO DOLLARS DOWN. Your post-filing payments can even help increase your credit score after bankruptcy. To learn more, schedule your free consultation by filling out our online form or calling 602-609-7000.

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Phoenix, AZ 85003
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Mesa, AZ 85202
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Glendale, AZ 85308
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Tucson, AZ 85701
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