This article was posted on Wednesday, Sep 01, 2021

Job losses due to COVID-19 have placed many San Francisco renters in financial jeopardy. Initially, they may have had personal resources available, like savings or loans from family members to keep them afloat.

But as time went on and those resources were depleted, they found themselves unable to pay their rent. Owners who have suffered loss of rental income due to a renter’s nonpayment of rent, but who wish to avoid eviction, may offer a renter, with substantial back rent owed, a repayment plan or even partial rent forgiveness, especially if they are working again. 

But tenants who have accumulated a large rent debt, often $10,000 or more, especially if combined with other debts, such as medical bills, may find the debt daunting.

Scott Weaver, an attorney at San Francisco’s Eviction Defense Collaborative, suggests that renters who find themselves in financial straits consider filing for bankruptcy.  “A lot of folks don’t want to look at the bankruptcy option,” Weaver said. “They see the stigma, and not the benefits, of bankruptcy. Bankruptcy is not a solution for everyone. But renters facing massive debts with no clear plan for repayment might be better off just wiping their debt and waiting seven years for the bankruptcy to disappear from their credit history. It’s also a way for renters to remain in place. “

A Concern for Landlords 

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Weaver is not the only attorney selling bankruptcy as a way for renters to wipe out rental debt. A Los Angeles-based law firm is advertising do-it-yourself bankruptcies to debt-ridden tenants for $89 or full-service bankruptcies for $249, and they’re not alone.

AB 3088 and SB 91 state that owners can begin suing renters for unpaid rent on March 1 (since extended to August 1), which might result in a judgement—a court order to repay. But if the owner gets a judgement against the renter, and the renter declares bankruptcy, the judgement will be wiped out.

Weaver states: “Tenants being sued by their landlords might use the threat of bankruptcy as a means of gaining leverage when negotiating a repayment plan. And with the current decline in demand for rentals in San Francisco, landlords might be more inclined to accommodate tenants.” Owners, especially small property owners with substantial rent debt, should be wary of renters who are tempted to use this strategy to evade their rent-payment obligations.

Bankruptcy Options for Past Due Rent 

Although there are four types of bankruptcy under federal law, most people will pursue either Chapter 7 or Chapter 13. Chapter 7 bankruptcy allows a renter with lots of unsecured debt (including rental debt) to dismiss that debt through a “Chapter 7 discharge.” On the other hand, Chapter 13 bankruptcy, also known as “reorganization,” allows renters to restructure their debt and make payments to the owner, usually over a 3 to 5-year period. Chapter 13 is most commonly used by people who have faced short-term financial setbacks, such as job loss, illness, or large unexpected expenses (e.g., medical bills).

After a renter files for Chapter 7 or Chapter 13 bankruptcy, the court typically grants an “automatic stay,” prohibiting further action by the owner against the renter. Renters who stay in possession of the premises after filing for bankruptcy must pay post-petition rent to the owner, keeping those rent payments current as long as they stay in the unit.

In other words, renters who file for bankruptcy can’t just stop paying their rent. But owners must understand that any past due rent will take some time to collect. If a renter stops paying rent after filing for bankruptcy, or fails to perform other lease obligations in a timely manner, the owner can petition the court to lift the stay and permit an eviction to proceed.

Responding to Tenant Bankruptcy

No one, least of all a rental property owner, wants to deal with a renter filing bankruptcy. If you have a renter in substantial rent indebtedness to you due to the pandemic, and you suspect that they may be tempted to file for bankruptcy, a basic knowledge of bankruptcy law and some preventive measures can go a long way to avoiding serious problems down the road. Also, of course, avail yourself of experienced legal counsel.

  1. Remain vigilant. Be aware that once a renter files for bankruptcy, the automatic stay makes it very difficult to evict that person. So, if you have strong reason to suspect that the renter may file for bankruptcy, be prepared to take appropriate action.
  2. Know the exceptions to the automatic stay. Bankruptcy courts will generally lift the stay within days if a renter has violated the lease for reasons other than nonpayment of rent.


The rules of bankruptcy are complicated and often confusing and the rules regarding eviction of renters for non-payment of rent are also complex and confusing.  In fact, given the various rent assistance programs available, it’s not even clear that a judge will permit a renter to file bankruptcy if there are other means to cure the rent debt. It’s complicated. 

If you have one or more renters with substantial rent debt, and suspect that they may consider filing bankruptcy, educate yourself on the basics of bankruptcy law (this is just a basic primer). And by all means seek the guidance of experienced legal counsel to help you deal with the problem—sooner rather than later.


Reprinted with permission of the Small Property Owners of San Francisco Institute (SPOSFI) News.  For more information on becoming a member of SPOSFI or to send a tax-deductible donation, please visit their website at or call (415) 647-2419.