A primary concern for tenants undergoing bankruptcy in South Dakota is the ability to remain in their homes. Please continue reading as this blog delves into how bankruptcy can affect a lease agreement in South Dakota and how our experienced Rapid City Bankruptcy Lawyers can help protect your rights throughout this complex process. 

What Happens to My Lease if I File for Bankruptcy in SD?

Contrary to popular belief, filing for bankruptcy in South Dakota does not automatically terminate your lease agreement. A lease is a legally binding “executory contract” under bankruptcy law, meaning both parties still have obligations: you must pay rent, and your landlord must provide shelter. Nevertheless, federal law requires you to decide on your lease:

  • Assume the Lease: You can agree to catch up on any past-due rent and continue making future payments as stipulated in the agreement.
  • Reject the Lease: You can opt to end the lease, and future rent obligations will be discharged through your bankruptcy. However, keep in mind that your landlord can still file a claim for any owed back rent.

The right option will depend on the type of bankruptcy you filed ( Chapter 7 or Chapter 3) and whether you are current on your rent payments. For Chapter 7 cases, you will need to file a “Statement of Intention” within 30 days of declaring bankruptcy to notify the landlord and the court of your decision to either assume or reject the lease.

For Chapter 13 cases, you can propose a repayment plan to address the back rent. In addition, the bankruptcy trustee may decide whether to assume or reject the lease by the time your plan is confirmed.

What if I Want to Stay in My Rental Home or Apartment?

When you file for bankruptcy in South Dakota, an automatic trigger is triggered. This court order temporarily halts most collection efforts, including eviction. If no eviction judgment exists yet, the automatic stay will likely prevent your landlord from kicking you out while your bankruptcy case is active, provided you continue to pay current rent.

If an eviction judgment has already been entered, your petition is, unfortunately, more limited, as bankruptcy often cannot reverse a court-ordered eviction. However, exceptions may apply if you can immediately pay past-due rent.

South Dakota’s landlord-tenant laws usually come into play. Landlords are required to provide proper notice before initiating eviction proceedings (typically three days), and failure to comply with these rules could impact the enforceability of an eviction.

For more information, please don’t hesitate to contact an attorney at 605 Bankruptcy. Our legal team is prepared to help you determine whether assuming or rejecting a lease is in your best financial interest.