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Owner, Dakota's Document Preparation & Consulting Services
by: Gigi King

If a tenant has already filed bankruptcy prior to a landlord attempting to evict for failure to pay rent, an automatic stay in favor of the tenant will prevent the landlord from giving the tenant a termination notice or from beginning the eviction process.
Bankruptcy is governed by federal law, under Article 1 of the U.S. Constitution. The primary bankruptcy law is in Title 11 of the U.S. Code. Liquidation proceedings under Chapter 7 — In Chapter 7 "liquidation" proceeding, those assets that are not exempt from creditors are collected and liquidated (reduced to money). The proceeds are distributed to creditors by a private trustee appointed to administer the debtor's estate under Chapter 7 (see generally 11 U.S.C. §§701-704). An eligible debtor may receive a "discharge" from his or her debts under Chapter 7, except for certain debts that are prohibited from discharge by the Bankruptcy Code. http://www.justice.gov/ust/eo/ust_org/index.htm
Reorganization proceedings (usually business-related) under Chapter 11 — Chapter 11 offers a procedure by which an individual or a business may attempt to "reorganize" its debts while continuing to operate. The vast majority of Chapter 11 cases are filed by businesses. The debtor, often with the participation of creditors, creates a reorganization plan under which to repay all or part of its debts. The "debtor in possession" may generally continue business operations pending reorganization, unless a trustee is appointed under Chapter 11 (see, e.g., 11 U.S.C. §1104).
However, the landlord may still proceed with the eviction by asking the federal bankruptcy court to lift the stay. Evicting a tenant who has already filed bankruptcy, or who files for bankruptcy after the eviction process has begun can be complicated. Some laws allow commercial tenants to stop the eviction process when bankruptcy court is involved, and in such cases, it is almost always best to hire an attorney.

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