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The Latest Threat to Rent-Stabilization: Chapter 7 Bankruptcy

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The latest potential threat to rent-stabilization? A bankruptcy case involving a 79-year-old rent-stabilized East Villager. Mary Veronica Santiago, unable to keep up with her bills after her husband's death, filed for Chapter 7 bankruptcy two years ago. She pays $703/month for her two-bedroom near Tompkins Square Park, and her lawyers tell the Times that she had no assets other than Social Security and, following the bankruptcy filing, shouldn't have had to pay the $23,000 she owed.

But Santiago's landlord stepped in and changed matters. The landlord was notified of the bankruptcy as part of standard procedure, the Times explained, even though Santiago paid her rent and does not owe the landlord any money. The landlord offered to buy out Santiago's lease, giving her enough money to pay off her debt, and the bankruptcy trustee okayed the offer. Now the case has gone to federal appeals court, where Santiago's lawyers argue that a rent-stabilized lease shouldn't be an asset considered in bankruptcy cases. Legal aid lawyers fear that allowing rent-stabilized leases to be part of estates for bankruptcy purposes could leave rent-stabilized but bankrupt tenants homeless.
· Widow's Bankruptcy Case Poses Risk to Rent-Stabilized Tenants [NYT]
· Rent-Stabilization coverage [Curbed]