Landlord is trying to keep security deposit

[businessman]

My wife and I filed our CH7 back in September. We never had a signed lease from our landlord, although we had an oral agreement for a one-year lease which started in August, a month before our filing. We thought this was where we would live as we made our fresh start, but after a couple weeks it was clear that there was a rat infestation...rat feces all through the attic, in the kitchen, garage, etc. On top of this, we couldn't sleep at night with all the noise and clawing in the attic. Our landlord never took us seriously over the course of 2 months, with over 20 calls to her to correct the problem. All she sent were handymen who set traps...it did no good.

According to CA civil code 1942, we are legally allowed to vacate the premises if no reasonable attempts are made to correct issues of habitability, which includes the presence of vermin and rodents. She would not accept 30 days notice, so we decided to vacate and include the lease in our CH7 filing. She is listed as a creditor for the lease, but I haven't yet included the $3200 security deposit as an exemption. She wants to charge us rent through the 23rd of this month and deduct that from our security deposit.

So we are faced with filing a small claims case against her. My question is, despite the rodents, is she legally allow to keep any of our deposit with regards to our bankruptcy? The place is left in immaculate condition, with upgrades we made out of our own pocket. She now just wants to enforce the 30-day notice and collect rent out of our deposit to cover it. Our rents were current up to the day of our vacating the house.

Last thing...our 341 hearing is in one week. Thanks for input!

[HHM]

That really is a state law specific question for CA landlord-tenant law.

I don't know the answer specifically, but here are some of the issues.

1. She did send someone to set traps. What else were you expecting? I am not an exterminator, but what else could be done?
2. The issue with habitability is your right to withhold rent. You mention CA code says you have the right to vacate, but do you have the right to withhold rent? (some states yes, some states no).
3. In your BK, you need to list the deposit as an asset and exempt it to keep it out of the hands of the BK Trustee.
4. When it comes to rental deposits and BK's, yes, landlord's can retain the deposit. Your issue is not the BK, your issue is landlord-tenant law.

You may still need to go to small claims regardless.