There are many people out there struggling with their finances and paying their bills, especially in the midst of the global COVID-19 pandemic. And if you have recently filed for bankruptcy, whether it’s a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, this could impact your ability to rent an apartment.
When you file for bankruptcy, there is definitely no hiding it. The bankruptcy filing will appear on your credit report for a solid seven to 10 years, and the bankruptcy filing will definitely affect your ability to rent a house, apartment or home after your bankruptcy case ends. That being said, a landlord or property owner will probably consider several different factors or criteria when determining whether or not they want to rent to you.
During this guide, we will delve into a few strategies that can boost your chances of renting after bankruptcy:
- Available income. Potential creditors and lenders don’t always consider bankruptcy as a negative thing. Many credit card companies and car loan lenders are happy to extend credit to someone who recently filed bankruptcy and discharged their debt, because these lenders know that it is likely that these borrowers probably have more disposable income now, since they don’t have huge credit card payments. Another thing to consider is that these lenders know that you will not be able to file for bankruptcy and discharge your debt again for a long time, due to timing rules around multiple bankruptcy filings. And landlords usually think similarly to these lenders. Landlords who are also property owners of the place you are looking to rent are more likely to listen to you and consider some of the same factors that creditors or lenders would consider. And most landlords are more interested in how much money you currently make or have available to pay your rent than the fact that you once filed for bankruptcy.
- Employment history. Another piece of criteria that many landlords consider when deciding whether or not to rent to you is your employment history or job stability. The landlord will want to know your employment history, as well as the length of time at your current job, whether or not you are permanently employed, your previous employment history, including any employment gaps, your hourly rate or salary and your wage history. The longer you have been employed at your current job, the better. Your landlord will probably want to compare your past financial situation and whether or not you were able to pay your bills with the income you had available to you before filing for bankruptcy to your current financial situation, including your current debt to income ratio.
- Bankruptcy case status. If your bankruptcy case is currently ongoing and you have not actually received a discharge or dismissal yet, then a landlord will probably not be willing to rent to you, especially if you are in the midst of a Chapter 13 bankruptcy case. If you need a bankruptcy court to approve your new debt obligation, the landlord or property owner will probably not be willing to wait for your case to be over. Keep in mind that while most landlords or property owners probably won’t be willing to rent to you if your Chapter 7 bankruptcy case is still pending, savvy landlords will probably understand that any debt you incur after the date you filed for a Chapter 7 bankruptcy will be your obligation to pay.
- Bankruptcy filing date. Keep in mind that your landlord will most likely look at the date that you filed for bankruptcy, and many landlords will hesitate to rent to you during the couple of years immediately following the bankruptcy case. But as the years pass, the bankruptcy, whether it’s Chapter 7 or Chapter 13, will most likely have less of an effect on whether or not you can rent, especially if you have since handled your finances as responsibly as possible and taken the necessary steps to clean up your credit report.
- Credit history. Your landlord will probably pull up your credit report no matter what, even if you have not filed for bankruptcy. Your landlord will look for any issues in your credit report, including lawsuits or judgments, evictions, late payments, or defaults on debts like credit cards and vehicle repossessions. If anything looks out of place or it looks like you are currently having financial issues and trouble paying your bills, you will most likely not be approved to rent.
Boosting your chances of renting after bankruptcy
The criteria listed above might sound discouraging, but luckily, there are steps you can take to boost your chances of renting after bankruptcy and persuading your landlord that you are a safe rental risk:
- Present your rent payment records. If you are able to show your potential new landlord that you did not break any rental agreements or leases with other landlords before your Chapter 7 bankruptcy or Chapter 13 bankruptcy and that you consistently paid your rent on time, then your bankruptcy might not make much of a difference to your possible landlord. We recommend using canceled checks and letters or receipts from previous landlords to make your case.
- Explain your personal story or situation. Most people choose to file for bankruptcy, because they are unable to pay their bills due to financial and personal reasons that are usually out of their control, including things like a death, a divorce, the loss of a job or an illness, either their own or someone in their family. If you had to file for bankruptcy due to circumstances beyond your control, you should explain the events or circumstances leading up to the bankruptcy to your possible new landlord. You can also explain why those events or conditions are not likely to happen again. Your landlord will probably be more understanding and more willing to rent to you if they understand your situation and are reassured that it will most likely not happen again.
If you are considering renting after bankruptcy, the Van Horn Law Group can help. Contact us or visit our website to learn more here.