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People file for bankruptcy for any number of reasons, one of which may be to get some financial relief from outstanding mortgage payments. People often fear filing for bankruptcy because they don’t know or understand the potential ramifications of doing so.
The biggest fear people often have is that they’ll be unable to secure future housing after filing for bankruptcy. While it is true that filing bankruptcy may negatively impact your ability to rent a home, not every landlord automatically disqualifies your rental application because you disclose filing bankruptcy.
The first thing you need to be clear about is that you can rent after filing bankruptcy. People who file for bankruptcy typically qualify for rent within three months. Depending on how you navigate your financial journey afterward, you may even set yourself up to become a homeowner within seven years.
Here are a few key factors landlords consider when renting to a tenant who’s filed bankruptcy:
Landlords don’t always view bankruptcy as a bad thing. In fact, some landlords may be empathetic to your situation and want you as a tenant.
Some landlords will be more interested in knowing how much money you earn and whether you have a history of paying rent on time than the fact that you filed bankruptcy. A positive rental history tends to weigh heavier in their eyes.
The next factor landlords heavily consider is a tenant’s employment history. Landlords want to know that their tenants have a stable job history and earning history. The length of time with the same employer can also directly influence the landlord’s decision. The landlord might also want to know how you handled the payment of your rent or mortgage before filing for bankruptcy.
You’ll be less likely to secure a new apartment If your bankruptcy case is still pending. This is especially the case if you’ve filed for Chapter 7 bankruptcy. However, an understanding landlord will consider that any debt you incur after filing Chapter 7 bankruptcy is solely your obligation to pay.
Landlords will review your credit report whether you’ve filed bankruptcy or not. They will primarily review your credit report for past evictions, lawsuits, judgments, or repossessions. Evidence of late payments may damage you the most, especially if it reflects that you still have outstanding debt.
No credit check apartments are your best option if you’re looking for a place to stay post-bankruptcy. They’re somewhat hard to find and probably won’t end up being your dream home, but they do exist. You can always upgrade to a new apartment after you get back on track financially.
Your potential landlord will find out about your bankruptcy, so just be upfront and honest about your financial situation at the beginning. Let him or her know that you went through a difficult time financially but you’re getting back on your feet. Mention the steps you’ve recently taken to meet your financial obligations.
Renting from a private owner is easier than renting through a property management company. Property management companies have stricter rules and rely heavily on background checks. You can find listings for private property on any real estate website. You may also spot them in neighborhoods–they have “for sale” signs in the front yard.
If you have ever rented a home before owning it, use that history to your advantage. This will show your potential landlord how responsible you have been in the past as it relates to paying rent and meeting other financial obligations. Use your previous landlord as a reference or pass along their contact information to the potential landlord.
Although it may not be feasible for a person who is recovering from bankruptcy, you may consider offering the landlord a larger security deposit. It will certainly increase your chances of renting.
Make a list of people you know would be willing to put in a good word for you. They can be your previous landlords, business associates, employer, mentor, or even your references. The more reference you can provide the better.
There’s no hiding a bankruptcy once you file for it, and it’ll be on your financial record for at least seven years. Even after it’s off your record, the fact that you filed for bankruptcy at all can still haunt you as you look for apartments. But this doesn’t mean that you’ll never be able to rent after filing bankruptcy. Following the tips above should help you in your renting endeavors.