Now, for the longer explanation, let us start with this: bankruptcy is surprisingly common, with nearly 800,000 individuals and businesses filing for the 12-month period ending December 31, 2016. More than half of all filing were chapter 7, and more than a third were non-business chapter 13 filings. Additionally, it’s estimated that 1.21-1.25 million Americans will file for bankruptcy this year. As such, be assured that you are certainly not alone, and that you have nothing to feel ashamed about. Bankruptcy is a very loaded term that carries a lot of emotional baggage, but it is technically a legal process.
With respect to renting an apartment after bankruptcy: yes, it is true that most landlords will run a credit check, and as such a bankruptcy filing will show up. However, many landlords are more interested in a prospective tenant’s employment history and status, as well as their current (vs. their former) debt situation. This is especially the case in markets where supply of rental housing exceeds demand, and as such prospective tenants — with and without a bankruptcy in their credit history — have more leverage.
Below are seven practical tips that can the chances that your rental application will be approved post-bankruptcy:
Be proactive and explain to a prospective landlord the context and mitigating factors related to your bankruptcy filing.
For example, you may have been overwhelmed — as millions of people each year are — by skyrocketing medical bills, or you may have endured an acrimonious and drawn-out divorce or custody battle. Or even if you simply lost control of spending, explaining this can demonstrate that you have re-organized your financial life, and have consistently met your financial obligations since filing.
Focus on your employment history and job security.
As noted above, focus on your employment history and (if applicable) your current job security. For example, if you are in a field where demand for your skills is strong (e.g. nursing, cyber security, etc.), then this can only bolster your chances of approval.
Offer a larger security deposit.
If possible (and it frankly may not be if your bankruptcy filing was recent and you are rebuilding your savings), then it may help if you offer a larger security deposit.
Just like applying for a job, providing references to a prospective landlord can make a significant difference in your favor. These can include former and current employers, and ideally former landlords as well that can vouch for your good conduct (financial and otherwise) as a tenant.
Target your search to private property owners.
Some private property owners have more flexibility in their decision-making compared to property management companies.
Get a co-signer.
If you cannot find a suitable rental on your own, then if possible, ask someone with good credit to co-sign your agreement.
Look for “no credit check” rentals.
Finally, if you are unsuccessful with all of the above, then you may need to focus on properties that are advertised as “no credit check” rentals. Often, these are located around colleges and universities (since they cater to students who do not have much/any credit history as yet).
Filing for bankruptcy is a major step, but it does not mean that you will be unable to rent an apartment, get a credit card, get a job, obtain a mortgage, lease a car, and so on. The key thing is to have the right plan, mindset and support system to carry it out.
To learn more about potentially restructuring your debts through bankruptcy, and for other questions related to life before, during and after a filing, contact the Law Office of Charles H. Huber today.