If you need to rent a house or an apartment after you file bankruptcy whether you are surrendering your home or you just need to relocate, the bankruptcy on your credit is hardly ever a barrier to renting.
Obviously, it’s better to not have a bankruptcy on your credit, but there are plenty of property managers and landlords who will ignore the bankruptcy if other factors are present. After all, many people who rent have less-than-perfect credit, and the rental market would be hard pressed to fill all that space with pristine credit-worthy tenants. This is especially true in today’s sketchy economic climate where renters often suffer from inconsistent employment, foreclosure, judgments and repossessions.
These are factors your landlord will probably consider if you’ve filed a bankruptcy:
- Is your bankruptcy discharged yet? Your Chapter 7 bankruptcy probably needs to be discharged before your landlord will extend you a rental agreement. If you are in the middle of a Chapter 13, the landlord will often not require discharge but may require a payment history from your Chapter 13 trustee that shows consistent plan payments in your case.
- How is your credit otherwise? Your landlord may concentrate on your credit before and after your bankruptcy. The better your credit was prior to bankruptcy and is now that your bankruptcy is over will go a long way in reducing the impact of the bankruptcy on your prospects for rent.
- Got money? Cash is king, and the better cash flow you have means less problems landlords will have collecting rent. The more money you earn and the longer you’ve been earning it, the more attractive you are to them – sort of like dating . . . 😉
- Can you afford it? A realistic rule of thumb is that your rent shouldn’t exceed 30% of gross income. So, make sure you focus your search on properties you can afford. Also, many landlords require deposits, and the availability of a deposit will also greatly increase chances of securing your preferred rental. It’s not enough that you have money because your prospective landlord wants to see stability as well. The longer you’ve been employed at the same job, the greater the probability of acceptance.
So, should you tell the property manager about your bankruptcy? If you are renting from an individual, I recommend revealing the bankruptcy only if asked. If you are dealing with a company or professional landlord, the bankruptcy question is likely coming, and I recommend bringing it up before they do.
If bankruptcy enters the conversation, be prepared to explain why you needed to file the bankruptcy and how it has stabilized your financial picture. Offer the most accurate and up-to-date information about the status of your case and offer to gather any additional information necessary to make a decision. Most people will responds positively to your truthfulness and consider that a bonus on your application, especially if you are applying in person and your sincerity come through.
The bottom line is that if you see yourself as a strong rental candidate except for the bankruptcy, then you will have little problem finding a suitable rental home for you and your family. This is no guarantee that you will get the rental you want, but chances are very good. If your credit was not that great prior to filing bankruptcy, you may have to sweeten the deal with the landlord with either a cosigner or increased rent to offset the landlord’s risk of loss.
Remember, the positive side of bankruptcy is that you have more disposable income to dedicate to your rental payment, and most landlords recognize this.
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Last modified: November 12, 2012