How Bankruptcy Affects Renting an Apartment
When debt gets out of control, bankruptcy is sometimes the best method available to get one’s financial situation back on track. However, filing for bankruptcy can have a number consequences—both positive and negative. For example, due to the fact that many landlords conduct credit checks on prospective tenants prior to renting the properties they manage, a previous bankruptcy can impact one’s ability to rent an apartment or house. However, this isn’t always the case, and filing for bankruptcy doesn’t automatically disqualify debtors from securing acceptable housing. There are, in fact, a number of factors that landlords examine when making eligibility determinations for prospective bankrupt tenants, including:
- Income – As mentioned above, bankruptcy isn’t always a barrier to finding good rental housing. In fact, many creditors assume that bankrupt applicants have plenty of disposable income following the discharge of their debts. Therefore, if an applicant can meet or exceed the income requirements of a rental property, then bankruptcy is unlikely to be a major impediment to qualification.
- Employment history – In addition to income, potential landlords will examine the applicant’s employment history to determine job stability. Other related factors to be examined may include:
• Length of time at current job;
• History of permanent, as opposed to seasonal or temporary, employment;
• Reasons for long gaps in employment history;
• Current rate of pay; and
• Wage history
- Status of applicant’s bankruptcy case – An unresolved bankruptcy case, as opposed to a case that has been closed, may make landlords reluctant to rent to an applicant, particularly in Chapter 13 cases. And although most landlords won’t be eager to rent to applicants with pending Chapter 7 cases either, they may also understand that an applicant will probably have more disposable income following closure of the case.
- Bankruptcy date of filing – The bankruptcy date of filing is another factor that landlords consider prior to approving prospective tenants. Landlords can be hesitant to rent properties to prospective tenants with bankruptcy filings that occurred in the previous two years. However, as time passes, bankruptcy tends to have less of an impact on a debtor’s ability to rent, particularly if he or she has been financially responsible in the intervening years.
- Credit History – An applicant’s credit history is important regardless of bankruptcy status. Prior to extending a rental offer, landlords examine prospective tenants’ credit history for entries such as:
• Late payments or defaults on other debts;
• Evictions; and
• Judgments or lawsuits
Legal Representation in New York
If you are considering filing for Chapter 7 or Chapter 13 bankruptcy in New York, please contact an attorney to discuss your situation. An experienced New York Chapter 7 or Chapter 13 bankruptcy attorney will keep you apprised of your rights while ensuring that you understand all of your debt relief options. Please contact us for a free consultation.