Many Americans have ended up filing bankruptcy due to losing their home to foreclosure. This leaves them homeless and without credit. Many people fear that filing bankruptcy will not allow them to be able to rent a home. This might’ve been a question in the past, but millions of Americans are facing this dilemma every year. With a large number of foreclosures nationwide and subsequently having to file for bankruptcy, this is a problem that property managers and landlords are aware of. Sure it is better to not have a bankruptcy filing on one’s credit report, but sometimes it’s necessary to clean the slate and get a fresh start. The only time it might be an issue is if the individual has not received their bankruptcy discharge and are still in the process of filing Chapter 7 bankruptcy. The landlord would be nervous about renting to an individual in the process of filing bankruptcy because of the legalities of it. The last thing a landlord would want to do is become a party to a bankruptcy filing.
There are some factors that a property manager would look at especially if someone had a bankruptcy filing on their record. The first thing they would ask is if the bankruptcy was discharged yet. No landlord would go into a rental agreement or lease knowing that someone was in the middle of the bankruptcy filing. Next, they would look at the causes of the bankruptcy by reviewing the credit. There are a lot of Americans that got upside down because of a bad mortgage that they couldn’t afford. The last thing they would look at is if the individual could afford the rent. As a rule of thumb, rent should be less than 30% of one’s income. If a person has a good job and been employed for a long period of time, many landlords would overlook the foreclosure and bankruptcy filing.
In today’s economy, this is more common than most people realize. While not every landlord will be sensitive to someone’s past financial problems, many know that good people got caught up in a bad economy and are trying to put their lives back together. They should also know that this same group of people post filing bankruptcy could possibly be completely debt free. If they no longer have a mortgage or car payment, there’s a good chance everything else would be wiped out in the bankruptcy discharge. For the smart landlords, they should know that these individuals are risk worth taking. Because of the risk, don’t be surprised if the landlord wants a much larger security deposit usually more than a month. I don’t think that this is asking too much due to the situation. In a short amount of time after paying bills and rent on time, credit will start returning to that individual.