Filing for bankruptcy in and of itself does not prevent you from renting an apartment or house. Still, a potential landlord may consider factors related to your bankruptcy in deciding whether to rent to you, or not. Here are some of those factors, and what you can do to increase your chances of renting a home after bankruptcy.
(To learn about other post-bankruptcy credit issues, see the articles in Improving Credit After Bankruptcy.)
Bankruptcy is not always a bad thing when you are being considered for credit. Many car loan lenders and credit card companies, for example, are eager to extend credit to borrowers who were discharged in bankruptcy. This is because they presume that you have more disposable income now that you don't have to pay debts that were discharged.
The same can sometimes be true with regard to landlords. They will most likely be interested in how much disposable income you now have to pay towards rent. If you have enough to pay rent, then your bankruptcy will not be as important to a landlord. If you filed bankruptcy but still do not have sufficient income to pay rent, then the landlord is likely to look at the bankruptcy is yet another negative factor.
Employment History Is Important
In assessing your disposable income, the landlord will likely look closely at your employment history, including:
length of time at your current job -- the longer you were employed, the better
whether your job is permanent, seasonal, or temporary
prior employment history, including length of time at each job and employment gaps
current rate of pay, and
prior wage history to compare how you handled finances with that income prior to filing bankruptcy.
Status of Your Bankruptcy Case
If you have not yet received a discharge, then a landlord may be naturally reluctant to rent to you. This is because of the uncertainty over your obligations to the other creditors that were included in the bankruptcy.
If you were denied a discharge or your case was dismissed, then a landlord may see this as a red flag. A landlord might also consider your bankruptcy as a negative factor if you have filed for bankruptcy more than once, as this may indicate a long-term pattern of financial problems.
How Long Ago Did You File Bankruptcy?
Also important to a landlord is the amount of time that has elapsed since you received a discharge. If you recently received a discharge, then a landlord may be more confident to rent to you since you cannot file bankruptcy again for a while. If, on the other hand, you had filed a bankruptcy several years ago, then a landlord may be concerned that you could file bankruptcy again.
What Is Your Current Credit History?
A landlord is also going to be interested in how you have been managing your finances since you filed bankruptcy. If a landlord pulls your credit report, it will likely focus on such post-bankruptcy issues as:
lawsuits or judgments
late payments or defaults on other debts, such as credit cards.
If a landlord sees that you are still having problems meeting your financial obligations even after getting a bankruptcy discharge, it may decide not to rent to you.
Rental or Leasing History
If you can show that you consistently made rent payments on time, and did not break your leases or rental agreements with other landlords, then a bankruptcy might not matter so much to a potential landlord. The potential landlord is likely to be interested in this history before, during, and after your bankruptcy discharge.
How to Improve Your Chances of Renting After Bankruptcy
If a landlord asks you about the bankruptcy, or if you anticipate that a landlord will consider your bankruptcy in making a decision, there are some things you can do to increase your chances of getting rental approval notwithstanding the bankruptcy.
Present Rent Payment Records
Keep documentation of your good payment history with other landlords and be prepared to present them to the potential new landlord. This includes copies of canceled checks and receipts.
Tell Your Story
Most people file bankruptcy due to circumstances beyond their control: illness, divorce, death, or job loss. If this was the case for you, explain to the landlord the real-life circumstances that caused you to file bankruptcy. Explain why these conditions are will not happen again, and that the reasons for your past financial problems will not impact your ability to pay rent.