Bankruptcy and Renting: Navigating Housing Options
In 2023 , about 69% of New Yorkers rent their residence in NYC, while the cost to rent jumped to an all-time high as well. If you’re struggling to pay your bills while renting an apartment, many people try to put all their disposable income to paying the rent, which often leads to missing payments or defaults on other debts. When you find yourself in this situation, you may start looking at debt relief options, including bankruptcy. If you’re defaulted on paying your rent, you may also be in the middle of the eviction process. Finding a place to live after declaring bankruptcy might seem tough, though it’s not impossible. Landlords may be hesitant to rent to someone with a bankruptcy on their record. Yet, knowing how bankruptcy and renting affect each other can help make the process smoother. The key lies in understanding how bankruptcy affects your chances and what steps you can take to secure a lease.
Your filing date and the type of bankruptcy you file (Chapter 7 or Chapter 13) play big roles. They affect your current lease and your future renting opportunities. But what if there was a way to keep your lease even during bankruptcy? Or what if understanding your rights could protect you against eviction? In this article, we’ll take a look at all aspects of bankruptcy and renting, and how the intersection of these two affects landlords and tenants.
Understanding the Impact of Bankruptcy on Rental Property
Consulting a bankruptcy attorney can shed light on how the bankruptcy code impacts residential leases. Bankruptcy alone can be complicated, and when you add the complexities of state law and NYC laws regarding eviction, it creates absolutely murky waters between bankruptcy and renting.
The Immediate Effects of Filing for Bankruptcy on Renting
After filing for bankruptcy, the most Immediate effect is that the bankruptcy automatic stay may operate to stay a case for an eviction judgment that a landlord may have pending. The filing date of a bankruptcy case and the specifics of bankruptcy filings make a huge difference.
If a landlord has a judgment for eviction, this information must be correctly disclosed on your petition. Additionally, the debtor must pay any rent due within the 30 days after filing to inure the benefit of the automatic stay. If the debtor wants to bankruptcy stay to extend further than 30 days, they must then pay whatever amount is due the landlord which entitles the tenant to a restoration of the premises.
If the bankruptcy case was filed before an eviction judgment was entered, the eviction case will likely be stayed (assuming there are no special circumstances from prior bankruptcy filings). This stay of eviction may not be long-lived, however, since the landlord may file a motion seeking relief from the automatic stay.
Keeping Your Current Lease Amid Chapter 7 or Chapter 13 Bankruptcy
If you’re planning on filing bankruptcy, you might be considering possible consequences to your lease in bankruptcy. In general, a debtor may elect to assume (keep enforceable) or reject (terminate) a lease in bankruptcy. For instance, if you file chapter 7, you would list the lease on Schedule G. On this schedule, you must declare whether you are accepting or rejecting the lease. Keep in mind, however, that a tenant’s decision with respect to the lease also impacts the landlord. If the lease is accepted, all rent due under the lease remains collectible (and not discharged). If the lease is rejected, a landlord may seek eviction on other grounds.
Under Chapter 13 bankruptcy, a repayment plan might include your lease payments, but the bankruptcy does not enlarge the scope of the lease. Thus, if you only have 5 months remaining under a lease when you file your bankruptcy case, assuming the lease limits your rights to just the 5 months remaining under the lease, that’s the amount of time you’ll be able to get. After that time, a landlord may proceed with an eviction case that they are allowed to proceed with under state rights.
The Potential for Eviction: Automatic Stay and Landlord Rights
The automatic stay in bankruptcy provides temporary protection against all kinds of collection and enforcement activity, including eviction, but it’s not absolute. Landlords have rights, too, and they may proceed in the bankruptcy court to enforce those rights. Understanding the balance between the automatic stay’s protection and a landlord’s right to evict is crucial for tenants navigating bankruptcy.
Any rights a debtor may have are predicated on them truthfully and accurately representing the state of their landlord-tenant relationship in the petition. I’ve seen cases in the past where a tenant filed bankruptcy but failed to disclose that a judgment of possession had been entered against them, and because of that, a judge not only granted a landlord motion for relief from stay, but also considered an order precluding the automatic stay from applying to the landlord in future cases.
How Bankruptcy Filing Dates Can Influence How You Rent an Apartment After Bankruptcy
The date you filed for bankruptcy is crucial when you’re looking to rent an apartment after bankruptcy. Property management companies and individual landlords view recent filings differently. While a management company might have strict policies, individual owners might be more understanding of financial difficulties. Timely rental payments post-bankruptcy can help rebuild trust with future landlords.
A bankruptcy filing is a matter of public record and, as a result, often gets reported on your credit report. How landlords and property management companies consider those filings will differ from location to location. While a bankruptcy filing alone should not prevent you from obtaining an apartment, it is part of a larger financial picture which may be considered.
If you are navigating a bankruptcy filing when trying to rent an apartment after bankruptcy, it may help to offer context around the filing: what precipitated the filing, what improvements have you achieved after discharge, and how you plan on paying your future rent.
Tips for Renting After Bankruptcy
The prospects of renting after bankruptcy may seem daunting, but fortunately it is not dispositive. Understanding steps you can take to rebuild credit after bankruptcy can help to improve your own situation.
Overcoming Landlord Concerns with Solid Employment History
In many rental contexts, and especially in NYC, many landlords just want to feel confident that you will be able to pay your rent on time. Your employment history can be a powerful tool in overcoming landlord concerns. Even if you’ve had seasonal or temporary roles, explaining employment gaps and showcasing a stable wage history can demonstrate financial stability. This is crucial in proving you’re capable of making timely payments despite a bankruptcy history.
If a landlord or property management company have questions around the bankruptcy, share context about what led to the filing, and how the bankruptcy discharge has helped facilitate your financial fresh start.
Demonstrating Financial Stability Through Employment and Income Verification
Being able to show that you’ve been paying rent timely and consistently increases your chances of renting a new place after bankruptcy dramatically. Providing tax returns and pay stubs can help prove your financial stability. These documents are key in persuading landlords of your ability to maintain timely rental payments.
Utilizing Your Past Rental History to Your Advantage
Your past rental history can be a valuable asset. Showing that you’ve made timely payments in the past can reassure prospective landlords. There are new apps that allows renters to report rental payments so that they can build a positive payment history. Renting from an individual might also offer more flexibility than large property management firms.
How to Present Your Rental History
When presenting your rental history, be prepared to discuss any late payments or issues, as well as eviction cases, but also highlight periods of consistent, timely payments. For instance, an eviction case where rent was withheld because of failure to make repairs might be received differently if an eviction case was brought against the tenant for failing to pay several months of rent and repairs were not an issue. Negotiating terms, such as slightly higher security deposits or shorter lease terms, can also be strategies to secure a rental agreement.
Tips for Securing a Rental Post-Bankruptcy
After a bankruptcy discharge, securing a rental involves saving for a security deposit and proving you have disposable income. Negotiating terms, such as slightly higher security deposits or shorter lease terms, can also be strategies to secure a rental agreement. Renting from an individual property owner might offer more flexibility than large, corporate landlords.
The Importance of Honesty About Your Bankruptcy Status
Being upfront about your bankruptcy status is crucial. Many landlords appreciate honesty and may be more willing to consider your application if you’re transparent about past bankruptcy cases. Additionally, NYC does allow prospective landlords to do tenant screening checks, and presumably a bankruptcy filing would appear on such a screening. It’s probably a better optic to get ahead of the bankruptcy filing, rather than have a landlord learn about it from a tenant screening report.
Effective Communication Strategies with Landlords When You File Bankruptcy
Working with bankruptcy attorneys can offer strategies for debt relief and how to communicate your situation effectively. They can provide guidance on the bankruptcy code and legal advice for discussing your bankruptcy with potential landlords. A bankruptcy lawyer may also be amenable to writing a letter on your behalf explaining the bankruptcy and how the discharge of debt operates.
Finding Renting Opportunities with Individual Owners vs. Large Properties
Looking for a place to live after the bankruptcy process can feel tough, and you may believe that all landlords are reluctant to rent to someone that had discharged debt in bankruptcy. Think about renting from individual property owners instead of big companies. Individual owners might be more flexible, and may not rely on tenant screening reports and credit checks as much as corporate landlords may. Individual landlords might listen to your story and understand your situation better. This can be especially true if you have a bankruptcy lawyer, who can explain how you’re fixing your finances. Remember, it’s about finding someone who’s open to accepting your application, even before your bankruptcy is discharged. Talking to rental agents can also give you a good idea of where to start.
Why Individual Owners May Be More Receptive to Your Situation
Rental agents often know which individual property owners might be open to giving you a chance, as well as give you inside information about what the property owner prioritizes. This means they may take the time to consider your whole situation, not just your credit score. They might be more willing to listen and understand. Plus, agents can help explain your situation to them, making it clearer why you’re a good choice, even after filing for bankruptcy.
Rebuilding Your Credit and Financial Health
After bankruptcy, it’s crucial to start fixing your credit. This means being super careful with your money. Every bill you pay on time helps. These are your financial obligations. Paying them will help rebuild your credit. Additionally, you want to be mindful of your credit utilization rate (percentage of total available credit being used). By making timely payments on new credit, and keeping credit utilization low, this will help improve your credit score over time.
Steps to Improve Your Credit Score After Filing Bankruptcy
One key step is making sure you don’t miss payments on other debts. Missing payments or defaults can hurt your credit score a lot. Keeping up with your financial obligations, like bills and loans, shows you’re on the right track. This can really help improve your credit score over time.
The Role of Secured Credit Cards and Loan Repayments in Credit Repair
Using secured credit cards may be a smart move. These cards use money you already have as security. Also, paying back any loans on time is super important. Both of these actions show you can handle debt responsibly. Over time, this can help improve your credit score, making it easier to rent a place or get a loan in the future.
Monitoring Your Credit Report for Errors and Updates
Always keep an eye on your credit report. Sometimes, mistakes happen. If you find an error, fixing it can help your credit score. This is an important part of getting your finances back on track.
How to Dispute Inaccuracies and Track Your Financial Recovery
If you see a mistake on your credit report, it’s important to dispute it. This means telling the credit bureau about the mistake. They are required to review any disputed accounts. Also, watching your credit report helps you keep track of credit utilization. By keeping credit utilization low, it shows if you’re getting better at managing your money.
Final Insights: Moving Forward with Confidence
Finding a new apartment after filing for bankruptcy and fixing your credit after bankruptcy takes time and effort. The good thing is, however, many people have done it, and you can too. Being patient, talking openly about your situation, and making smart money choices will help. Over time, you’ll find the right place to live and get your finances back in good shape.
Embracing Optimism and Persistence in Your Search for a New Home
Keeping a positive attitude is key. Yes, finding a place to live, in general, is challenging, and finding one after bankruptcy may seem harder. But many have succeeded before you. Stay hopeful and keep looking.
Landlords have a right to inquire about your financial stability, so being able to confidently and competently explain your bankruptcy case will be helpful. Moreover, being able to demonstrate how you’ve leveraged the bankruptcy in rebuilding your financial wellness will be powerful when you’re discussing with a prospective landlord.
Conclusion: Contact the Law Office of Richard Kistnen to discuss how bankruptcy may affect your rental situation
If you’re navigating the complexities of bankruptcy and worrying about how it may affect your chances to rent a property, you’re not alone. Understanding the impact of bankruptcy on your record, dealing with past-due rent, or facing eviction proceedings can feel overwhelming. The Law Office of Richard Kistnen is here to guide you through these challenges. Whether you’re considering filing the bankruptcy under chapters 7 and 13, or you’re seeking ways to rebuild your financial stability and secure housing post-bankruptcy, we can provide the support you need. Don’t let the fear of eviction or the struggle with unpaid rent hold you back. Call us today at (718) 738-2324, or click the link to claim your complimentary, no obligation virtual bankruptcy consultation and start securing housing with confidence.