Looking forward - renting a home post-bk13

[Zombie13]

Hi everyone.
Our final bk13 payment will be made mid-late January 2021.
After the discharge, we plan to sell our home and relocate, and rent a home.
I would like to clarify whether or not a fresh, recent bankruptcy will be a common, significant issue with home rental.
If it is, we need to determine ways to negotiate/resolve with the potential landlord.
Thanks everyone.

[justbroke]

I can tell you that it 100% depends on the owner/landlord. A lot of homes, at least in the major metro areas, are being purchased by corporations. So they tend to use what I would call national standards in leasing residential properties. This means income that, monthly, is at least 3X to 3.5X the monthly rent. This means absolutely no evictions (in last 5-7 years). This also usually means no bankruptcies within the last 2 years.

The bankruptcy one is interesting, because I rented from one of the largest national rental management companies while in an active Chapter 13. They seemed to look at the filing date and I was in year 4 of the Chapter 13. I did have scores in the high 600s at the time, so I'm sure that helped. I can absolutely tell you that they love stable into and being with the same employer for a very long time. Nowadays, long stable employment with very good income is a plus. The credit score just solidifies the decision.

Whether a particular landlord will negotiate will first start with your score. If your score is under 620 then it may be an issue right form the start. Most rental/leasing companies use CoreLogic or SafeRent. These scores usually come exclusively from Equifax, if that helps. The scoring system weighs a lot but does take the credit score as a start and gives the landlord a recommendation on the lease.

Personally I was scared, but I've been approved for every single lease that I wanted during my Chapter 13, and even just months afterwards without issue. The income, longevity of employment, and score are the keys (pun intended).

[Zombie13]

Thank you justbroke , we will focus on these particulars then.
So, were you approved for rental *houses*, versus apartments? Just want to be absolutely sure.
I have a consecutive history of employment since 2004 with a caveat: finished working with one company in January 2019, and started with another company in February 2019, with severance overlapping the new job's salary.
The credit score is an interesting topic; just checked credit karma. While in the bk13 as of today, two scores are: 720, and 742. Is that even accurate? What are they smokin? Can I have some? LOL. Note, the website shows the closed accounts, but I do not see an entry specifically for 'Bankruptcy'.

So, what typically happens to the scores right after the final payment clears, and right after the discharge? I seem to recall a conversation on here that indicated, the score typically goes down hard for awhile, then recovers. Not sure if that is correct though.
When we do sell the home, we will have an estimated $150K - $200K in the bank account from the home sale. I did read the comment in another thread, about having 12 months worth of rent payment; something like that: you used a 60%/40% calculation: 60% was the value used for rental calculations.

Assuming this information holds true next year, post-bk13:
* stable work history since 2004
* credit scores of 720 - 740
* bank account shows $150K - $200K
* no evictions, nor foreclosures, for the past 5-7 years

Then we should be in good shape.

Also - if we get this done, then after we move into a rental home, then we can consider putting that large sum of money elsewhere, such as smart investments. But, not until we get into a rental home.

[Barbisi]

Thanks, justbroke! Our main concern with having to remain in this house until at least March/April 2024 (when the BK13 will no longer show up on our credit reports is twofold, medical issues that will continue to plague me as I struggle with the stairs and the toxic air and dry altitude of Colorado, and the very real possibility that the overheated Denver market will self "correct" before then, meaning houses will no longer sell well above their estimated value (sometimes 40k or more) and meaning we could owe more than what we could sell for and that would mean our only way out would be a short sale or voluntary foreclosure.
I'm sure you understand why we want to avoid being rooked like that again, jb!
Also, this house is already 46 years old and is shortly due for many major updates and upgrades, and if we aren't allowed to sell in 2022, we may be left holding the bag just as we were with the other house that directly bankrupted us in the first place.
As for scores, I think we may be in the upper 600s to low 700s. (I was able to check my scores for free a while back. ) We were never late with mortgage and auto payments during this Bk13 nor rental payments in the past for the nearly twenty years we rented.
How do you check CoreLogic, SafeRent and Equifax, once the discharge happens? And wouldn't having 100K or more in the bank help us to prove we were solvent?

[justbroke]

Thank you justbroke , we will focus on these particulars then.
So, were you approved for rental *houses*, versus apartments? Just want to be absolutely sure.

Both!!! Both with traditional landlords (individuals) and corporate landlords (management companies). My income and job longetivity are significantly higher than most, so I'm sure they saw the $$$ and figured I would never have a payment issue. The credit report backed that up.

I have a consecutive history of employment since 2004 with a caveat: finished working with one company in January 2019, and started with another company in February 2019.

Same industry is always good. Longevity in the type of work is the kicker.

The credit score is an interesting topic; just checked credit karma. While in the bk13 as of today, two scores are: 720, and 742. Is that even accurate? What are they smokin? Can I have some? LOL. Note, the website shows the closed accounts, but I do not see an entry specifically for 'Bankruptcy'.

Credit Karma uses a so-called FAKO score known as the Vantage score. It's not a bad score but may not be exactly the same as a true FICO score. The problem is that while you have a bankruptcy on your credit report, you're compared to other people with a bankruptcy on their report. Once that falls off, then you're compared to other "like" consumers. This is known as bucketing. So in the current bucket, you seem to be okay.

So, what typically happens to the scores right after the final payment clears, and right after the discharge? I seem to recall a conversation on here that indicated, the score typically goes down hard for awhile, then recovers. Not sure if that is correct though.

There is no way to tell. Each credit file is so specific. But once the discharge is entered people usually see a slight bump. Whether that's 20 points or 60 points is way too fact specific. Besides, your FAKO scores "look" okay and even if they were 100 points higher than the FICO score, that's still pretty good considering the bankruptcy.

When we do sell the home, we will have an estimated $150K - $200K in the bank account from the home sale. I did read the comment in another thread, about having 12 months worth of rent payment; something like that: you used a 60%/40% calculation: 60% was the value used for rental calculations.

I don't understand the comment.

Then we should be in good shape.

yes.

Also - if we get this done, then after we move into a rental home, then we can consider putting that large sum of money elsewhere, such as smart investments. But, not until we get into a rental home.

I would protect it in a retirement account with which you have access. I think there are "laddering" IRAs (just like laddering certificate of deposits). I would just not expose that much cash, even if I were technically collection-proof.

How do you check CoreLogic, SafeRent and Equifax, once the discharge happens? And wouldn't having 100K or more in the bank help us to prove we were solvent?

You can't check them yourself. I'm a landlord so I have SafeRent (MyRental) and can run LexisNexis CoreLogic as well. I can't even check "myself" as that's not allowed. But what I did was tested the waters by wasting $40 and applying to a major (high-end) apartment complex here to see if I was approved. Probably not the best thing, but it didn't impact my score (no hard inquiry). I did live in an apartment the 8 months before discharge, and it was another major management company. I was approved for a $2,200/month apartment with only a $335 deposit. That was while I was still in a Chapter 13! I would not be afraid of renting if you have a decent (clean) credit profile even with a bankruptcy on it... active or not!

(Funny thing was that their website said no active bankruptcies. Didn't seem to matter for me!)

[Zombie13]

justbroke thank you again for all the detailed responses.
RE: the comment you did not understand: I should have made it more clear. It came from this thread:
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https://www.bkforum.com/forum/before...on-your-record
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and your comment was:
"Income stability matters, and without demonstrating that ability, some landlords want the tenant to show 12-months of reserves in a bank account. That means, for a $2,000/month lease, at least $60,000 proven funds in the bank (doesn't have to be liquid, such as stocks/bonds). You wonder why $60K, well take the $2,000 and divide by 40% and you get $5,000/month. While 30-33% is the maximum that anyone should ever spend on housing, a retired person likely doesn't have the same tax burden, so 40% is a good maximum housing burden. So that's how you get how much you need to "live". (Some may use a different formula or percentage.)"

So, that's where my comment was derived from.

<EDIT>:: But, it sounds like, that information is relevant, only if income stability cannot be demonstrated. I can demonstrate income stability, so perhaps it does not matter if we do not have a large sum of money like that in the bank. Nonetheless, I reason, having $150K - $200K in the bank should improve our position for renting, since it could/should demonstrate liquidity.

I will check my FICO score then as well, if possible.

[Barbisi]

I do understand some people may indeed think we are simply "mad" because we want to sell out and move to another state immediately after discharge instead of waiting 2+ year afterwards as most would do.
Of course ,our situation as justbroke himself noted in a different thread, was a perfect storm from the very beginning and will remain so until we are able to implement the many changes necessary for a better, healthier , more productive life post BK13.
Getting the discharge is not the final step for us, but rather the first in a potentially unwieldy road back from a disastrous detour which will probably take more than 10 years to fully recover from (i.e. from the date we bought the fixer-upper in 2014 ). A high price for a mistake many have made (buying the wrong house) , but few have had to pay for ,for such a long time (in a five year BK13 and beyond).
Normally , you sell the lemon money pit and quickly move on with your life, and are not still impacted seven + years later by such a poor financial decision.
That is also why I believe renting will be the right course of action for us for some time to come!
Thank you to all who continue to read my posts, and I do hope these musings can help others not to fall into the same BK13 pit we did, or if they do suffer from similar stress , I wish them only success and prosperity moving forward.

[justbroke]

But, it sounds like, that information is relevant, only if income stability cannot be demonstrated. I can demonstrate income stability, so perhaps it does not matter if we do not have a large sum of money like that in the bank. Nonetheless, I reason, having $150K - $200K in the bank should improve our position for renting, since it could/should demonstrate liquidity.

From what I am seeing, most of the major leasing companies will take savings if you can demonstrate that you have 9-12 months of liquidity in the bank. A friend of mine was unemployed but had $75K in the bank and was able to rent a $2K/month place. That was with a standard deposit as she also has a credit score > 800.

[Barbisi]

Well, justbroke, my husband has been through the unemployment merry-go-round twice already ,once for 16 months in Texas, and secondly for a very short time (on severance before starting with his current company the next month) here in Colorado, so hopefully a third one is not looming in our future LOL!
All the more reason to be renting, with out a mortgage and solar panel lease -otherwise a quick trip back to Bk13!