Former Homeowner Renting Question after BK

[clearslate]

Hi All:

I sold my home last month and am temporarly renting from a family friend. The deal ends in one month. I haven't looked for rentals in over 20 years.

Has anyone out there gone through the renting process after filing and found it hard get approved due to the credit checks? I need to start looking and am worried about my credit status. My current landlord (who rented to me without questions) said that he'd write a letter of reference.

Thanks!

[empowered]

Hi clearslate.

There have been a few long threads on this in the last week or two. One should be in the Chapter 13 section and was initiated by someone who is moving to a new city to start a new job after a 13 and finding it frustrating to be looking for a place.

You might try to search, anyway, for "bankruptcy" and "renting" or something.

I'm a renter and rented through my Chapter 13 in another state and as I made a transition to a new one. It's pretty hard to find landlords who don't want credit checks these days. I have found a better reception from private landlords of smaller houses who are suffering in the current recession. The drawback is that houses may go back on the market when things improve. There are long-term rental houses though and you can pointedly ask the landlord before you go any further whether it will be available for at least a few years. Some will be delighted to have a tenant who wants to stay a long time since it's cheaper.

I wasn't a home owner before bankruptcy but I am older than many tenants and renting to a single person can be easier on a house than renting to a family so that's a point in my favor. On the other hand, it may be easier to be sympathetic to the financial difficulties of a family. I would think that, either way, a private homeowner might have some sympathy for your having had to sell your own house. Maybe that's a point in your favor.

Anyway, it seems like it's a mixed bag. Some people are finding it's not as hard as they thought it would be to rent; others find that suddenly they are pariahs in the rental market despite good jobs and good rental history.

In the past few years I have rented from two homeowners who didn't care about running credit, though one of them considered it when it was so clear that I didn't want to talk about my own situation. When I told him what the matter was he just said, "I'm not afraid of bankruptcy." And he asked me if I wanted to buy the house. Eh, I'm not there yet. I've also been turned down to live in a building that I once occupied for several years and where I still had the recommendation of the manager. The building had changed hands and the owners didn't care about my good history in the building. I also found that even before my Chapter 13 it was pretty hard to compete in a competitive rental market, at one point being excoriated by a landlord over my debt load and with disregard for the fact that I was listed as paying on time and had no evictions in decades of renting. Now I'm in the process of refiling as a Chapter 7 and I've begun to feel that I might be forced to buy a house as soon as I can, if I can, just to avoid continuing to be kicked around the rental market. Otherwise, ever having a long-term "home" seems a near-impossibility at this point.

Anyway, the general consensus is that it might help to try to work with private owners or owners of smaller complexes who are more willing to deal with people on an individual basis. People have also found that if you really want a place it's good to be upfront with someone and ask if they're open to considering someone who has had some financial difficulty like bankruptcy. You can remind them that they're well-protected since now that you're already bankrupt, you won't be able to declare it again any time soon. (I haven't done such a thing, but you could if it works for you.) Some people believe that you'll just have to pay higher deposits if you're bankrupt but in my experience people just say no, or they say yes. My current landlord told me that some of her best tenants had declared bankruptcy. But she is also an experienced landlord who has rented in pretty competitive markets so she's dealt with a variety of situations. And I'm also subject to being asked to leave when they decide to put the house back on the market if I am not able to buy it myself. Though I've heard that rent-to-own is generally a losing proposition for the hopeful buyer, I have occasionally thought of looking for one of these just so that I might not have to move whenever someone wants to sell.

In a more competitive market where credit score is everything, even for finding a home to live in, you may have to move further out or consider less desirable dwellings.

If I were you, I'd emphasize that I'd been a homeowner for decades and consider offering a few personal references since you won't have tenant references to offer. Since they won't be able to check for evictions (since you've had your own house) your current financial situation may also be more important. But I would hope that based on your home ownership, you'll have an easy time finding a sympathetic landlord, especially if you're looking at living in a house with a private owner.

[HakunaMatata]

Empowered offered a wealth of information. I guided my sister and her husband through the rental maze. They had filed BK, were surrendering their house, were unemployed with children and pets, and were terrified. They secured a rental without issue. We zoned in exclusively on private landlords (avoided leasing agents/realtors/companies as they tend to have more austere standards) and ultimately found a first-time landlord who wasn't particularly excited to assume this role; however, economic circumstances warranted such. I think it is important to assess the proper rental segment (likely a private landlord), think like a landlord (commonly struggling in this economy), emphasize your strengths (former homeownership is strong factor), maintain confidence, and be honest about your situation. There may be hiccups (denials); although, there are numerous available properties. Present the situation as a win-win and success will be achieved for both parties.

[bigtim6656]

Like empowered said, look for small private rentals, maybe in a neighborhood you would prefer to not be in. Some aprt complexes care more about your rental history and not your general debt. My sister, brother and I rented a 900 a month apartment a few years ago, they would not let my dad on the lease as he had a few bad rental hits, the three of us did not.

[tobee43]

Empowered offered a wealth of information

got that correct. i so agree to look for "private" landlords....and smaller places.

people just don't want to give up their past standard of living....well we went from over 4000 sq feet to 2000 sq feet...we had most of the big place shut off anyway because of heat and cooling bills...

we are happy with the change...look at the positive...less work..."home is WHERE the heart is".

[ccsjoe]

clear, having rented only a couple months ago, albeit before my filing, I can tell you that the majority of private-owned places we saw indicated on their ads or paperwork that recent bk ok so long as no evictions and late rents. This was in Northern CA if it helps.

[empowered]

My experiences of being turned down and having difficulty competing despite a very good job, an extensive rental history and no evictions were also in Northern California. I don't think you can generalize about what it's like to rent in an area when things can change vastly from neighborhood to neighborhood.

The San Francisco Bay Area is an extremely competitive rental market though if you move out further it can be easier. But that's still a generalization. For example, in the part of the Bay Area where I grew up and which is now a highly desirable community I had a landlord who didn't even want to check my credit report (before the bankruptcy) because he considered it invasive; in another less attractive community a more uptight landlord was extremely judgmental about my debt load even though my application to his place should have indicated someone who was trying to cut expenses.

Locale is only one factor. Attitudes of the landlord count for a lot.

BTW, don't just assume you won't be able to get into a desirable location and place. Since then my tendency has been to only go for places I want enough to have that discussion about whether they would consider me. And since it takes a lot for me to have this discussion, I'm now in a small house in a location where I never would have expected to be able to rent or own. The current depression of housing prices has contributed some great houses to the rental market. Start with places you want to live in before you assume that you have to live somewhere you hate.

[BobMango]

As both a landlord and an renter I can give you both perspectives. As a landlord my biggest concern is employment with adequate income and no evictions. Evictions are costly and someone that will stick it out to force an eviction is not someone I want in my property.

As a renter we recently signed a new lease. When we went to talk to the property manager I explained our situation (filed Ch 7, discharged in Feb) before we filled out any paperwork. Her response, "Well, maybe last year that might have been a problem, not now." We were able to get the new lease for a deposit that equals one months rent. We'll pay the first months when we move in and there is no deposit for our two dogs. We signed a two year lease to lock in the rate, and because we'd expect to go month-to-month at that point while we start looking for a house to purchase, provided the housing market looks like something we want to get back into.

What I am hearing from most of the property managers I've spoken with is that rental prices are starting to go up because no one wants to buy right now. We did not have trouble finding a variety of properties in our price range and desired location however.

[tobee43]

i can see both sides.

we recently suggested to our daughter who relocated her family to another state to rent the house she has for sale.

a friend of ours, who is in the real estate business said absolutely NO!!! he is seeing it time and time again...when people are moving into these rentals after losing their homes....and then once in they STOP paying their rents....and the LL take them to court and the judges don't want to throw people in the streets!

now there was a blog on this site about it....however, i can't locate it...but there are pro and cons to the situation.

what is one suppose to do to get a roof over their heads....???

and then there are always going to be those scammers....that even scammed funds from katrina...people in jail that got federal funds....ahhhhhhh where is the trust...

there are actually honest people that lost their homes that need a place to live and then there are those that are out to get whom ever they can...i think they are called..."attorneys"...LOL...JUST Kiddin!!

it's a real problem either way you look at it.

[empowered]

Mango-man, that's pretty good not to have to offer a deposit for doggies, or any pet.

Bravo.

[clearslate]

Thanks All! Great information. I'll look into the private landlords. The rental market in my area is suffering as well, so there may be hope for me in that.
Thanks again.

[olivies]

Well, we were in the process of looking for a new rental immediately after we filed, to get us into a better school district. I thought for sure it would take a long time to find someone willing to rent to us, so we started looking back in April even though we didn't need to move until our lease was up in September. We were told just a couple times by realtors that their clients were not interested in renting to bankrupt renters- and you know what, those houses sat and were available for a very very long time.

We found a private home that was perfect for us, and were upfront with the homeowner and told her our credit was not good right now but we have always been on time with our rent and could provide references. Her response was "NOBODY'S credit is good right now. We basically just want to see that your income can support the rent". Since we were going from a higher rent to lower rent, and we knew the rent itself was only going to be about 15% of our take home pay, we didn't worry. And she gladly approved our application with just one month's deposit, and was even willing to take the deposit in installments over a couple months.

[ryan]

I can't say how difficult it would be after BK, but I have been making serious inquiries with larger apt communities run/owned by management companies. I've asked them about bad credit and about Foreclosures. They are not as negative as you would think, at least for FC.

I'm actually surprised how many have 'special programs' for credit challenges. They still run credit, but try to offset lower scores with higher deposits requirements....

One afternoon, I called 3 places and 2 of them were willing to work with a person in my situation. I do think it also is a function of where you are located. In strong markets, obviously it will be tougher. But in weaker ones, I think even apartment complexes are open to at least considering credit challenged ones like me.

I've always felt the odds are in your favor, as there are THOUSANDS of places for rent in every city, and you only need ONE place. :-)

[schalc]

Renting post Chapter 7 and getting out of lease

Hello:

Has anyone had to get out of a lease (that wasn't part of a BK - I have a good relationship with landlord so I don't think it will be an issue) and more importantly, I am considering moving from LA to the East Coast and wondered how difficult it is to rent, say if I am able to put cash up front (with a friend's help) to get it (I plan to call/email and explain and then simply grab a u-haul, ny faith, my pup and hit the road). I don't know if the Trustee can take this monies to the future landlord before the discharge. I know it's a lot of questions, but everyone one this forum appears well-versed, thanks so much.

[Freddy03]

Just for the heck of it - I started looking at rental homes in my area (FL) just to see what's out there. And I was surprised my homes said BK was ok as long as it was discharged.

Good Luck!