Renting with bad credit.

[Ineedhelp2]

We will soon be out of our house and we've been owners for 20 years, and never had a formal rent agreement, so renting is a new experience.

I've contacted several agencies, and they're aware of the foreclosure problems and they said that would not necessarily be an issue, but I'm also concerned about our very bad credit and a pending chapter 7.

We found a house we like a lot and the normal policy for this agency is three months rent in advance, first, last, and one month worth of security deposit.

In my mind, that's a lot of security for the landlord, but the agent said they might want to see my tax returns too, which will really sink me, since we had a bad year, though we've been doing well enough the past six months after some very rough times.

Anyway, any tips or ideas how to deal with this? What if we could scrape up an additional month of rent? Does that usually help?

Will the court be ok with advance payments for rent? They wouldn't come after any of that when we file chapter 7 would they?

[justbroke]

You have done well so far by being upfront, open and honest! Continue that course and you'll find something!

Anyway, any tips or ideas how to deal with this? What if we could scrape up an additional month of rent? Does that usually help?

Actually, most States (and even some Cities) have very strict rules on deposits. In some locales, the deposit (security/damage) can't be more than 1 or 1.5 times the rent. However, so long as the agent/owner doesn't ask for exorbitant deposits, by asking for pre-paid rent, this may work.

Remember, you're trying to make the owner comfortable with you taking possession of their $100K, $200K, or more home when your (credit) record indicates that you can not pay your bills. First they want to be able to trust that you have employment (pay stubs, proof of employment). Second they want stability (tax returns show stability).

When I rented just before filing, my credit report was horrible and the landlord/owner only asked what I was doing with my rental units... since he was an owner too. He was more concerned with stability, employment and the in-person interview (10 minutes) with my family and I!

Will the court be ok with advance payments for rent? They wouldn't come after any of that when we file chapter 7 would they?

This depends on how your Trustee thinks of this. If it's a security deposit, then you have to list it as an asset. However, if it's just advanced rent... it's not an asset, since it's already paid. I wouldn't think the Trustee would ever know about advanced rent, unless they look at Bank statements and wonder where $3000 went. That's easy to explain, though, as first month, last month, plus security... $1,000 times 3!

The Cats had a Trustee who forced them to "buy back" the security deposit they had with a Utility. I think that's a cheap shot, but deposits are property of the Estate.

[Ineedhelp2]

Would the trustee take the security deposit?

I'm a total newb at renting, and was unaware of she sreening process and fees involved with management services.

I am currently looking at a house and told the service about my bad credit, yet on the form they sent me they said my application would be denied if I failed the credit report.

He told me they could work with me if I could verify income, but could they also be scamming us with the fees?

What if there are a couple other applicants for this house that he likes better, but they are still in the application process, but he thinks they might ultimately be better prospects? Wouldn't he still want our application and the $30.00 fee for me and another $30 fee for my wife, knowing we would be turned down? Do they make money on those fees?

[justbroke]

Would the trustee take the security deposit?

Not take, but make you pay it to the Trustee!

I'm a total newb at renting, and was unaware of she sreening process and fees involved with management services.

Well, the only thing you should be paying, to the management company, is the $30-50 per "adult" credit check fee.

I am currently looking at a house and told the service about my bad credit, yet on the form they sent me they said my application would be denied if I failed the credit report.

Some of the forms are standard rental forms. Until last year, it was true that the top tier management companies would deny you on the credit check alone. Nowadays, they still perform screening services (background check, employment verification, rent-to-income ratio, etc.) for owners. I think it's up to the owner whether they want to relax the requirements, but the ratios, background check and employment verification are almost never waived or reduced!

He told me they could work with me if I could verify income, but could they also be scamming us with the fees?

That credit check fee, really goes to places like Intellius and other verification services. As an owner/landlord I am still a member of Tenant Verification Services. A credit decision, background check (criminal), plus eviction report... costs me $33.90 per applicant.

What if there are a couple other applicants for this house that he likes better, but they are still in the application process, but he thinks they might ultimately be better prospects? Wouldn't he still want our application and the $30.00 fee for me and another $30 fee for my wife, knowing we would be turned down? Do they make money on those fees?

In this business, it's "a bird in hand is better than 2 in the bush". True, they may pick one applicant over the other. Maybe you can ask to have it refunded if they don't select you. I don't know of many that do that, because this can be a significant cost to them if many applicants apply.

[Ineedhelp2]

I figured they probably just paid $10 to run a credit check. You don't think they make any money on the fees?

[justbroke]

I figured they probably just paid $10 to run a credit check. You don't think they make any money on the fees?

It depends on which check they're running. Yes, they may make $10, but they have cost for having staff that does this. Especially phone calls to prior landlords, employers... they aren't making that much, if anything.

[Ineedhelp2]

I'm concerned about the idea that a security deposit would be an "asset."

How can I discuss this with a potential landlord without scaring them away?

I have not yet filed chapter 7 and it probably won't happen until after I am tossed out of our own home.

I wish my chapter 13 attorney had been more proactive and gotten me to file chapter 7 sooner or had kept us better informed about our options and problems that could arise. I felt like we were pretty much on our own.

[justbroke]

How can I discuss this with a potential landlord without scaring them away?

You don't. If you do need to "pay it back" to the Trustee, the Trustee could give you 12 months, interest free and monthly payments to pay it into the Estate.

I wish my chapter 13 attorney had been more proactive and gotten me to file chapter 7 sooner or had kept us better informed about our options and problems that could arise. I felt like we were pretty much on our own.

That does happen sometimes.

[Ineedhelp2]

I found that at leat in colorado, a security deposit is listed as an exemption:

For purposes of garnishment proceedings pursuant to the provisions of article 54.5 of this title, any amount held by a third party as a security deposit, as defined in section 38-12-102 (2), C.R.S., or any amount held by a third party as a utility deposit to secure payment for utility goods or services used or consumed by the debtor or his dependents;

[justbroke]

38-12-102 (2), C.R.S., or any amount held by a third party as a utility deposit to secure payment for utility goods or services used or consumed by the debtor or his dependents;

I think that's for garnishments themselves. For Bankruptcy, you look to 13-54-102(1)(r). It appears to be good for security and utility deposits.

[overspent]

I am two months late on my mortgage and CC payments. To prepare for foreclosure I looked at rental listings on Craiglist: there are over 1500 listings for my metro area anyday and over 100 3+ bedroom houses for rent each day. I printed out about 5 houses of iterest. Called the first, told them I had bad credit due to stop payment on mortgage they lady from the property management company said that that's very common this day and not an issue. They only have issue if you try to hide. I didn't call the rest. I know it's easy to rent these days.

[Ineedhelp2]

I applied for a house through a property management company. They wanted first month, last month, and a security deposit all in advance ($1,200 rent, $3,600 total). I told them about my bad credit in advance and about the foreclosure and they said in that case to make sure I document well my income, which I did. After I applied they said I would need an additional $1,000 deposit because of my bad credit, plus a $500 pet fee.

Is this the real world when it comes to renting? That's over $5,000 to move into a $1,200 per month home.

I quibbled about all that advance money and they told me it was non negotiable, and to stop by and pick up my application money (since they didn't run the credit check).

Seems very excessive to me.

On the other hand, I've talked with private individuals who were much more lenient, though so far have not yet found the right place.

[desertgrl74]

That sounds way too much money to me! I decided to look at apartments rather than renting a condo from an owner because I have seen some really good offers around my area. Renting from a homeowner seems like they want more. I would look around at apartments. The apartment I found is in a great area, plus I got a $99 move in, first month free and second month 50% off. I didn't have to put a deposit down at all, just the $99. I really lucked out because other apartments I saw wanted two seperate deposits of 450 each and plus 300 for pet deposit + additional $25 a month for my cat to live there! HA! I have to pay pet rent too! Crazy! I've never rented in my entire life and that cracked me up. Look at all your options.

[Ineedhelp2]

You've never rented?

I'm in a similar situation. We've lived in only two houses in thirty years, and rented the first one on a private deal, later bought it, and then bought another house.

All this stuff about deposits and background checks and pet deposits and application fees was new to me.

I'm working on another rental that I really hope we can get, and through a property management service, and this one is a much better deal, and they are willing to work with us on the deposit monies so we don't have to come up with everything up front.

Plus...if the lease needs to be broken, all we have to do is find another tenant to pick up where we left off and there is no penalty.

The other outfit wanted three months of rent to break a lease.