Bankruptcy – whether chapter 7 or chapter 13 – can have a ripple effect on different areas of your life. If you’re a renter, you’re likely wondering whether or not bankruptcy will affect your current lease, keep you from re-signing a lease at the end of your current term, or prevent you from finding a new place to live.
We’re here to answer your questions, get you on the path to bankruptcy, and help you get through this time with minimal stress and anxiety. Ready to get started? Call Padgett & Robertson at 800-303-1416 to set up a consultation now.
When You Are Behind on Rent
If you’re currently behind on rent, what will happen to your lease and your living arrangement? The money you already owe your landlord at the time of filing is considered a debt, and it must be accounted for in your list of debts. However, your landlord is temporarily forbidden from attempting to collect that amount from you while the automatic stay is in place.
That doesn’t mean, though, that there are no consequences for not paying your rent. The landlord can still file for eviction against you for being behind on rent. They can do this even if you are in the automatic stay period. You should have a plan for paying back this debt if you want to continue living in the same place after your bankruptcy is granted.
Note that this only applies to current debts. The rent you still owe each month is not a debt, and you must continue to pay it if you do not want to be evicted.
When You Are Current on Rent
Assume that you are current on your rent and that you are only behind on other bills and credit accounts. In this situation, your bankruptcy will not have as much of an effect on your lease. Your landlord cannot evict you simply for declaring bankruptcy, and as long as you continue paying your rent in full and on time, you are likely to preserve the landlord-tenant relationship.
Telling Your Landlord
Your landlord will be notified of your intention to file bankruptcy, as the court will send them Form 309A. You may want to let your landlord know ahead of time that this is coming and what your intentions are, especially if they are a mom-and-pop landlord that may be unfamiliar with this type of situation.
Letting them know ahead of time can ease their fears if you tell them that you are planning on keeping your lease, keeping up with on-time rent payments, and otherwise honoring your agreement with them. If you have a corporate landlord that you have never actually met—common in large multi-building complexes—this step may be unnecessary.
Preparing for Renting After Bankruptcy
While your bankruptcy filing may have minimal effect on your current lease and rent obligations, it can have a major impact on your ability to find a new place to live in the future. Most corporations that own rental properties do a credit check on new applicants, and bankruptcy may automatically disqualify you from being considered. This isn’t always the case, of course—you may still be able to be approved. It all depends on whom you rent from and how competitive the rental market is in your area.
If you are finding it difficult to find a new rental after bankruptcy, just realize that it is largely a numbers game. The more places you reach out to, the more likely it is you’ll find a place that accepts you.
Note that individual landlords tend to be slightly more flexible than large corporations since property managers at large corporations have strict guidelines they must follow. But if you find a private landlord who seems understanding, you can explain your bankruptcy and how you’ve taken steps to improve your financial stability.
Find Out How Padgett & Robertson Can Help
Are you ready to move forward with your bankruptcy filing? Let’s sit down, talk about your options, and look over the numbers. From there, we will move forward with the documentation and paperwork you’ll need. Just give us a call at 800-303-1416 or fill out our contact form to set up an appointment.