While “bankruptcy” is one of the most terrifying words in the vocabulary, it’s vital to remember two things about this widely misunderstood concept.
The first thing is that bankruptcy is not a moral judgement. Rather, it’s a legal process; and a fairly common one at that. For example, in 2016 there were nearly 800,000 bankruptcy filings (individuals and businesses) in the U.S. So, while it’s not the norm, it’s certainly not the exception either.
The second thing is that the courts (which in this context represent “the will of society”) have absolutely no interest — legally, ethically, socially, politically, or any other-ally you can think of — to ruin the rest of your financial life. On the contrary, the fundamental purpose of bankruptcy is to avoid such ruin, and enable you over time and through a structured plan and process, get a fresh start and financial reboot.
However, if you roam around the web in forums, social media, chat boards, and content aggregators (did someone say upvote?), then you might fear that filing for bankruptcy means that you’ll never, ever be able to rent an apartment again. At least, not one that isn’t about to be condemned, or regularly featured as a crime scene.
The truth is that renting an apartment after filing for bankruptcy is both possible and practical. According to Charles Huber, an experienced bankruptcy attorney and principal of the Law Office of Charles H. Huber, here’s what to keep in mind:
- Be proactive and let a potential landlord or property manager know about your bankruptcy back story.
- Emphasize in the application (or conversation per the above) your employment history and job security.
- If necessary, offer a larger-than-required security deposit (e.g. two month’s rent instead of one month’s rent).
- Provide solid references from current and former employers. If you can get references from previous landlords, that’s even better.
- Focus on private rentals vs. large property management companies. The former often have more discretion than the latter.
- Get a co-signer to strengthen your application. Obviously, the co-signer needs to have a good credit score.
- Target rental “no credit check” rentals. These are often found near colleges and universities, since students usually don’t have much of a credit history yet.
The Bottom Line
Filing for bankruptcy is a very serious step, and must not be taken without careful research and analysis. However, if you ultimately decide that it’s the right decision for your financial future, then be assured you won’t spend the rest of your life on the outside looking in. In fact, if all goes as planned, you should be able to qualify for a credit card in about a year, and a competitive-rate mortgage in about two years. It’s not the easiest road to travel, but there is a light at the end of the tunnel. With the right guidance, support, focus and discipline, you’ll get there!