Potential tenant just out of bankruptcy.

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Potential tenant just out of bankruptcy.

Bill Marcotte
Sewickley, PA · Member since 2017 · 2 posts · 0 votes

I have an applicant that is JUST coming out of bankruptcy. Case is getting closed this week. Medical bills were the culprit and overall seems like a very decent tenant. Income is guaranteed under disability and social security which, to my understanding is, a safe bet. 

I’ve also requested a co-signer who will qualify and the tenant has complied with that. Curious if anyone has some advise about how to proceed. 

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Brian Ellis
Rental Property Investor · South shore, MA · Member since 2017 · 1k+ posts · 1k+ votes
7y

Looks like you have already made your decision? You would get your best answers from his/her previous landlord references on whether or not they are a good tenant. Need to go off of facts, not first impression. Bankruptcy is always an indicator of irresponsibility with finances. Disability and social security might put you at ease, but the truth is they can still spend it on other things. 

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  • Brian Ellis
    Rental Property Investor · South shore, MA · Member since 2017 · 1k+ posts · 1k+ votes
    7y

    Looks like you have already made your decision? You would get your best answers from his/her previous landlord references on whether or not they are a good tenant. Need to go off of facts, not first impression. Bankruptcy is always an indicator of irresponsibility with finances. Disability and social security might put you at ease, but the truth is they can still spend it on other things. 

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  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    7y

    I'd rather have someone just getting out of a BK than someone about to file.

    The problem I've had with SSI tenants is they sit around all day bored, some dreaming up things for you to do. The 'victims' do this.  They use they only give me, they won't give me type of language.  A lot of excuses for the BK?  Run. 

    The other problem I've has is a high % smoke.  Not every smoker I've had was a turd, but every turd has been a smoker.  With 3x damage due to smoke remediation. I don't rent to smokers anymore. 

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    7y

    @Bill Marcotte the purpose of checking one's history is to get an indication of future performance. They failed to meet their financial obligations and filed for bankruptcy. They have not yet proven any change in behavior. What makes you think they will?

    Just because it's medical doesn't mean anything. They have the same chance of incurring medical expenses now as they did three years ago.

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  • Bill Marcotte
    OP
    Sewickley, PA · Member since 2017 · 2 posts · 0 votes
    7y

    Hey Brian. Just asked for a co-signer and the co-signer also made an application. Nothing inked. No previous landlords as was living with ailing relative and owned prior  

    Steve. Prospective tenant was VERY up front about the issues and recognizes that it is a hurdle in terms of securing a place. Non smoker. All our units are 100% smoke free. 

    Nathan. It was a serious medical issue (aka $$$$). And chapter 7 Is not something you can just “do again”. 10 year waiting period IIRC.  a custodian will be in charge of expenditures for a set period. Housing would be considered essential by any custodian. SSI and disability income is 5x rent. 

    I guess I’m general I’m not looking for “I wouldn’t do it blah blah”. More looking for, “I went into a similar situation with my eyes open to the issues at hand, thought I had the bases covered and still got burned because of X.”

    I’m inclined to help this person out because if it works out it’s good business. If it’s hard for them to find a new place, they stay put. I like long term tenants. Not established people with “options” who wake up and figure out that they should be paying off a note not their landlords note. Those types stay 2-3 years and bolt. 

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  • Scott P.
    Rental Property Investor · Indiana...mostly · Member since 2019 · 468 posts · 245 votes
    7y

    I've rented to people who have declared BK.  Once their debts were discharged they were all fine for me.  My application asks if they are in the processing of BK at this time and I would not want to rent to those because I would end up being a creditor and not get paid if they don't pay me, I think.  

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  • Linda Trettin
    Member since 2019 · 3 posts · 2 votes
    6y

    @Bill Marcotte

    I never take tenants with co-signers as they have no skin in the game. For the last few years low income people's medical premiums have been subsidized, so why the medical bills? Maybe they chose not to sign up for insurance like many did? I'm in an eviction of the 2nd tenant I gave a break to, with a low credit score, in 30 years. After repeated HOA rules violations, I gave her notice. She then put a stop payment on her rent debit, filed a frivolous demurrer on the eviction and now has filed bankruptcy even though I'm her only creditor & had no problems paying for two years. The bankruptcy won't hurt her because her credit was bad anyway. BTW, she told me her credit was bad because of medical bills!

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