Tenants with bankruptcy

6 Replies

Just bought a home in the Midwest and it’s currently listed for rent. I have lots of interest and some of the applicants have had a history of bankruptcy. The reasons for some of these bankruptcies were medical bills. My question is how do I proceed with these particular tenants who have good credit score yet the history of bankruptcy? Do I still rent to them? Do I pass? What’s involved in the process of choosing?

@Nadir M. We look at how recently a bankruptcy was discharged (if it was). We'll usually ask them to explain the situation so we can get a better context of it. We look at the current record of on-time payments and if most of the debt was from medical bills AND they have the income AND a glowing rental history from 2 landlords ago, then we'll usually take a chance. 

Don't accept anyone with an active bankruptcy! We require it to be at least one year after the bankruptcy, and we require them to show responsible financials for the previous year, a good Landlord reference, solid income, and more. They are riskier than someone without a bankruptcy, but you can still mitigate that risk through other means.

@Julie Hartman

Thanks for your response. What all do you also look at? I’ve also had many applicants with good credit scores and having trouble choosing. It’s definitely a good problem to have but need some guidance.

Originally posted by @Nadir M. :

@Julie Hartman

Thanks for your response. What all do you also look at? I’ve also had many applicants with good credit scores and having trouble choosing. It’s definitely a good problem to have but need some guidance.

If it's all from medical bills and their payment history is all on-time since the discharge, we would dive into their employment history and rental history. We want a glowing review from 2 landlords ago not necessarily the current landlord. The current landlord may just be trying to get rid of them. We want a solid employment history; at least 2 years with the same employer. We want at least 3x rent as the income threshold and nothing less. If all of that looks good but the credit is still short, you can always ask for extra deposit (assuming your state allows it).