When Bankruptcy Isn’t SO Bad

As a landlord you get to decide your standards, so long as they do not discriminate under the Fair Housing laws.

So, what happens if a tenant qualifies in every way, except that recently they had to file a bankruptcy? What factors should you consider before you risk signing a lease agreement with them?

Many people were affected by the housing market crash, and in some instances some financially responsible people ran into some unfortunately circumstances. For example, someone could have filed a bankruptcy because of unforeseen medical expenses. That is why you need to look at their closely to see where their finances took a downslide.

How can you determine if the tenant applicant is actually financial responsibility in spite of a bankruptcy? First you could ask that they provide bank statements showing they have now have some liquid savings in addition to paystubs showing current income. Also, you are within your rights to request a higher security deposit from a tenant applicant who does not meet credit score requirements.

The good news for the landlord is that any debts accrued after the bankruptcy has been discharged cannot be included in the filing. So, the tenant will responsible for paying you all amounts owed at this time and going forward. Also, the tenant cannot file another bankruptcy for seven years from the first one; so keep in mind how many years they have to be accountable for all of their finances.

Since 1988, has been a leading provider of tenant screening services for Landlords, Property Owners, Property Managers and Real Estate Professionals.