Getting calls from debt collectors? Mailbox filled with collection letters? While there is an 11 word phrase to stop debt collectors from reaching out, that doesn’t mean your problem is gone.
Bankruptcy might be your best debt relief option when facing financial hardships and sinking in debt. While you may need to take a Chapter 7 means test calculator to see if you should file Chapter 7 or Chapter 13, either option can help get you out of debt. However, when you file for bankruptcy, it remains on your credit report for between seven and ten years. Therefore, there is no hiding it. While bankruptcy could help forgive your debts and offer you a clean slate to work on your finances, the bankruptcy on your credit report could make it challenging to rent a house after your bankruptcy case.
Most landlords aren’t happy to rent to someone with a bankruptcy case or one who recently received debt discharge following a bankruptcy case. Therefore, they may be reluctant to allow you to let their premises. So, what do you do? Here is a guide on how to rent after bankruptcy.
Renting An Apartment or House After Bankruptcy
Food, shelter, and clothing are basic human needs. If your house got liquidated after filing Chapter 7 bankruptcy, you would need to get a place to live. The best option available is renting a home or an apartment. However, landlords always request a credit report from their potential tenants. Since the bankruptcy filing remains on your credit report for almost a decade, it could affect your ability to rent.
Different landlords have different opinions on bankruptcy. Some may see it as an opportunity for you to get rid of your debts to restructure your financial life. Therefore, you no longer have outstanding debts and can make better financial decisions, making it highly likely for you to afford to pay your rent. Other landlords might be cautious with you, fearing you may become bankrupt again and unable to afford the rent. Therefore, renting could be more difficult after filing Chapter 7 bankruptcy. Although challenging, it is not impossible.
6 Tips to Improve Your Chances of Renting After Bankruptcy
Do you need to find a new home but are worried about a bankruptcy affecting your apartment search? Here are six tips that will make your search easier and will improve your chances of renting after a Chapter 7 bankruptcy case;
- Expect High-Security Deposits- to prove your ability to meet your monthly rent; some landlords may ask you to make a higher security deposit. Preparing for this expense beforehand will make it easy.
- Candidly explain your situation– there are several reasons people file for Chapter 7 bankruptcy. Sometimes, these reasons are beyond their control. Be open to your landlord and write them a letter explaining what happened. Some landlords may understand your reasons and allow you to rent.
- Create a portfolio for your employment history- try creating a document that highlights your employment history, rental history, and current income. Financial stability could persuade your landlord to approve your rental application.
- Work on your credit history- your landlord needs to know you can make better financial decisions irrespective of your past problems. You can show responsible money management by building a credit history that shows timely payments.
- Speak to the landlord personally instead of agencies or companies- most landlords contract agencies and companies to manage their apartments. Working with the property owners gives you an edge since agencies and companies have strict policies, which they must adhere to. The landlord can make exemptions to these rules, giving you a better chance to explain your situation.
- Provide a list of references- you need to demonstrate responsibility to your potential landlord. Therefore, having references either from your previous landlord or employer can help. While you may include personal references, they will not carry the same weight as professional references.
How to Thrive After Filing a Chapter 7 Bankruptcy Case
Set yourself up well before you even start filing for bankruptcy by considering the potential cost associated with filing. But you will need to have state-specific information before getting started. So, if you live in Kansas, you’ll need to ask “how much does it cost to file bankruptcy in Kansas.” Alternatively, if you live in Louisiana, you need to ask “how much does it cost to file bankruptcy in Louisiana.” Basically, you need to have state-specific cost information to make sure you are accurately estimating what you may have to pay for your bankruptcy.
You need to consider debt-relief options when you have a mountain of debts to clear but your disposable income cannot meet these obligations. Filing Chapter 7 may be complicated, and it could come with its set of challenges. However, sometimes, it may be the best option for you.
During the bankruptcy case, you need to know you can survive these challenges and even thrive after the case. Your focus should be on the brighter picture, getting a fresh start you get after filing Chapter 7. By the end of the case, you will be free of debts. Therefore, you can make better financial decisions to build a healthy financial future. Over time, with the right choices, commitment, and dedication, you will work on your credit rating and be able to rent a home.
If you successfully rent an apartment after bankruptcy, you should remain diligent with your finances. Here are tips to ensure you stay financially responsible in your new house;
How to Exercise Financial Wisdom While Renting After Bankruptcy
Economists advocate for the 50-30-20 rule to manage household expenses. According to these financial experts, your rent should be 30% of your monthly income. So, if you rent a home for $1,250 monthly, you should be earning an average of $3750.
However, that is not always the case and is a mere stipulation in an ideal world. In the real world, suggestions like this could seem disappointing and discouraging. Luckily, there are different ways you can reduce monthly costs to enable you to save more as you rent. They include;
1. Getting a Roommate.
One great way to save on renting costs is to get a roommate with whom you can share renting expenses. Getting a roomie might be unrealistic, but not impossible if you have a family. A reliable and responsible roommate can help ease the burden of rent and basic utilities every month. Fortunately, websites like Roomster make it easy to find roommates within your city.
2. Automate Your Bills
After bankruptcy, your credit score is damaged, and you need to build your credit. An essential factor in your credit rating is your payments. However, with so much to do, it is easy to forget when your bills are due. Unfortunately, late payments could further damage your credit rating. Stay ahead of bills by automating payments. Set up autopay to avoid late payments. The monthly reminders will ensure you don’t miss due dates.
3. Move to a Cheaper neighbourhood.
Everyone desires convenience, and thus, you might be tempted to rent a place near your workplace or your friends. However, the more accessible the neighbourhood is to the city, the higher the rent. Rent is expensive as you get closer to the city. When looking to save more and build your finances, you might consider moving to a cheaper neighbourhood, which is usually further from the city. While you will spend on daily commutes, the money on transport will be less than the rent difference. Thus, you get to save each month.
4. Rent a House with Fewer Upgrades.
Does moving to a different neighbourhood sound frustrating? If you have valid reasons to live within the city, you should consider downgrading to a basic apartment to save on rent costs. Most rentals have basic and upgraded units. Usually, the upgraded units have features like granite kitchen countertops and stainless steel appliances and typically go for more than the basic units. Sacrifices have to be made when saving, and one is compromising on the upgrades to get back on your feet.
5. Be Mindful About Your Usage
Simple lifestyle changes and checking on your usage can significantly help reduce monthly costs. Simple practices like turning off the lights during the day or when walking out of the room and turning off the tap as you brush can help save hundreds of dollars.
6. Share Internet Expenses
Although most apartments have Wi-Fi included in monthly rent, some apartments don’t offer Wi-Fi. So, instead of installing all the hardware in your house, you can ask a neighbour to share their internet with you. In return, you help them pay the internet costs. The goal is to meet your basic connection needs without spending a fortune.
7. Negotiate Your Rent
You have probably opposed the idea before reading on. People commonly assume that the renting cost is a fixed price. However, it is not always the case. When finding an apartment, don’t be scared to negotiate the rent. The worst that can happen is getting a “No” for an answer. The best time to negotiate is during the off-season, for example, during the summer when most apartments are empty as students go home for the summer. Thus, most units are empty, giving you leverage to negotiate.
8. Cook meals Instead of Ordering Take Outs
Cooking is not a hobby for many, mainly because of the clean-up process that follows. But if you would like to save money, cooking meals is more cost-effective than take-outs. Come up with a weekly meal plan and buy the ingredients you will need for the week. Avoid buying ingredients that won’t be required to avoid them going bad and going to waste.
Despite shelter being a basic need, it could be expensive. With other bills to take care of, you need to ensure you save as much as you can to leave some money to yourself. Follow our eight tips above to save and live debt-free.
Take Away
After filing Chapter 7 or Chapter 13 bankruptcy and getting a bankruptcy discharge, renting could be challenging. Therefore, you need to be wise in your renting habits and save as much as you can. While cutting costs involves sacrifice, it will eventually improve your financial stability and, over time, your credit rating. Do you have any questions on renting after bankruptcy and how to save more? Get in touch with one of our professionals for actionable money-saving habits to help you get back on your feet.
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