How To Refinance Your Home After Bankruptcy
Filing bankruptcy is an extreme option for dealing with outstanding debt but in some cases, its the only way to get the fresh financial start you need. Going bankrupt can relieve your debt burden but there are some long-term consequences. It can take years for your credit score to recover, which can be discouraging if youre looking to get a better a deal on your mortgage loan. While refinancing after bankruptcy may be challenging, its not impossible and weve got a few tips that can help make the process easier.
Check out our refinance calculator.
How To Rent A Lovely Home Or Apartment After Bankruptcy
The site just answered a question on how to rent after bankruptcy but I wanted to explore that more and give you some additional resources on how to accomplish that.
Renting a place to live after a bankruptcy is actually a relatively easy thing to do with some insight.
Granted, the major apartment complexes might not be interested if they make their decision solely based on a recent credit report but those places are generally guided by corporate policies and procedures that other places to rent are not.
If you do approach a major corporate apartment complex you should be up-front with them about your bankruptcy. If you apply they are going to find out about it anyway.
Let them know you recently went bankrupt and ask what options might be available to help you get qualified. In the past this has been easily overcome a number of times with people agreeing to put up a slightly bigger security deposit to give the landlord some additional peace of mind.
The ironic fact is that filing bankruptcy generally frees up money each month that makes being able to afford a place to rent, easier.
Other places to approach that are easy to rent at are small apartment building landlords and especially private landlords. Check Craigslist for local rental opportunities or some other online portal that lists rentals in your area.
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Andy Faria of Northeast Properties offered this insight:
Expect To Pay A Larger Deposit
In some cases, a rental agency will automatically require a larger deposit from a higher risk renter. If this option is not offered and you are concerned you might be turned down for an apartment, offer to pay a higher deposit. This can be especially helpful in the case of a private owner. You are basically offering them a few months worth of insurance on their risk.
There are no-credit check apartments out there, but it might take some effort to find one that is located in a safe neighborhood that is close to where you need to be. Make sure you tour any rental before agreeing to sign a lease and be sure you are comfortable with the arrangement before committing.
So remember, bankruptcy does not necessarily mean you will be denied a home or apartment rental. It just might take a little extra effort or possibly a higher security deposit. Remember, theres a positive side to your post-bankruptcy situation and many creditors realize this fact. After your bankruptcy, youve discharged your debt and cannot file another bankruptcy for a certain period of time. Thats actually less of a risk than someone who has not filed yet, owes a lot of debt and is trying to sign a lease.
A potential landlord will worry that someone drowning in debt will not pay the rent timely and might eventually file bankruptcy. If you have already filed bankruptcy, youve started a new path that eliminates many of these risks.
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How Do I Rent A Place After Bankruptcy
No matter whether you file for Chapter 7 or Chapter 13, the bankruptcy process creates a number of unanticipated obstacles, including finding an apartment to rent. You cannot hide the fact that you went bankrupt, as the bankruptcy filing will appear on your credit report for seven to ten years after your bankruptcy case ends. Still, this is not always a deal-killer, as landlords or property owners will often consider several different criteria when determining whether to rent to you.
Can I Lease Or Rent After Bankruptcy
- 10:03 am
When you reach the end of your financial rope, bankruptcy can be the only way to recover and get started on a fresh track. Unfortunately, many people who rely on rental properties to give them a home can be uncertain how bankruptcy will affect their future hopes of getting a place to live. Thankfully, Bankruptcy doesnt rule out the possibility.
How Bankruptcy Affects Renting
You dont have to look far before hearing stories about the way that bankruptcy affects ones credit. There is some truth to this, with a bankruptcy showing on a credit report for potentially up to 10 years. When you look to rent a home or apartment, the bankruptcy will show up on your credit report. Thankfully, there are many things that you can still use to convince the landlord to overlook the bankruptcy and move forward with the rental process.
Your Available Income Plays a Big Role
If youre swamped by credit card debts, then its obvious that you wont have much extra money and may have to short-change some of your bills. If you have been in a bankruptcy, you will have less debt or more manageable payments meaning more disposable income. Show your landlord that you have enough income to cover your rent along with the bills that remain. If you rented in the past and kept up with your payments, use your old receipts to prove that you kept up with your rent bill even when you had other debt.
Your Job and Past Work History
When You Filed for Bankruptcy
A Heart-to-Heart Talk
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How Do I Get An Apartment After Filing For Bankruptcy
Finding an apartment after bankruptcy may prove difficult, as your credit report may flag you as a poor credit risk. Landlords seeing your credit problems are taking the risk that you may be late or miss rental payments. In order to successfully find an apartment, your best bet is to convince the landlord that you are a reliable renter, in spite of the blemishes on your credit report.
Keep your job. If you have a bankruptcy in your credit history, even a sympathetic landlord will not want to rent to you if you also show a spotty employment history. Stability in your job and an income that will sufficiently cover your rent can go a long way towards convincing a landlord to rent to you.
Have money in the bank. Show your prospective landlord that you have sufficient funds to cover any rental payments, even if your income at your job were to diminish.
Speak to the landlord in person. If you are trying to convince someone to rent to you, it is always easier to be charming and personable in person than over the phone. In spite of your credit history, a landlord is more likely to rent to you if he thinks you are still a respectable member of the community, and not a deadbeat. Be honest and open about your situation, and offer to provide whatever will put the landlord’s mind at rest, be it referrals from past landlords or an additional upfront deposit.
Full Transcript Show 187 Advice For Tenants Renting A Property
Doug Hoyes: The biggest expense most of us have is our housing costs, either mortgage, taxes, utilities and maintenance fees if we own or rent, and maybe certain utilities if we rent. Some of the most popular episodes of Debt-free in 30 have involved real estate. Ive had as guests investment experts, economists and realtors, but never before have I had a guest who understands the rental real estate market from the perspective of both tenants and landlords. How is that possible? Well, lets find out and meet my guest. Who are you and what do you do?
Rachelle: Hi, my name is Rachelle and Im a property manager. I own a company and we rent and manage condos and houses in the greater Toronto area.
Doug Hoyes: So your typical client is somebody who owns one or two condos, one or two houses, and you manage them for them is that what you do?
Rachelle: Correct. Ill manage them and we also have a sizeable rental business. So the hardest part of the process is going to the place, showing the place, and people hire me for my judgment, selecting good tenants to help them have a successful landlord and tenant relationship.
Rachelle: Correct. A lot of our clients are actually out of the country, so if youre relocated for your work and you know maybe . . .
Doug Hoyes: Ive got to move to Texas, but Im going to leave my house here, so youre going to take care of my house and rent it out while Im gone?
Rachelle: Almost none of them.
Doug Hoyes: Then its all cash.
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Can A Bankruptcy Trustee Take My Home
Itâs not common, but itâs possible in certain circumstances.
The bankruptcy trusteeâs job is to sell non-exempt property for the benefit of unsecured creditors. That includes personal property and real property. Whether your home is safe from the trustee depends on whether it has any ânonexempt equityâ which in turn depends on its market value.
As a reminder, hereâs how we calculate equity in this scenario:
Have A Job Or Proof Of Income
Be sure to bring your current pay stubs or some type of proof of income when you apply to rent. If you have the type of job where your income varies month-to-month, its best to have something in writing from your employer or HR department to give the landlord. If you’re self-employed, bring current bank statements to prove your income.
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Use Your Past Rental History
If youve rented in the past and are able to show you were a good tenant and paid your rent on time, make sure to point this out on your application or at an interview with a potential landlord. This might help convince them to give you a chance, even with bankruptcy and less than ideal credit score.
Be Prepared To Explain Your Situation
Not every foreclosure or bankruptcy filing is the result of poor money management. If, for instance, a job loss or unexpected hospital visit sank your finances, you can explain that to a property manager or landlord. Be ready to show how you are better equipped to handle expenses now and why that financial hardship is behind you. This may mean gathering proof of income beyond what is normally required.
A frank, up-front conversation can also prevent you from wasting time and money on an application fee if the landlord wont budge.
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Buying A House After Bankruptcy
- Amy Fontinelle – Forbes Advisor
Buying a house can be a challenge in itself, but if youve had to file for bankruptcy, owning a home may seem all the more difficult to achieve. However, its still possible regardless of whether youve filed for chapter 7 or chapter 13 bankruptcy.
Your biggest hurdles to getting a mortgage will be the mandatory waiting periods after youve declared bankruptcy, and rebuilding your credit score to qualify for a mortgage.
In addition, having a lower credit score from your bankruptcy may prevent you from qualifying for the lowest interest rate your lender offers. You may instead need to make a higher monthly mortgage payment or purchase a less expensive home compared to someone with excellent credit. That might feel like a bit of a blow when youre trying to get your finances back in shape.
Still, the process of buying a home after bankruptcy is feasible. Heres how.
Here’s What You Need To Know
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Recently, more than one million Americans filed for personal bankruptcy. Of these filings, about 706,000 were Chapter 7 bankruptcies and about 330,000 were Chapter 13 bankruptcies. In many cases, personal bankruptcies are the result of unsurmountable medical bills or result following long periods of unemployment, a common problem in the recent economy.
If you are among the millions of people who have filed for personal bankruptcy in the past few years, you may think that your dream of homeownership is an unattainable one. But, believe it or not, you can still buy a house as well as homeowners insurance.
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What Is Chapter 13 Bankruptcy
Chapter 13 bankruptcysometimes called a wage earners planis typically sought by people who want to pay off their debts but cant afford to pay them all off at the same time. Instead, they turn to the courts to essentially buy time to pay off their bills over time. Its available to anyone whose unsecured debts are less than $394,725 and secured debts are less than $1,184,200. Today, one-third of all bankruptcies in the United States are Chapter 13.
Ask About Unorthodox Rental Options
Sometimes rental agencies are unwilling to enter into a long-term lease with someone they consider a risk, but they might be willing to offer something short-term. This is not the most convenient of options, but it gives you a few months to prove yourself to the rental agent. If you pay your rent on time short-term, they might eventually extend a longer lease.
Also Check: Letter Of Explanation For Bankruptcy
Will Your Landlord Be Told If You Are Bankrupt
When you are made bankrupt or you declare yourself to be bankrupt, you are obliged to give details of all your creditors . So, if you are in arrears with your rent, your landlord is a creditor and they should be listed as such. Following the making of a bankruptcy order, the official receiver or your trustee in bankruptcy will contact all of your creditors and will ask them for details of the amount of their debt and how it arose.
If you are not in arrears of rent, then your trustee may feel that there is no need to contact the landlord as payment of rent would be a normal living expense. The trustee would not normally interfere with this in the same way that they would not normally interfere with you incurring other living expenses, such as payment of council tax and utility bills. The position may be different if the rent is very high and beyond what would normally be paid for that type of property and if the landlord is a family member.
It should be noted, however, that the official receiver will place a notice of your personal insolvency in The Gazette, which publishes legal notices and provides a permanent public record of your bankruptcy.
What To Do Before You Apply For A Mortgage
Before you apply for a mortgage loan, check your credit score by getting copies of your three main , which detail the financial transactions from your past. You will want to check these credit reports for errors, such as a credit issue that you resolved but that is not reflected in your report.
In some postbankruptcy cases, errors continue to report negatively on credit reports, says Carey.
These mistakes will drag down your overall credit score and reduce your chances of getting approved for the mortgage. So if you spot mistakes on your credit reports, work with the credit bureaus to correct the information they include. This can boost your credit score significantly, and may even tip the scales on your home loan approval. Mortgage lenders want to see any movement from bad credit to good credit, so dont leave any of your hard-earned progress on the table.
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Do You Need To File Bankruptcy To Get Out Of Debt
Filing bankruptcy to get rid of debts you cannot pay can help you take control of your finances. Most people file bankruptcy because a life event that was out of their control caused a financial crisis.
If you have questions about filing Chapter 7 or filing Chapter 13, Ascend can help. We have resources available that allow you to compare debt relief options. You can also check to see if you meet the income qualifications for Chapter 7 or estimate a Chapter 13 plan payment.
Call us at 833-272-3631 to discuss our services, including the Savvy Method of paying off debt without bankruptcy.
We are here to help you choose a debt relief option that works for you. If you want to explore bankruptcy further, we can help you locate a bankruptcy attorney near you that offers free bankruptcy consultations.
Be Proactive About Improving Your Credit Now
Just because you had to declare bankruptcy doesnt mean your credit is ruined forever. If you begin taking steps to improve your credit immediately after bankruptcy, your credit score will start to reflect the positive results. The sooner you raise your credit score, the easier it will be to get into the apartment you want.
In my article ‘How to Get a Good FICO Score After Bankruptcy’, I offer tips on how to get started on improving your credit score right away.
Here are a few tips to help get your credit back on track so it’s easier to rent after bankruptcy.
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Can I Rent A Home Or Apartment After Being Discharged From Chapter 7 Bankruptcy
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