Have you got that itch to move to a new place? If you have a bankruptcy reporting on your credit profile, you’d better think again! A mortgage may not yet be possible, so you’ll be renting. A lot of large apartment corporations and property management companies run a credit check on all prospective tenants. Before even going to look at an apartment, call first and ask what their credit requirements are. You may have to be outright blunt and ask if they do a credit bureau check, and if so, does a previous bankruptcy disqualify you.
If You’re An Ex-Bankrupt, Many Doors Are Closed
Many times, a previous bankruptcy will disqualify you right away. It’s best to get that out in the open. If you’re a bit shy being so open and potentially drawing attention to this, just ask what types of references they require. If the subject of a credit check still doesn’t come up, you can either confirm it by saying “do you also perform a credit check?” or just go over in person. Soon enough you will find out if a credit check is needed when you fill out the application form. Chances are pretty good that if they do a credit check, a previous bankruptcy that is still reporting your credit file will result in an automatic decline.
You then have two options. Either ask if a stellar letter of reference from your current landlord would help, or perhaps pre-paying a few months of extra rent would make a difference. Another option is to just look for another place to rent.
How I Rented Apartments With Poor Credit
In my pre-bankruptcy days I managed to partially overcome a challenge like this. My credit was already a bit shaky in 1999, eight years before filing for bankruptcy. One place I rented was from an individual who bought an old house that was converted into four apartment units. He was more concerned in having a tenant paying rent and did not do credit checks on anyone. You need to find someone like this to rent from – a private individual with an investment property such as a house, condo, a basement suite or a room in a house if that meets your needs.
After bankruptcy, you need to be willing to be willing to make a few sacrifices and work a bit harder than everyone else.
Moving right along, a year later I decided I wanted something a bit nicer and found a great apartment owned by a large corporation. They did a credit check, and, surprise, surprise, I needed a co-signer due to bad credit. At first they didn’t want me at all, but I managed to sway them a bit by offering to pre-pay 3 months rent. I still needed a co-signer. It was very embarrassing to have to get mommy to co-sign for me when I was 27 years old. It was the first and last time I ever needed a co-signer for anything in my life. Although I wasn’t bankrupt at that time, the same situation could have happened after bankruptcy.
Large Corporations And Rental Offices Are Not Good Choices
After that experience, I learned that if I wanted to rent, and my credit was still shaky, I’d better avoid large corporations. But then I filed for bankruptcy in late 2007. After filing, I really wanted to get out of town. As luck would have it, a friend of mine was the building manager for a 21 unit apartment building owned by a large company. Normally a credit check would have been done, but since he personally knew me for over 10 years, he was able to bypass that requirement. As it happened, a year later I needed to move to be closer to my aging parents.
Sub-Leasing An Apartment
My next, and last apartment rental came in the form of taking over a lease from a friend who had just bought her own condo. I took over the apartment 3 months into a 1 year lease and paid on time or early every month, but the lease was still in my friend’s name. When the lease came up for renewal, I notified the building owner that I would like to renew the lease in my name. I provided a letter of reference from my employer stating how much I earned and how long I have worked there. That, along with my excellent payment history swayed the landlord to renew my lease without a credit check. I continue to pay early (anywhere from 2 days to 2 weeks).
You might be able to take over an existing lease if the current tenant will let you keep the lease in his or her name. But, that’s not too common, because they take a bit risk. Since the lease is still in their name, they are responsible for any damage or unpaid rent. But, you might find have a friend who is moving mid-lease, or a complete stranger by looking at the classified ads in the local newspaper, bulletin boards on online on Craigslist or Kijiji.
Move Towards Home Ownership
The best thing, however, is to make the step away from being a renter and become a homeowner. I’m currently in the process of saving up a down payment for a modest home I can afford. I have no plans on renewing my current lease when it comes up for renewal. After speaking to a great after-bankruptcy mortgage broker who services all of Canada, and explaining my entire situation, we are confident that I will get approved for a mortgage in the new year. That way, no more needing to please a landlord! In my case, it’s actually easier to get approved for a mortgage than for an apartment rental!
More details on after bankruptcy mortgages to come in a future article, but suffice it to say that it takes at least 2 years after bankruptcy discharge with at least 1 year of NEW re-established credit and at least 5% down – the more the better. I’m aiming for at least 20% to help seal the deal. The days of getting a mortgage the day after discharge from a bankruptcy are gone. If you happen to find one, you’re likely going to be paying outrageous interest rates.