One of the most common concerns people have before filing bankruptcy is whether they will still be able to rent an apartment.
You may be worried that every landlord will automatically reject your application once a Chapter 7 or Chapter 13 bankruptcy appears on your credit report. That is not necessarily what happens.
Bankruptcy can make the rental application process more difficult, particularly during the first year or two after filing. However, many people successfully rent apartments after they receive their bankruptcy discharge order. Approval usually depends on the landlord’s screening standards, your current income, your rental history, the timing of the bankruptcy, and the strength of the rest of your application.
This article explains what New Jersey renters should expect and what they can do to improve their chances of approval.
Can You Rent After Filing Chapter 7 Bankruptcy?
Yes. There is no mandatory waiting period that prevents someone from renting an apartment after filing Chapter 7 bankruptcy.
A person can apply for a rental while the bankruptcy case is pending, immediately after receiving a discharge, or several years later. The real question is whether the particular landlord will approve the application.
Landlords and property management companies may consider factors such as:
- Current income and employment;
- Credit history and credit score;
- Prior evictions or unpaid rent;
- Rental references;
- The amount of monthly rent compared with household income;
- Whether the bankruptcy case is still pending;
- Whether the applicant has a cosigner or guarantor; and
- The landlord’s internal rental qualification policies.
A bankruptcy filing does not automatically mean that you cannot qualify.
Will Every Landlord See the Bankruptcy?
A bankruptcy is a public court filing and may appear on a credit report or tenant screening report.
Under the Fair Credit Reporting Act, tenant screening companies may report bankruptcy cases for as long as 10 years. Other types of negative information are generally subject to shorter reporting periods.
Not every landlord performs the same type of background check. A private owner renting one apartment may use different criteria than a large apartment complex operated by a national property management company.
Some landlords focus heavily on credit scores. Others place more weight on current income, employment stability, prior landlord references, and whether the applicant has a history of paying rent on time.
Does Bankruptcy Cause an Automatic Rental Denial?
Not always.
Some large apartment complexes use fixed screening criteria that may result in a denial when an applicant is in an open bankruptcy. Others may require that the bankruptcy be discharged or that a certain amount of time pass after filing.
A smaller landlord may be more willing to review the applicant’s overall financial situation instead of relying entirely on an automated score.
The Bankruptcy Code contains protections against certain forms of bankruptcy discrimination by governmental units and employers. However, it does not create a general rule requiring every private landlord to approve an applicant who filed bankruptcy.
Landlords must still comply with applicable fair-housing, consumer-reporting, and New Jersey landlord-tenant laws.
Is It Better to Apply Before or After the Bankruptcy Discharge?
When possible, applying after discharge may make the application easier to explain.
A Chapter 7 discharge usually establishes that the debtor is no longer personally responsible for most dischargeable debts. An applicant may be able to show that old credit-card bills, medical debts, personal loans, and other qualifying obligations have been eliminated.
From a landlord’s perspective, this can sometimes be more reassuring than an unresolved financial crisis involving active collection lawsuits, wage garnishments, and unpaid accounts.
However, waiting is not always practical. A tenant may need to relocate while the bankruptcy is pending because a lease is ending, a family situation has changed, or the current housing is unaffordable.
Applicants who must move during an active case should be prepared to provide clear information about:
- Their current monthly income;
- The expected bankruptcy timeline;
- Their post-bankruptcy budget;
- Their recent rental payment history; and
- Whether their attorney expects any issue affecting their ability to sign a lease.
How Long After Chapter 7 Should You Wait to Rent?
There is no single waiting period that applies to every landlord.
Some applicants obtain rentals shortly after filing or discharge. Others encounter landlords that require the bankruptcy to be at least one or two years old.
The longer an applicant demonstrates stable income and on-time payments after bankruptcy, the less significant the filing may become. But waiting a fixed number of years is not legally required.
Before paying a nonrefundable application fee, ask the landlord or property manager about the written qualification standards. Useful questions include:
- Is there a minimum credit score?
- Does a recent bankruptcy automatically disqualify an applicant?
- Must the bankruptcy be discharged?
- Is there a waiting period after discharge?
- Are cosigners or guarantors accepted?
- What income-to-rent ratio is required?
- Is an application fee refundable if the bankruptcy causes an automatic denial?
Getting these answers first may prevent wasted application fees.
Can a Landlord Require a Cosigner Because of Bankruptcy?
A landlord may require a cosigner or guarantor when an applicant does not satisfy the landlord’s normal financial criteria.
A qualified cosigner may improve the application, particularly when the cosigner has strong credit, sufficient income, and limited existing debt.
However, a cosigner is taking on a serious legal obligation. If the tenant does not pay the rent or breaches the lease, the landlord may pursue the cosigner.
The tenant and cosigner should read the lease and guaranty carefully before signing.
Can a New Jersey Landlord Demand a Larger Security Deposit?
New Jersey generally limits the security deposit for a covered residential rental to one and one-half times the monthly rent. Additional annual increases generally cannot exceed 10% of the current deposit but this can vary by location.
For example, if the monthly rent is $1,800, the standard statutory maximum security deposit would generally be $2,700.
Tenants should be cautious about offering several months of rent in advance. New Jersey law may treat advance rent intended to secure future payments as part of the security deposit. A proposed arrangement should be reviewed carefully rather than assuming that a large prepayment is permitted.
What Should You Do If the Tenant Screening Report Is Wrong?
Tenant screening reports sometimes contain inaccurate or outdated information.
Possible errors include:
- A bankruptcy belonging to someone with a similar name;
- A discharged debt still reported as currently past due;
- An eviction case that did not result in an eviction;
- Duplicate accounts;
- Incorrect balances;
- Old addresses associated with another person; or
- Information that should no longer be reported.
When a landlord takes adverse action based on a tenant screening report, the applicant can generally request a free copy of the report from the screening company within 60 days.
Review the report carefully and dispute inaccurate information with the reporting company.
Seven Ways to Improve Your Rental Application After Bankruptcy
1. Check Your Credit Reports Before Applying
Review your reports for discharged debts that are incorrectly shown as outstanding or delinquent.
A discharged account may remain on the report, but the balance should generally reflect the effect of the bankruptcy discharge.
2. Prepare Proof of Current Income
Gather recent pay stubs, benefit statements, employment verification, bank statements, or other reliable documentation of household income.
Landlords are usually more concerned about whether you can pay the new rent than about debts that no longer require payment.
3. Create a Realistic Housing Budget
Do not apply for an apartment that consumes nearly all of your available income.
A strong application should show that the rent, utilities, transportation, food, insurance, and other necessary expenses fit within your post-bankruptcy budget.
4. Preserve a Strong Rental History
Continue paying your current rent on time whenever possible.
A positive reference from a current or former landlord may carry substantial weight, particularly when the applicant has no eviction history or unpaid rental balance.
5. Explain the Bankruptcy Briefly
A long personal explanation is usually unnecessary.
A concise statement may be enough:
“My bankruptcy resulted from a period of financial hardship. The case has now been discharged, I have stable employment, and I have maintained a consistent rental payment history.”
Do not make representations that are inaccurate or that cannot be documented.
6. Consider a Qualified Cosigner
A financially strong cosigner may help when the landlord permits guarantors.
The cosigner should understand that the guaranty may cover rent, property damage, legal fees, and other lease obligations.
7. Ask About Screening Standards Before Paying
Some rental companies use automatic screening rules. Asking about those rules before submitting an application can save time and money.
Should You Move Before Filing Bankruptcy?
Housing plans should be discussed with a bankruptcy attorney before the case is filed.
The timing may matter when:
- You owe money to your current landlord;
- You are facing eviction;
- You intend to reject or terminate a lease;
- Your security deposit must be disclosed as an asset;
- You plan to use money for moving expenses;
- You are considering paying several months of rent in advance; or
- You need to qualify for a new apartment immediately.
Moving money, repaying selected creditors, transferring property, or making unusual prepayments shortly before bankruptcy can create issues that should be evaluated before the transaction occurs.
What If You Owe Money to a Former Landlord?
Past-due rent and many other debts owed to a former landlord may be dischargeable in bankruptcy.
However, the answer may be different for certain debts involving fraud, intentional property damage, or conduct falling within another exception to discharge.
An eviction record may also continue to affect tenant screening even if the related monetary debt is discharged. Bankruptcy eliminates qualifying personal liability; it does not necessarily erase accurate public records or rental history.
Can You Stay in Your Current Apartment After Filing Bankruptcy?
Filing bankruptcy does not automatically require a tenant to move.
A tenant who is current on rent and complying with the lease can often remain in the property. The lease and any security deposit must still be properly disclosed in the bankruptcy paperwork.
The analysis becomes more complicated when the tenant is behind on rent, has already received eviction papers, or is subject to a judgment for possession. Bankruptcy timing can be critical in those cases.
A tenant facing an active eviction should obtain legal advice immediately. Waiting until the scheduled lockout or removal date may sharply limit the available options.
Frequently Asked Questions
Can I rent an apartment immediately after Chapter 7 discharge?
Yes, you may apply immediately. Approval depends on the landlord’s standards, your current income, rental history, credit information, and other application factors.
Do apartments automatically reject people with bankruptcy?
Some rental companies have strict policies concerning recent bankruptcy, but there is no universal automatic-denial rule followed by every landlord.
Will a cosigner help me rent after bankruptcy?
A qualified cosigner may improve the application when the landlord accepts guarantors. The cosigner becomes legally responsible if the tenant fails to satisfy the lease.
Can a landlord charge double the normal security deposit?
For most residential rentals covered by New Jersey’s Security Deposit Law, the total security deposit generally cannot exceed one and one-half times the monthly rent.
Can I dispute an incorrect tenant screening report?
Yes. An applicant who receives an adverse-action notice should request the report, review it, and dispute inaccurate or outdated information with the screening company.
Will bankruptcy erase an eviction from my record?
Not necessarily. Bankruptcy may discharge qualifying rent or damage claims, but it does not automatically remove accurate eviction court records or rental history.
Should I apply for an apartment before filing bankruptcy?
That depends on the urgency of the move, the landlord’s screening policies, your current debts, and the timing of the bankruptcy. Discuss the plan with a bankruptcy attorney before moving money or making large advance payments.
Speak With a New Jersey Bankruptcy Attorney Before You File
Concerns about future housing should not automatically prevent someone from considering bankruptcy.
The better approach is to evaluate the housing plan before filing, correct inaccurate credit information, protect available funds, and understand how the bankruptcy may affect an existing or future lease.
Brenner, Spiller & Archer helps individuals and families evaluate Chapter 7 and Chapter 13 bankruptcy throughout New Jersey, including Camden County, Burlington County, Gloucester County, Cumberland County, Monmouth County, and surrounding communities.
To discuss your financial situation and housing concerns, call 856-963-5000 to schedule a free initial consultation with one of our New Jersey bankruptcy attorneys.
This article provides general information and is not legal advice. Bankruptcy and landlord-tenant outcomes depend on the specific facts of each case.