Renting accommodation can be tricky at the best of times.  It is hard to find a property that you like, that is within your budget, and that suits your needs.  Then comes the part of raising the deposit, which can be about equal to 3 months rent.  If you are thinking about renting after bankruptcy and foreclosure, you will find the whole process even more difficult.

Personal bankruptcy can come in two different forms; either a liquidation of your assets to pay off creditors a portion of what is due to them, or a reorganization of your debts that allows you to pay off 0-100% of them over a period of 3-5 years.  There are many advantages to bankruptcy as it can provide you with an automatic stay to protect you from harassing creditors, collections, and wage garnishment.  It can also help you clear any dischargeable debts and/or help you consolidate your payments into something more manageable.  However, bankruptcy also has many negatives that come with it.  While it may provide you with a clean financial slate, bankruptcy will appear on your credit history for up to 10 years.  This causes your credit score to drop significantly.  As a result, you will find it difficult if not impossible to qualify for home mortgages or loans.  Renting after bankruptcy will also be much more difficult.

Foreclosure is the legal process of a lending institution, such as a bank mortgage company or other lien holder, taking possession of a mortgaged property when payments on it have not been made.  Unemployment, divorce, illness, and even death are among the many reasons that people fail to pay their mortgage, and unfortunately there are approximately 4.8million homes that are facing foreclosure in the U.S. right now.  Foreclosure does not happen immediately after you fail to make a mortgage payment as there is a strict procedure that must be followed.

After being delinquent on your payment for 3 months, you will receive a Notice of Default and then have 35 days to pay the amount in full or the foreclosure proceedings will start.  Once you have been served with a Summons and a Complaint, you will have to file an answer within 20 days.  This just acknowledges your receipt of the summons and shows the court you understand what is occurring.  At this point you have the Right of Redemption with provides you with a 90 day grace period in which to pay the amount due in full.  If you have still not managed to come up with the funds at the end of this period, you can be evicted within 48 hours and your house will be listed for sale.  It will take 30-45 from the advertising date for the sale to be scheduled, at which point your house will be sold to the highest bidder.  An important thing to note about foreclosure is that if the sale price is less than the amount owed to the lender, you may be held responsible for the difference.  At the end of the foreclosure process, a note will be added to your credit history and it will remain there fore at least 7 years.  It is very damaging as it will reduce your credit score by 200-300 points, making renting after foreclosure very difficult.

If you have recently filed for bankruptcy or had your house foreclosed upon, you will not find renting accommodation very easy.  This is due to the fact that landlords use your credit score to determine if you are a safe risk or not.  If your credit report indicates that you have been bankrupt or your house has been foreclosed upon, landlords may see you as being a difficult tenant and be unsure about renting accommodation to you.

First of all, you should work towards improving your credit, which will ultimately help you look better in the eyes of your future landlord.  You can do this by getting a couple of credit cards and making sure you only use a maximum of 40% of the limit given to you.  Whether they are secured or unsecured cards is not important, but you should make sure that they report to all three credit bureaus as that is what your credit score is based on.  Don’t forget to pay them off in-full and on-time to increase your credit score.  Applying for small personal loans and paying them off will also help to raise your score.

Raising your credit score can take a couple of years and if you need to rent property soon after bankruptcy or foreclosure, it may be best to try changing your search criteria.  Look for properties that are not in the most sought-after areas and start looking at smaller complexes that are not run by large property management companies, but perhaps independent landlords who may be more sympathetic to your situation.  It will also help if you can offer the landlord some security.  Landlords may overlook your credit history if you can provide them with a cash deposit, or offer a co-signer to ensure they will receive their money.

Renting after bankruptcy and foreclosure can be a difficult process, especially if you need to do it before your credit rating has had time to recover.  However, it is not impossible and with a little determination and flexibility, you may still be able to find the rental property of your dreams.  Remember that there are many property management companies that specialize in dealing with people who have filed for bankruptcy and suffered foreclosure.  They may be able to provide expert advice and help you with the financial aspect of renting after bankruptcy.

To find out if the personal bankruptcy process is right for you, consider filling out our free bankruptcy evaluation.