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Is it possible to get an apartment in New York City if I just filed for bankruptcy? I have more disposable income now that I'm not buried in credit card debt, but I'm afraid that my bankruptcy will be a red flag for landlords. I've never had an eviction and I've always paid my rent on time.
It's difficult, but by no means impossible to rent an apartment after you've filed for bankruptcy. You may want to wait until your finances are in a better place before you start looking, but at the very least, you'll want to make sure you're presenting the best case for yourself to a prospective landlord, our experts say.
"If you've just filed for bankruptcy and not had a period of time to establish a new financial pattern, I'd hold off on applying for a rental apartment for now," says Gordon Roberts of Sotheby's International Realty. "Better to form a plan and concentrate on the next step of your financial 'rehab.'"
If you have to move ASAP, this is when a short-term sublet might be a better bet than trying to get a new lease with a landlord.
Roberts suggests giving yourself time to re-establish good credit by creating a paper trail of steady, on-time payments.
"Take that 'extra' disposable income, set aside cash, and pump up your savings," says Roberts. Additionally, "Try to get a credit card, no matter how lousy the terms, Use it sparingly, and pay in full and on time every month."
Even after you take those steps, you will likely have to calm your prospective landlord or management company's fears.
"You'll need to be prepared with information that they may either ask for, or which will help them decide in your favor. That would include being transparent about the bankruptcy and explaining the events that led to that course of action," says Roberts. "Demonstrate that it was a one-time thing, and you've learned your lesson (your post-bankruptcy record should attest to that). Accentuate the positive, especially if you've been with the same employer for a number of years. Get a bland employer's letter confirming your satisfactory employment."
You also might want to include a letter from a former landlord attesting to the fact that you're a good tenant and pay on time. "A good landlord reference may minimize some of the requirements or at least help the deal get done," says Fernando Morais, an agent with Triplemint.
As you search for a place, make sure you're not barking up the wrong tree and applying to apartments you have no chance of getting.
"You can gather quite a bit of intelligence on your own," says Roberts, "such as searching rental listings online, and calling to see if your financial history would disqualify you as an applicant. Some large, well-established residential rental buildings may have longstanding, inflexible requirements," Roberts says. On the other hand, an apartment "managed by an owner/landlord may also be more sympathetic to your situation and willing to take a chance."
If you have a particular neighborhood in mind, you can reach out to a broker who specializes in the area and ask them directly which buildings might work for you, he says.
Of course, money talks too.
"In face of this situation landlords will work with a couple of options, if not both," says Morais. These include requiring a strong guarantor who will be responsible for the lease you default, and/or requiring extra security deposit. "The usual is one month of rent as security deposit, but I have seen similar situations where the landlord asked for six months of rent as security deposit."
And if you don't have someone within the tri-state area willing to be your guarantor, you can pay for an institutional guarantor instead, who will act as your guarantor. "Any landlords that do accept the renter will require significant additional cash security or the guaranty by an institutional guarantor," says Jeffrey Geller, vice chairman and chief operating officer of Insurent, a Brick Underground sponsor.