The New York Times ran a disturbing article in mid-April that investigated the cost of apartment rents in cities throughout the United States. The authors ranked U.S. cities by median rent as a share of median income. The good news, sort of, is that New York City only placed tenth at 39.5 percent. It was only 23 percent in 2000. Number one was Los Angeles, whose median income residents would pay a shocking 47 percent for the median rent. As a general rule, the experts say that renters shouldn’t pay more than 30 percent of their gross income on housing, but often they don’t have much of a choice if it means moving to a more remote or less safe neighborhood. Unfortunately, as housing costs have risen, median incomes have declined.
There’s a chance that these trends will lead to another housing bust, and some people may have to search for rental housing during or after bankruptcy. The question is how hard is this? The answer depends on a few factors, but a bankruptcy filing on a credit report usually won’t make it impossible for would-be tenants to find apartments.
For debtors in a chapter 7 bankruptcy, landlords often won’t extend leases to tenants until the discharge order has been entered. This means that a lease can be signed between a discharge and the closure of a case, which occurs later. Debtors in an ongoing chapter 13 case will probably have to offer landlords evidence that they are making the payments on a timely basis.
Once debtors are out of bankruptcy, the usual rules to finding an apartment apply. The higher the debtor’s income, credit score, and savings are, the better the terms will be. The current income, especially in a payroll job in town will often be enough for landlords to see past a past bankruptcy. Again, the 30 percent rule applies. Sometimes landlords will require debtors to post more than first month’s rent and a security deposit, like the last month’s rent as well, or find someone to co-sign the lease.
Ultimately, a bankruptcy is one factor among many that landlords look at when renting. The better the debtor’s reasons for filing bankruptcy the easier it will be to explain to an owner. Certainly, hiring an experienced New York bankruptcy lawyer to streamline your case and avoiding easy traps will make financial decisions subsequent to bankruptcy much easier. Hopefully instead of more bankruptcies, rents will go down and incomes will go up again.
For answers to more questions about renting after bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced bankruptcy attorney in Brooklyn Bruce Weiner for a free initial consultation.
