A couple years ago I wrote about the rental housing crisis in New York City. The New York Times investigated apartment rents throughout the country and found that for NYC, the median rent as a share of median income was 39.5 percent. The recommended ratio for tenants is 30 percent. This didn’t mean the median renter paid the median rent; some pay less and some pay more—which is the problem. The NYT recently ran an opinion piece by a Harvard sociologist who researches people living below the poverty line and pay more than 70 percent of their incomes on rent, despite living in squalid conditions. These tenants are a high eviction risk, so their plight can help illustrate what New York bankruptcy can do for renters.
First, to briefly summarize the sociologist’s article, renting to poor people is a counterintuitively profitable business. The Milwaukee, Wis., trailer-park landlord makes roughly $447,000 annually—roughly 30 times the federal minimum wage—renting accommodations that municipal authorities referred to as “an environmental biohazard.” Landlords can reduce rents by renting to the poor but reduce costs even more, making a higher profit. The reason tenants still pay high rents, according to the sociologist, is insufficient spending on housing for the poor. Only one-quarter who qualify get government aid, giving the unlucky ones no alternatives but to pay all their government aid to landlords. All this leads the author to recommend housing vouchers for all, a program that would cost much less than homeowner tax deductions. The sociologist also criticized bank overdraft fees, payday lending, and even government loans to students attending for-profit colleges as designed to immiserate the poor.
The NYT opinion piece can be found here.
New York is too dense for the kind of trailer parks found around Milwaukee, but undoubtedly many New Yorkers pay very high proportions of their incomes in rent and it enables their landlords to get away with violations. In some ways one might think people prefer mortgage companies to landlords, even if they face foreclosure sometimes. However, bankruptcy can benefit tenants.
For one, the automatic stay will prevent an eviction if the bankruptcy is filed before the court enters the eviction order. Even debtors who are about to be evicted might be able to cure their rent deficiency if their leases allow it. Sometimes they can deposit this money with the bankruptcy court. Bankruptcy can also stay a landlord’s collection efforts. More on the automatic stay for renters here.
Debtors in bankruptcy will have better luck signing a lease with a landlord after they’ve received a discharge order. Debtors in chapter 13 will probably encounter fewer difficulties negotiating with landlords, particularly if they demonstrate that they are making their required plan payments on a timely basis.
As with homeowners, the further you are from eviction, the more talking to an experienced New York bankruptcy lawyer can help you stay in your home.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with eviction, and protecting your assets in bankruptcy please feel free to contact experienced bankruptcy automatic stay Bruce Weiner for a free initial consultation.
