Filing for bankruptcy can have significant impacts on the future of your finances. Depending on which chapter you file, this will remain on your credit report for at least seven years. As such, creditors will see this, and it can impact your ability to take out loans or rent. While bankruptcy can make obtaining approval more difficult, it does not legally prevent you from renting an apartment. The following blog explores what you must know about trying to rent an apartment following a bankruptcy case and how a Memphis, TN consumer bankruptcy lawyer can assist you during these challenging and confusing times.
Can You Legally Rent an Apartment After Bankruptcy in Tennessee?
Bankruptcy does not prohibit a filer from entering a residential lease, as there is no federal or Tennessee law that bars someone from renting, simply because they filed Chapter 7 or Chapter 13. However, landlords do have the ability to screen tenants to determine their risk.
Important Legal Considerations
- Bankruptcy does not make it illegal to rent housing
- Landlords in TN may review credit reports before approving a lease applicant
- Chapter 7 and Chapter 13 bankruptcies will appear for different lengths of time on a credit report
- Pending bankruptcy cases can raise additional concerns for landlords and property management companies
- Rental approval is based on overall applicant risk, not solely on bankruptcy
How Does Bankruptcy Appear on Credit Reports?
As mentioned, a bankruptcy filing will appear on your credit history and can ultimately impact how landlords analyze your financial reliability and the likelihood that you will make on-time rent payments.
Chapter 7 vs. Chapter 13 Reporting Periods
- Bankruptcy reporting begins the day you file your petition with the court
- Chapter 7 typically remains on a credit report for 10 years
- Chapter 13 typically remains on a credit report for 7 years
- Landlords will generally review overall payment trends, not just a bankruptcy filing
What Landlords Actually See
- The date the petition was filed
- The date debts were discharged
- Public record entry
- Payment patterns before and after filing
What Tennessee Landlords Consider Beyond Bankruptcy
Under Tennessee law, landlords have broad discretion when it comes to screening applicants, provided they do not violate federal or state fair housing protections. Most landlords weigh several factors when screening applicants for rental units and properties. Bankruptcy is only one element they will consider when determining whether or not to approve an applicant. Other factors landlords will examine include income verification, rental history, prior evictions, and credit history.
Income and Employment Stability
- Length of current employment
- Stability since filing for bankruptcy
- Income-to-rent ratio
- Full vs. part-time employment status
Rental History
- Prior evictions
- Lease violations
- Prior landlord references
- Late rent payments
Debt Incurred Post-Filing
- Debt incurred after a Chapter 7 filing is your responsibility
- Post-filing debt obligations are not subject to discharge during bankruptcy
- Demonstrating the ability to make on-time payments can serve as reassurance for landlords
Renting During an Active Bankruptcy Case
For residents in Memphis and the surrounding Shelby County communities, bankruptcy cases typically proceed through the United States Bankruptcy Court for the Western District of Tennessee. Because filings are public records in that court, they will generally appear on a background check when the landlord conducts a tenant screening. As such, an active case may make a landlord more hesitant to approve an application.
Chapter 13 Considerations
- Chapter 13 requires court approval for certain new debts
- Some landlords may hesitate to approve an applicant with an open bankruptcy case due to the complex approval procedures
- The trustee is responsible for ensuring repayment plan compliance
- New lease obligations during an open bankruptcy case are generally allowed but typically require disclosure
Chapter 7 Considerations
- No repayment plan oversight
- Debt after filing is solely your responsibility
- Debt discharge can actually reduce overall debt burdens
Strategies to Improve Chances of Renting Post-Bankruptcy
In the event you are looking to rent an apartment, unit, home, or other form of residential housing, understanding the steps you can take to increase your chances of a positive outcome is critical.
Actionable Steps
- Provide proof of stable income
- Offer a larger security deposit when possible
- Submit written, positive references from prior landlords
- Be honest and open about your reasons for filing bankruptcy
- Establish a consistent and on-time payment history after discharge
- Consider asking a trusted friend or family member to co-sign or act as a guarantor
Private Landlords vs. Large Property Management Companies
- Private owners often exercise more discretion
- Property management companies may use automatic screening processes
- Smaller or private landlords may be more willing to take explanations and references into consideration when screening applicants
Contact an Experienced Memphis Bankruptcy Attorney Today
At the Arnold Law Firm, our dedicated team understands how difficult dealing with the aftermath of bankruptcy can be. That’s why we prioritize helping you through these challenging times so you can focus on what matters most. Contact us today to learn how we can assist you during these complex legal matters.
