Should a landlord rent to a tenant that claims they are about to file bankruptcy?
prospective tenant is about to bail on the home they own. They have stated they will file for BK after they rent and walks away from their current residence, which they own and are underwater on.
any comments?
Here they are, telling you how dishonest and despicable they are and they are perfectly willing to screw other people out of money they have no right to be keeping. This should be a no-brainer. you do not want to have them inside your property. You will be their next victim, they are without morals and ethics, that isn’t going to change.
September 6th, 2010 at 5:06 pmI would recommend a VERY large deposit. Their credit is ALREADY ruined, so what is their incentive to NOT stiff you???
September 6th, 2010 at 5:06 pmpersonally I wouldn’t touch them with a barge pole – aren’t alarm bells ringing in your head over this? Go with your gut feeling, let them be somebody else’s problem.
September 6th, 2010 at 5:06 pmNot on your life.
Deadbeat waiting to become YOUR eviction problem.
September 6th, 2010 at 5:06 pmYeah, it’s happening to a lot of people and it’s not all their fault. True, some were greedy and took advantage of the soaring home values but others just got trapped and squeezed. I think you have to go with how you feel about the people. Do they seem honest? He is being upfront about his finances and filing BK will free up cash so they won’t be missing rent. I’d maybe try to get 3-6 months upfront if possible. Just say ‘hey, you can’t pass a credit check so I need a little reassurance…’
September 6th, 2010 at 5:06 pmI would only consider a short term lease (90 days or less) as the Bankruptcy court has the power to reduce the rent irregardless of your lease agreement . Make sure to get a decent deposit and be there to collect the rent when it is due.
September 6th, 2010 at 5:06 pmIt’s your call.
September 6th, 2010 at 5:06 pmI’d want to know a lot MORE of what would normally NOT be my business before renting to them.
Have they filed for bankruptcy before? What is the cause/trigger of the bk? What’s the $$ amount?
Is it just house debt or lots of credit card debt, etc.
On the plus side, they told you this up front. On the negative side, they told you this up front because they don’t think it matters, it doesn’t bother them. . . . . . .
I’d want the largest deposit law permits in your state, plus first and last month rent. They can come up with this because they’re not paying their mortgage or current living expenses.
And know that the BK court can undo the lease or redo the lease or claw back the security deposit in some cases.
Never assume the troubles of another when you can avoid it.
People here have advised you to demand a larger security deposit or advance rent. O.K. You do that and the Bankruptcy Court determines you demanded excessive amounts of money. So, you have to release that money to the Court so other creditors can be paid. Now you have more exposure than you may want.
These prospective tenants have decided to walk away. So, they are about to taste blood. Who says they won’t taste more blood by stiffing you on the rent?
If I were you I’d avoid this and not rent to these people.
September 6th, 2010 at 5:06 pmask for first month’s rent, last month’s rent and security deposit and require a 12 month signed lease and ask to see RECENT pays tubs – if they don;t make at least 3 times the monthly rent, they can’t afford the rent
– if they don’t have that much cash, don;t rent to them
September 6th, 2010 at 5:06 pmYou run a business, so you need to understand that good credit is a predictor of good and timely future payments. However, the economy has taken some serious hits lately and this has impacted otherwise responsible people. These folks are losing their home in a horrific housing crisis wherein homes were grossly over-valued and people are now having to choose between carrying negative equity, or gaining a fresh financial start through bankruptcy. I think you should ask for references and give these folks a chance. They cannot discharge any debt incurred after their bankruptcy filing, and after their filing, they cannot file a chapter 7 bankruptcy for 8 years. Like any tenant, if they do not pay you, you can always move to evict.
Best of luck.
Daren A. Webber
September 6th, 2010 at 5:06 pm