This may not seem to make sense, but stick with us, and it will…

In March, we began learning about this dangerous virus that could potentially sweep the nation. As we moved into April and May, many businesses began shutting down. They were able to apply for federal and state relief, and this allowed many of them to continue to pay workers. But many millions of Americans found themselves unemployed. Many of those folks applied for and received unemployment benefits, but that amount was often not enough to keep up with their monthly bills.

Our business, however – helping people navigate bankruptcy – seemed to drop off. Here’s what happened:

In addition to receiving unemployment (and for those lucky enough to still receive some sort of pay from their employers) as many as 160 million Americans received some of the $270 billion paid out by the Treasury Department. This was coupled with an increase in the average unemployment payment, to an average of $600 per week.

But a recent article in the New York Times warns of the pain that’s soon to come.

Those relief payments are scheduled to end this month. The nation’s largest banks, which fund much of the nearly $14.3 trillion Americans carry in debt (in the form of credit cards, car loans, student loans, mortgages, etc.) are currently stockpiling cash in anticipation of the billions of dollars we’re expected to default on when the rent finally comes due.

Which brings us to something folks rarely consider: Will bankruptcy help me if I rent my home?

Many look at bankruptcy as a negative mark. They assume that it means you can’t handle your bills. And they assume that it only helps those who own homes or have a lot of tangible assets.

But bankruptcy, as we talked about many months ago, is an opportunity to get a clean slate. It’s an opportunity to regroup and try to get a handle on your debt.

And here’s how it impacts your status as a renter:

First, filing for bankruptcy can save you from being evicted from your rental home or apartment. Generally speaking, your landlord must obtain a “judgment for possession” before you are evicted.  You will receive notice of the court proceeding, usually called an “Unlawful Detainer”, so it is important to be proactive. If you’ve gone to court and the judgement goes against you, it’s likely too late.

Secondly, a restructuring type of bankruptcy can provide a means to repay the past due rent payments. A liquidation type bankruptcy can buy some time to work with your landlord and generally will discharge the past due payment. Either way, you have options you can discuss with an experienced bankruptcy attorney.

Lastly, this process will not ruin your chances of ever again renting a home or apartment.

Admittedly, filing for bankruptcy impacts your credit history. But as we’ve told countless clients through the years, this mark on your credit has a finite life, and most lenders find a consistent payment history as valuable (if not more valuable) as a blemish-free report. If you declared bankruptcy 5 years ago and have met every payment benchmark in the months since, you’ve done well to prove yourself a good risk. A future landlord may ask for a larger security deposit while you’re undergoing bankruptcy, or impose stricter lease terms because of an existing bankruptcy, but it’s not an automatic barrier to future rentals.

Most of the folks that we’ve helped have found themselves in troublesome debt through no fault of their own. They became saddled with unexpected medical bills. They may have lost an income-earning spouse. A nationwide pandemic that caused you to lose your job is no different, and not something that you can control.

We can help you harness to tools to get you through to the other side.