Applicant Bankruptcy
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Applicant Bankruptcy (by JesseL3 [VA]) Nov 29, 2023 1:11 PM
       Applicant Bankruptcy (by plenty [MO]) Nov 29, 2023 1:15 PM
       Applicant Bankruptcy (by Ray-N-Pa [PA]) Nov 29, 2023 1:26 PM
       Applicant Bankruptcy (by Sisco [MO]) Nov 29, 2023 3:15 PM
       Applicant Bankruptcy (by JesseL3 [VA]) Nov 29, 2023 4:42 PM
       Applicant Bankruptcy (by 6x6 [TN]) Nov 29, 2023 7:39 PM
       Applicant Bankruptcy (by DJ [VA]) Nov 29, 2023 8:48 PM
       Applicant Bankruptcy (by JesseL3 [VA]) Nov 30, 2023 6:45 AM
       Applicant Bankruptcy (by S i d [MO]) Nov 30, 2023 8:18 AM
       Applicant Bankruptcy (by JesseL3 [VA]) Nov 30, 2023 2:41 PM
       Applicant Bankruptcy (by Eddie [KY]) Nov 30, 2023 5:59 PM

Applicant Bankruptcy (by JesseL3 [VA]) Posted on: Nov 29, 2023 1:11 PM

It doesn't come up often, but my son asked how we should handle an applicant that recently filed for bankruptcy protection. I'm thinking of the following: Cpt. 7 - if within the past 5 years, no. Cpt. 13 if within 2 years, no; after that time frame, we'd need to see how they have been paying into the BK plan. If on time payments, fine. If not, no.

My son wants to computerize (we use Buildium as our PM software) the decision making process and this topic would potentially require a set of eyeballs on the application. Which is fine if we are getting a good resident.

I'd love to hear your thoughts. --73.40.xx.xx

Applicant Bankruptcy (by plenty [MO]) Posted on: Nov 29, 2023 1:15 PM

I usually accept BK if it's closed. And they can provide that letter. So no other creditors can be added. Following.

Applicant Bankruptcy (by Ray-N-Pa [PA]) Posted on: Nov 29, 2023 1:26 PM

Are you asking a real estate investor or a property manager?

What do I mean?

If someone just filed for a Chapter 13 and they own a house - do you as a manager think they are able to prevent washing out? But as a real estate investor, I see Sub2 investment possibilities.

In a sub2 deal though, don't ever keep the folks who previously owned the place in the same house. They must move out. Don't be that real estate investor in front of the judge for an eviction that is trying to explain sub2 with the previous owner getting booted out. You will not like the results.

Applicant Bankruptcy (by Sisco [MO]) Posted on: Nov 29, 2023 3:15 PM

I too have accepted previous BK. I won’t in the future.

Is there a chance that I may pass on someone who would keep their agreements? Yes, there is that possibility. However, the track record of someone who files BK is that they will fall behind, and instead of finding a way to pay, they focus on getting out from under the agreement that they made.

What is the upside of dealing with such people?

Applicant Bankruptcy (by JesseL3 [VA]) Posted on: Nov 29, 2023 4:42 PM

This is for use as a decision tree kind of system. If this, then that.

If the BK is discharged because it has been paid out (Chpt. 13) I'm normally fine with them as it speaks to a persons character in some small way.

Chpt. 7 is sometimes the only alternative for those with insurmountable medical debts, etc. For those folks, there needs to be some time after the discharge for them to reestablish credit.

And I hear ya! In a great county such as the USA, the BK laws are such that an unsecured creditor such as us have to accept $0.01 on the dollar that is rightfully owed to us for back rent, fees, damages, etc. That's just not right.

Thank you all for your insight. So far, it seems we'll stick with our current ITTT: Bankruptcy = no if within the last 5 years.

Anyone else care to weigh in?


Applicant Bankruptcy (by 6x6 [TN]) Posted on: Nov 29, 2023 7:39 PM

I see people filling BK as irresponsible.

Applicant Bankruptcy (by DJ [VA]) Posted on: Nov 29, 2023 8:48 PM

Can't you file for bankruptcy again after 7 years?

If that's true, the person who filed over 5 years ago could be just about ready to file again - and include you.

Applicant Bankruptcy (by JesseL3 [VA]) Posted on: Nov 30, 2023 6:45 AM

6x6 - There are certainly people out there that are irresponsible, but certainly not all who file BK are. Over the many decades I've been in the real estate industry (investor, landlord, mortgage broker, realtor, property manager, developer and author) I've run into many people that a BK was their only way to get themselves back on solid financial ground. One such couple for about 15 years ago was doing fine up until the husband had an freak accident happen while helping a friend and was out of work for many months. Their two income household went to a one income household. They sold many of their personal belongings including their house and moved in with family while the husband was going through rehab. Unfortunately, it wasn't enough. They chose Chpt. 13, repaid a large percentage of their debts and needed time after the 13 had ended to be in a position to buy another home. They moved in first as renters and after about 2 1/2 years, bought the home.

Many are embarrassed to have found themselves in a position to even have to take BK.

Unfortunately, there are others that don't see it that way. It's someone elses fault that they can't make ends meet. Never occurring to them that it was their fault for not using credit wisely.

It's a tough call for sure.

And yes, DJ, there is a time frame that allows someone to refile for BK protection after being discharged. I am not sure what that is, but the time frame you mentioned sounds about right. And they certainly can refile, but then again, so can someone who hasn't filed before.

We always look for the applicant that has more income than necessary to qualify and great credit. And since there are those deserving of a second chance people out there, I'm wondering if there is a way anyone on the forum has found to be more reliable over the years than not when reviewing an applicant with a BK.

And, heck, there may not be...

Thank you ALL for your insights!


Applicant Bankruptcy (by S i d [MO]) Posted on: Nov 30, 2023 8:18 AM


I can see you've gotten a lot of good advice, and perhaps you've already made your decision, which is fine. But I do want to push back a little on something you said... for the purposes of providing thoughtful dialogue.

You wrote:

"certainly people out there that are irresponsible, but certainly not all who file BK are"

Then you proceeded to tell the story of a man who lost his work do to a freak accident and how their debts overwhelmed them.

Now... we certainly don't blame people for having freak accidents or illness. Stuff happens, right?

But, there was DEBT involved that overwhelemed them.

Who took out that debt?

What was the debt for?

Why did they build their financial life as a house of cards that would come crashing down without his income?

I think he was much more to blame for that aspect than you give him credit for. Debt is not a requirement. Debt is a choice. When a person doesn't have the money needed now, they have to decide: what level of risk do I accept? There is ALWAYS risk with debt. Doesn't matter if it's so-called "good debt" or "bad debt." Debt doesn't care if it's good or bad. All it cares about is being repaid.

Did this man have unemployment insurance? Why not?

Did they have the necessary assets to sell to repay? Why not?

To be clear, I don't berate people when they screw up. I've screwed up too. But step 1 in preventing FUTURE screw ups in fully acknowledging and accepting responsibility for my part in the screw up. So with that in mind...

The first thing I'd do when evaluating a previously bankrupt applicant is check the credit report. If I see them racking up debt again, then it is clear they didn't learn their lesson the first time around. On the other hand, if they have cash in the bank, no debt, and can show me their certificate of completion of Dave Ramsey's Financial Peace University, THEN I will KNOW for a FACT that they took the lesson to heart and are probably worthy of consideration.

Hope that helps.


Applicant Bankruptcy (by JesseL3 [VA]) Posted on: Nov 30, 2023 2:41 PM

S i d

Ha! That's is almost verbatim what they said! They found they were living paycheck to paycheck and keeping up with the Jones.

The actually got themselves out of the BK faster and paid every creditor back in full after the husband recovered enough to go back to work full time.

The wife's comment to me was 'it was a humbling experience' and 'they were embarrassed to have had to do it'.

It's not often you find these types of folks.

I appreciate your insights as well. And we do pull credit reports for sure.


Applicant Bankruptcy (by Eddie [KY]) Posted on: Nov 30, 2023 5:59 PM

If chapter 7 is closed they can't file again for 7 years. Chapter 11 no because they might add you to the BK and convert to a chpt 7

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