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Getting an apartment after a bankruptcy

Dear Dr. Don,

I went through a divorce two years ago and was left with a large amount of credit card debt. Over the past two years I have been doing my best to pay it off and have NEVER been late. I even moved back home with my parents and allocated all of my income toward repaying the debt.

I eventually came to the realization that I would never get out from under the debt. I have to move out in July, and there is no way possible to do that without eliminating the debt, so I did by filing for bankruptcy. Now my friend and I have been apartment hunting and we are having a hard time getting one because of my bankruptcy filing. What can I do? Why can't we just put it in her name? Would it be possible for my parents to co-sign for me in this situation? -- Anonymous Angst

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Dear Anonymous,
I understand and respect the sacrifices you made in attempting to repay your outstanding credit card debts. Never being late with a payment up until the point when you file for bankruptcy, however, doesn't carry much weight when a landlord reviews your credit history.

Illness, loss of a job and divorce are the big three when it comes down to which factors trigger a personal bankruptcy filing. Divorce can be the trickiest to navigate through because of the joint marital credit obligations and the creditors not having to abide by the allocation of debt decided in the divorce decree.

You'll have much better luck finding a place that will rent to you if your friend puts the apartment in just her name or your parents agree to co-sign the lease agreement, assuming your friend and your parents both have good credit. If your friend puts the lease in just her name she's ultimately responsible for the entire lease payment. If I were her, I'd prefer that your parents co-sign.

If your parents agree to co-sign, they should make sure that it isn't a continuing agreement -- meaning that any lease renewals require them to reaffirm their status as a co-signer and any assignment of the lease to a roommate other than you doesn't carry with it their obligation to pay the new person's rent. If your parents go this route, they should have their attorney review the lease agreement. (You should pay the attorney's fee.)

Bankrate.com's corrections policy
-- Posted: June 22, 2005
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