Potential tenant considering bankruptcy in Baltimore Maryland

[Kim Coleman]

Hello Bigger Pockets community!

So I'm in the process of vetting tenants for my Baltimore rental.  Here's the scenario - military applicant with 6x rent in verifiable income, no evictions, no criminal record, decent credit with high balances and a 2 late payments in the last year, nothing currently late, waiting on previous landlord  rental history verification.  There is a case from tenant holdover court from 2012 for current residence, but case was dismissed.  No fillings for late payment of rent prior to or after that filing.   

Here's what's concerning me: This applicant wrote a letter to explain late payments on their credit report and stated in the letter they are going through a divorce from a person who was chronically unemployed which created the need to live off credit cards and this person is not paying their debts on the joint accounts.  Fine.  But then the letter says these debts may cause the applicant to loose their security clearance (military) and therefore the applicant has hired an attorney to file bankruptcy.  The bankruptcy appears to me as a major red flag.  Should the tenant move in and stop paying me, I would become a creditor and could get discharged (or so I understand).  I'm not familiar with Maryland or Baltimore laws when a tenant files for bankruptcy.  HELP! Would you rent to this person? What is the worst case scenario? What other questions should I be asking? 

Thanks in advance for all those in this community who help each other out all the time. I did some searches and gained a little info but didn't see anything particular to Baltimore or Maryland. I hope this helps someone else out there one day too.

[Account Closed]

Originally posted by @Kim Coleman:

Hello Bigger Pockets community!

So I'm in the process of vetting tenants for my Baltimore rental.  Here's the scenario - military applicant with 6x rent in verifiable income, no evictions, no criminal record, decent credit with high balances and a 2 late payments in the last year, nothing currently late, waiting on previous landlord  rental history verification.  There is a case from tenant holdover court from 2012 for current residence, but case was dismissed.  No fillings for late payment of rent prior to or after that filing.   

Here's what's concerning me: This applicant wrote a letter to explain late payments on their credit report and stated in the letter they are going through a divorce from a person who was chronically unemployed which created the need to live off credit cards and this person is not paying their debts on the joint accounts.  Fine.  But then the letter says these debts may cause the applicant to loose their security clearance (military) and therefore the applicant has hired an attorney to file bankruptcy.  The bankruptcy appears to me as a major red flag.  Should the tenant move in and stop paying me, I would become a creditor and could get discharged (or so I understand).  I'm not familiar with Maryland or Baltimore laws when a tenant files for bankruptcy.  HELP! Would you rent to this person? What is the worst case scenario? What other questions should I be asking? 

Thanks in advance for all those in this community who help each other out all the time. I did some searches and gained a little info but didn't see anything particular to Baltimore or Maryland. I hope this helps someone else out there one day too.

 Kim, the answer is NOOOOOOOOOO!!!!!!!!!!!

Just boil it down to the facts, and put aside your love of the military - which I do, too :-)

Bad credit.  2 late pays in the last year IS current late pays.  Credit maxed out, so there is no way the score is any good.

Person going through divorce - always avoid anyone going through a divorce or recently divorced by whatever means you can get away with - every time.  They never stay long (meaning they usually break their lease or only stay a couple months if it's month to month) and there is usually drama with the ex.  

Who gives a rats patootie if the guy loses his security clearance - which has nothing to do with his application and everything to do with him trying to get you to care about him, because he's a soldier. 

Remember, this is not an excuse contest.  You do not care why his credit is in the toilet.  All you care about is the fact that it is in the toilet.

You have an applicant about to file bankruptcy.  Whichever version he is approved for - Chapter 13 or 7, he will have many months or even a year to add someone new to it.  In other words, he can add what he owes to you in it.

A tenant who has been to holdover court, has screwed over his landlord.  Sure, they worked out a deal afterwards.  Just because it was dismissed - doesn't mean he wasn't guilty.  It means they settled out of court.

There are so many red flags here, I'm going blind.

And bless his little heart, he also made sure you know he has a lawyer.  Fortunately, the fact that he wrote you a letter of excuses, hoping you will be willing to enter him into an excuse contest - only shows that the lawyer has told him he's not likely to find anyone to rent to him, and his best hope is to write a letter that will - hopefully - tug at the heartstrings of some extremely naive, but patriotic, landlord.

Pick your reason to deny him.  The easiest one would be to just say that he doesn't meet your criteria based on credit.   No need to be any more specific than that.