Tenant application foreclosure plus credit cards

[Sam Leon]

Have a tenant applicant and even the showing went really well and he seems really mature and responsible, the credit report looks strange.

i know many people are doing short sales and foreclosures from being upside down and I don't want to get into the whether foreclosure is a sign of someone not meeting their financial obligations argument here.  He warned me that his credit will be suspect due to the foreclosure.

but in addition to the foreclosures, I used plural here because he had a second mortgage, he had six credit cards he maxed out on, five of them are closed, one remains active.  All six have a balance exceeding the credit limit.  On average of $8000 balance on each card.  Every card was "account closed by credit grantor" with an unpaid balance in 2019.  So in credit cards he has 40k of closed accounts with unpaid balance and another 8000 unpaid balance on an active card.

his explanation is he was trying to save his house by filing bankruptcy so he maxed out his credit cards prior.  The bankruptcy never went through because foreclosure happened sooner.

my understanding is these credit card debts will not disappear they will be sent to collections agencies eventually correct?

then he will be faced with the decision to pay rent or pay the collection agencies?

the credit report only count the open credit card balance as a risk and dismiss the closed accounts because it's not active.

Thoughts?  Pass?

[John Underwood]

I would keep looking for a better applicant.