How Should Tenants Manage Debt After a Rent Eviction?

Contrary to what many people might think, having debt after a rent eviction is quite normal. Many renters face financial difficulties after eviction, and debt is common among them. Eviction-related expenses such as unpaid rent, late fees, and legal fees can leave you with hefty bills. If you’re dealing with debt after an eviction, you’re not alone. 

How you handle these bills is what matters. After being evicted, there are effective strategies to manage your debt. When you have a strategy, you can take action, such as seeking assistance or debt relief, or increasing your income when feasible. Continue reading as we go over a few methods for managing eviction debt.

What Does Rent Eviction Debt Include? 

1. Unpaid Rent

Unpaid rent, or rent arrears, is defined as a past-due rental payment. It is generally classified as eviction-related debt and can be pursued by landlords both during and after the eviction process. Unpaid rent is subject to collection through various methods, including a breach-of-lease notice or a court order. 

If you are unable to pay the rent for your property after being evicted, the landlord may pursue legal remedies, such as filing a small claims lawsuit against you or using a debt collector. A reputable Harford County property management company can also help tenants understand how unpaid balances may affect future rental applications.

2. Late Fees

Most leases allow landlords to charge late rent fees. While the law does not require it, the lease must be reasonable and reflect any costs incurred by the landlord. There are many ways to confirm if you have an eviction. However, merely failing to pay a late fee isn’t grounds for one.

In places such as California and Oregon, late fees do not lead to immediate eviction. If a tenant does not pay the late fee, the landlord may deduct the unpaid late fee from the tenant’s security deposit or charge interest on it.

3. Legal Costs

It is common for legal fees associated with rent eviction cases to be classified as debt owed by tenants to landlords. For many tenants, these expenses arise from court filing fees, attorney fees, and other actions taken against them due to non-payment of rent.

Legal fees depend on jurisdiction, but can usually be collected by landlords through judgment. In addition, legal representation, discovery-related motions, or trials can result in significant increases in legal fees, which are paid by tenants under the indemnity provisions of their lease agreements.

How Should Tenants Manage Debt After an Eviction?

Start by assessing the eviction-related liability for unpaid rent, the tenant’s legal fees, damages, and additional expenses by using the final court ruling or settlement statement from the landlord. You should also make immediate contact with the former landlord to request an itemized list and consider making partial payments from your savings or security deposit. By doing this, you might find that the landlord’s willingness to be transparent provides an opportunity to reach a settlement before collection efforts. 

Talk with the landlord about proposing a payment plan and offer what you can afford each month. If they refuse, you should promptly respond to any collection letters that you receive from them. Doing so demonstrates to the landlord that you are acting in good faith. Although you may eventually have to deal with debt collection agencies or file a small claims lawsuit, negotiating directly with the landlord often results in successful settlements.

You can also apply for free debt advice from nonprofit organizations, such as Citizens Advice and Shelter, which provide breathing space schemes that can prohibit creditor action. In the United States, some state-specific options include tax refund offsets and bankruptcy, as well as prioritizing high-interest debts. Tight budgeting will prevent excessive expenses and free up more funds for additional payments.

Can Eviction-Related Debt Affect Credit Reports?

Unpaid eviction debt can affect your credit score. Eviction debts don’t always show up on credit reports. However, your landlord may send any outstanding debt to a collection agency. If a debt is recorded as early as 30 days past due and assigned to collections, collections activity may appear on your credit report and stay there for a maximum of seven years.

One important component of your credit score is your payment history. Your credit score may decline significantly if you were evicted for nonpayment of rent and your landlord sent the outstanding balance to collections.

Top 3 Ways Tenants Can Improve Their Rental Profile Over Time

1. Timely Rent Payments 

On-time payments indicate effective financial management and can improve your creditworthiness, making it easier to obtain future housing. Regularly making your rent payments on time over a 12- to 24-month period will help you establish a reliable history of responsibility, which can improve future screening scores when renting from landlords.

2. Keep Your Property in Good Condition

Be proactive about maintaining your property throughout the lease. Report any minor problems immediately, and keep the unit clean during inspection periods to receive glowing recommendations from your landlord. Take pictures and emails of your records as evidence to turn your regular tenancy into an asset in your portfolio that mitigates the negative impact of past problems, such as evictions.

3. Develop Evidence of Your Finances

Get consistent employment or other proof of income, which should be at least three times your monthly rent through regular bill payments, while building up your credit rating over time. After approximately six to twelve months of on-time payments, obtain a letter of recommendation from your employer or other creditors to indicate you have found stability and are competitive against renters with previous debt issues.

Final Thoughts 

Overcoming financial obstacles is a natural part of being human, and unpaid debt following eviction is no different. Even though this may be your current situation, it doesn’t have to permanently define who you are. You can better manage these negative impacts of financial troubles by acting early and seeking adaptable alternatives.

Keep in mind that it’s possible to repair your credit after repaying your eviction debt if you pay your bills on time, dispute reporting errors, and lower your credit utilization ratio. With all these, plus the strategies we’ve discussed above, you can manage your unpaid debt after eviction without any hassles.