Collecting Unpaid Rent from Evicted and Former Tenants: Strategies & Solutions
When a tenant skips out on rent and gets evicted, landlords are left with a double whammy: a vacant property and an unpaid bill. While collecting any debt comes with challenges, recovering past-due rent from evicted tenants presents a unique set of difficulties.
Why Evicted Tenants are Tough Collections:
As a seasoned collection agency with experience across diverse industries, we've found that collecting unpaid rent from evicted tenants often yields the lowest success rate. The reason boils down to a simple reality: financial hardship.
Eviction signifies financial instability: Eviction is often a clear indicator of financial instability. In most cases, being evicted signifies that the tenant is facing genuine financial difficulties. No one desires to be evicted and left without a home, and the average tenant will earnestly endeavor to pay their rent to avoid eviction. However, if a tenant is evicted despite their best efforts, it usually points to a significant lack of funds and severe financial hardship, leaving little room for landlords to recoup unpaid rent. However, it's important to exercise caution, as not all cases are straightforward. While rare, some individuals deliberately exploit the system, seeking to live rent-free for as long as possible. They hop from one property to another, intending never to pay rent until forced out by eviction. This underscores the critical importance of conducting thorough credit checks before leasing out a property. Such checks can help landlords identify potential red flags and avoid tenants with a history of similar behavior, thereby safeguarding their investments.
Limited leverage: Unlike other debts, we can't repossess a property to recoup losses. While security deposits might offer some cushion, they rarely cover the full amount owed.
Strategies for Collecting (Sometimes):
While the odds are stacked against us, it's not entirely hopeless. Here's what we've learned:
Early Credit Reporting: Having your debt collection agency report the unpaid debt to the credit bureaus early, before your tenant has secured a new apartment, can encourage them to pay to prevent this open unpaid bill from hindering their ability to get a new apartment.
Patience and Persistence: If someone cannot pay right now, it does not mean things will not change. Considering an unpaid debt can remain on a debtor's credit report for up to 7 years, we report those accounts to the credit bureaus with the hope that it will encourage the debtor to pay down the road.
Legal Action: In some cases, legal action might be necessary. However, before filing a lawsuit, it's important to have a roadmap for how a judgment will be enforced, should one be awarded, as one may otherwise be wasting good money after bad.
Prevention is Key:
The best solution? Avoid eviction altogether. Here's how:
Thorough Tenant Screening: Meticulous screening, including credit checks, can identify applicants with a history of financial instability.
Clear Communication: Maintain open communication with tenants, addressing concerns early and offering support when needed.
Early Intervention: Don't wait for rent to become significantly delinquent. Address late payments promptly and offer solutions to prevent escalation.
Remember: Evictions are stressful for both landlords and tenants. By understanding the challenges and implementing preventative measures, you can increase your chances of a smooth rental experience.
