The short answer is no, bankruptcy does not stop people from qualifying for Section 8. It also does not make people who already have section 8 lose it. You don’t even need to tell the Section 8 administrator about the bankruptcy.
HOW DOES BANKRUPTCY AFFECT SECTION 8 IN MINNESOTA?
In Minnesota, families can get the government to pay some of their rent if they are “very low income” as defined on this table from HUD. There is also a long waiting list for a Section 8 voucher, so it is important not to lose it.
The voucher can only be used at properties where the landlord or the management company accepts Section 8, but it pays a large portion of the rent. The qualifications for a Section 8 voucher are only that you make less than a certain amount of money, and that you find a landlord who will accept it.
Here is a link for the qualifications.
Bankruptcy does not change a person’s income at all. It gets rid of or discharges debts, but it doesn’t change someone’s income. Because Section 8 is based on income and bankruptcy doesn’t affect income, bankruptcy doesn’t affect Section 8.
Bankruptcy will still make your budget more affordable because when bankruptcy discharges the debts, you won’t have any monthly payments for debts anymore. Your income will still be the same, but your debt payments will be less, and you won’t have to worry about things like wage garnishment or bank levy.
At Walker & Walker, we have filed bankruptcy for many Minnesotans who receive Section 8. None of them have had to report anything about the bankruptcy to Section 8.
Landlords are also generally not informed of bankruptcies. It is true that the bankruptcy is on a credit report, and that it will show up on a background check when looking for a NEW apartment, but your current landlord will not be told about a chapter 7.
Not sure how it would work for you, or just have questions? Walker & Walker offers a free attorney consultation. Just call us at 612-824-4357.