How to Break a Lease When You Have Bad Credit

How to Break a Lease When You Have Bad Credit
Mike Randall
By: Mike Randall
Posted: January 10, 2014's popular "How-To" series is for those who seek to improve, rebuild or better understand their subprime credit rating.

Being locked in a lease that you can no longer afford or that doesn’t fit your needs can put you in a tough spot.

As you know, a lease is a legal agreement and you have an obligation to fulfill the terms of the original contract.

However, sometimes it is simply not possible to remain in a lease, especially if it means you will default on other obligations.

If you have bad credit and you really must break a lease, there are a lot of things to consider. First, there is the potential of further damage to your credit.

Next is the possible expense if the lessor decides to hold you responsible for the payments anyway.

A third consideration is any potential legal action that might be taken against you as a result.

But don’t panic!

There are ways to go about this predicament that might leave everyone satisfied – or at least not ready to bring suit.

Here are some guidelines and suggestions for how to break a lease when you have bad credit.

1. Don’t duck out on your lease.

Whatever you do, don’t just duck out on your lease. Open a dialogue with your lessor about your circumstances.

Let them know that you want to keep your obligation, but that it is just not possible.

Be truthful and answer any questions that they have respectfully.

 2. Find someone to take over your lease.

You should also consider finding someone to take over your lease. Having a replacement tenant or lessee already lined up can go a long way toward soothing a wary landlord.

 3. Understand your lease.

Know that the contractual obligations work both ways. Your landlord or lessor can also be responsible for breaking the lease.

For example, if you have asked repeatedly for certain repairs to be made without the work being done, you can declare the lease agreement invalid and may legally break it.

“Be sure to carefully document the

circumstances, including dates and times.”

 4. Use careful documentation.

Another way that a landlord may be in violation of a lease agreement is by not respecting your privacy and/or property. If this is the case, it is also grounds for nullifying the lease.

Again, make sure you document the circumstances and use this method only as a last resort.

 5. Review your lease agreement.

Carefully review your lease agreement and talk it over with a legal representative if you don’t understand any part of it.

There may be a clause that allows for early termination, or another way that you can claim nullification of the lease.

 6. Understand the policies.

When dealing with a private lessor versus a management or leasing company, you have a lot more room to work.

That is because most management companies are restricted by company policy, whereas a private party is capable of making exceptions.

Also know that private parties are less likely to report your actions to the credit bureaus.

7. Avoid a legal battle.

Understand that the courts are likely to rule on the side of a landlord in most cases, so avoid a legal battle if possible. If a landlord truly is at fault and you have a valid reason for breaking the lease, lay out your case.

Tell them that you know your rights and are within the law by choosing to leave. Make sure they understand that they and not you have actually broken the lease.

It is never an easy decision to break a lease agreement, but sometimes it is necessary. Using these tips and guidelines, you can potentially get out of your lease without any damage to your credit, reputation or wallet.

Just remember to consider all options and seek legal advice if necessary.

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