Don't want to reaffirm our leased chevy truck

[sofarindebt]

We have a 2004 Trailblazer that is $560/month. We would LOVE to get rid of this, but if we don't sign a reaffirmation, will they come take it right away. The problem is we have 3 kids (all under 3) and with the big carseats we couldn't fit them all in the back of our sedan, if we had to go w/out a truck for a couple months to rebuild our credit. So my questions are:

1. Will they not reposess if we keep up with the payments?

2. Is it easy to lease after a chapter 7? We don't want to buy, we like having warranties and getting a new car every 3-5 years.

Thanks!

[HHM]

Have you filed yet, or are you planning to file.

If you have already filed, since it is a lease, I am surprised reaffirmation is even an issue. A lease is not a debt, so the BK has no effect on the lease, you either make the payments or they take the truck.

Putting that issue aside, I would presume that since it is a lease, if you do not reaffirm they will take the truck, no ifs, ands, or buts.

Also, you're being unrealistic about your credit expectations, after a BK, it does not take months, but about 2 YEARS to rebuild your credit. Two years is about the time that needs to lapse before creditors overlook the BK, assuming you maintain good credit habits in that time. That does not mean you will not get credit in less than two years, but to be in a position to get "going" market rateas on things like car loans and mortgages, you typically need to wait about 2 years from discharge.

Above table leases (meaning market leases, not the shady shops) usually require very good credit, so if you file chapter 7, odds are, it will be difficult to lease for the frist couple of years after your discharge, but anything is possible, if you continue leasing your current vehicle, you will probably be able to lease again when your current lease expires, (assuming all your payments are on time).

[sofarindebt]

Thanks, no, we are not filing until June

and you do have a point, I guess keeping the lease would help rebuild our credit too. I don't know what you mean about leases not being debt. If we quit making payments, we would be liable for the remaining payments for the next 2 years, and bankruptcy would wipe that out.

[HHM]

and you do have a point, I guess keeping the lease would help rebuild our credit too. I don't know what you mean about leases not being debt. If we quit making payments, we would be liable for the remaining payments for the next 2 years, and bankruptcy would wipe that out.

I know it doesn't seem to make sense, but remember, a lease is "renting" and just like with apartments, you prepay each month to rent the car for that month. Also, as more confirmation that it is not a debt, a lease is not listed on your list of creditors on the BK petition, they have a seperate form (Executory Contracts) where you list leases. You are correct, most lease contracts contain a "pay in full" provision if you get out early or default, but that "pay in full "debt"", only becomes a debt upon default. Here is the catch, if you are current on your lease payments up to the point of filing BK, then default after filing, there is a good argument that that debt survives the BK, because the event that gave rise to the debt, your default, occured AFTER you filed. However, you could probably amend your petition after filing BK to add them as a creditor for the "pay in full" penalty. Compare that situation to a typical credit card, you borrow money from a credit card to buy something, the debt is created at the moment of charging, and so long as there is a balance on the credit card, there is a debt. When you make a lease payment, you have already paid the rental cost for the upcoming month, you don't owe the leasing company any more money for that month to use that car.

The long and short of leases and BK, you either pay or the car goes. (if you let the car go, you are correct, the pay in full provision does get discharged). However, unlike with typically car loans, you need to make this decision before you file BK because you are not given a whole lot of time to deal with it after the fact.