What happens to money in lease purchase

[scbank]

My huasband and i are currently in a lease purchase agreement and are considering filing chapter 13 due to back taxes and other unsecured debts and we have an auto loan. Our credit scores a very low and we know that if we file a chapter 13, we risk not being able to excerise our lease option when it is due in 2 years. We stand to lose approximately $17,000.

Any advise?

[HHM]

It will depend on the wording of your Lease Option, but if the terms are such that you "must" exercise the option on or before that date, then yes, you would lose the funds.

[scbank]

lease purchase

What if the terms read that an extension would be granted to such-and-such and then is silent with respect to any additional? I would rather just try to pay the debts myself but the penalties and interest are absolutely outrageous and cannot seem to pay down tax debt or student loan debt. Even if that is achieved, I don't see that it is gong to help credit situation, but rather, just reduce debt to income ratio.

With the stringent lending laws as they are, do you know if mortgage lenders are willing to lend to people who have not taken on new debt to raise credit scores, but have paid down old debts?