Reaffirm Car Lease?

[bbgstartingover]

Thank you so much for this forum and your support.

I was just reading my Honda Lease Agreement and it
says under DEFAULT, that if I file a Bankruptcy
Petition, then I will be in Default. So, now I'm
confused as to what to do, since I'm filing a lot
later than I originally expected (first week of March).

My lease expires July 1st. Let's say I try to reaffirm
(assuming they'll let me) and I'm discharged end of
June. At that point, because I'm over my alloted
miles/yr and most likely won't be able to get a new
lease, I'll have to turn my car in on July 1st and pay
the overage miles charges, which I won't have the
money for...not to mention then trying to finance
another car on top of that (I have no idea what to
expect there either). So, should I even reaffirm the
car at this point? Should I call the Lessor/Finance company before I file? If I don't reaffirm, will I still
be liable for the overage on the yearly miles
allowance? Also, if I don't reaffirm, then that will
affect my monthly disposable income -- so will that
push me into a Chapter 13 (right now, I'm way under the median for Colorado, and my monthly income minus my expenses shows a negative balance (-90). I'm so confused now, I don't know what to do.

Also, my lawyer currently put my car lease on Schedule F (Creditors Holding Unsecured Nonpriority Claims, with the payoff amount listed). I thought I saw somewhere in the forums that it should be listed with a zero value on Schedule B as an "Executory Contract."

What are your thoughts? I'm so nervous about all this...

Thanks so much for your help.

[gophermn]

Can you see if they will refinance a loan for you? I know I have been working with Toyota and the 1st thing they said is that they dont want my truck. I have been on time with payments which is huge in their eyes.
See if they will work with you moving it from a lease to a loan. This will of course get you out of the upsaide down miles. Otherwise, you might have to just add it to the BK and look for another automobile.

[bbgstartingover]

Thanks for the advice . I'm going to file March 10-13 (somewhere in there). Do you think I should talk to American Honda Finance BEFORE I file or AFTER to see if they'll refinance my car loan and get me out of my current lease? Will it make a difference? They're going to find out in a few weeks anyway if I want to reaffirm.

[keepmine]

Talk with them now. After you file, they very likely won't discuss it for fear of violating the automatic stay.
For sure don't reaffirm if you can't afford to pay the overage.
You can finance another ride immediately post bk but, the interest rates will be pretty high.
I'd suggest you delay filing until you get your transportation needs settled.

[emoney]

First your lease will not be in default if you file BK. That is against public policy.
Your present problems show the folly of leasing an automobile.
regards,
emoney

[ameliabedilia]

When we did our bk the first thing that showed up on the credit report was that the lease was IIB, not default. When I called to ask about that I was told this was standard procedure and they do not report anything other than that.

[bbgstartingover]

If I talk to American Honda before I file, do I mention that I'll be filing BK soon and that's why I'm calling to see what my options are or do I not say anything about the BK and just try to get them to change my lease over to a loan?

Thanks so much to all of you on this board. Your help and support are...there are no words. I can't tell you how much comfort just reading this board has been for me these past months.

[keepmine]

I'd not tell them about your bk plans.

[bbgstartingover]

I called Honda Financial Services to see what's involved in extending my car lease as well as purchasing my car (I did not mention anything about filing BK). Here's what I found out:

1). I can extend my lease for up to 24 months, no credit check is done, and I wouldn't be tied to the length of the extension, once I extended the lease. Also, my payments would remain the same. I just have to call them within 80 days of the end of my lease (July 1st). 80 days prior to that date is around April 14th. I call, they send paperwork, I sign and send paperwork back and that's it.

2). If I want to purchase my car, I would have to refinance through any Honda dealership, and a credit check is definitely run.

So, if I want to keep my car, it looks like the best and cheapest way to go would be to extend the lease before I file. However, that would mean postponing filing until the end of April or beginning of May.

I stopped making cc payments last June 2007, and two of the three cc's have been turned over to collection agencies. Just getting monthly statements from them right now.

Part of me doesn't want to wait to file and wants to reaffirm the lease as is and take my chances July 1st when my lease is up. Another part of me wants to postpone filing until I can extend my lease, although if I did this and then filed, and they accepted my reaffirmation at that point, my lease pymts toward the extension won't count in rebuilding my credit. Is that correct?

What are your thoughts? I value what you all think and thanks again for being there.

[bbgstartingover]

Any thoughts? Are Lease Payments reported after reaffirming?

Just wondered what your thoughts were after my last update. Thanks again.

Also, I just started getting collection calls again. It's been very quiet up until yesterday. I wonder if that's an indication of them speeding things up to getting ready to sue/serve me.

Hugs to all of you! Hang in there...

[clifrockh]

incorrect, sorry

First your lease will not be in default if you file BK. That is against public policy.
Your present problems show the folly of leasing an automobile.
regards,
emoney

leasing a car is the best way to drive a new car as long as you are an average mileage driver and lease for 3 yrs or less. The money factor equates to an interest rate of approx. 1%, with no negative equity risk at the lease-end, an actual end-date of debt, AND you are paying 15-30% lower payments the entire time you drive the car, due to the fact that the depreciation problem is moved to the end, meaning you don't have to absorb it.

example:

20000 car financed 6 yrs @ $392 per month
2000 taxes and fees
4000 interest
26000 to pay out over 6 years while absorbing the depreciation and trying to trade 3 yrs later only to find out you are still 5000-7000 upside down.

vs

24000 lease 36 months , 15000 miles per year @ 1% moneyfactor
@309 per month
at 36 months as long as normal wear and tear, and 45000 miles or less- NO NEGATIVE EQUITY, walk away, lease again, your choice. But it ends the negative equity cycle that most buyers are in due to trading upside down all the time.

See what kind of car can be financed at 309 per month for 36 months with $0 down, heck even 309 x 72 buys you a sub-compact and years of negative equity.

The above example is our actual vehicle situation. Guess which one we let go back, happily? We would be fools to go out and finance at 25% and 500/ month for 60-72months, when we can just reaffirm the lease car with 18 months to go and then it is finished.

I see it everyday, people say no thanks I want to own my car so I am only interested in financing, can you do 84 months? They don't own it at all, the bank does. But they do own all of the downsides.

If you have good credit, you throw good money after bad financing a car.

[lrprn]

If you have good credit, you throw good money after bad financing a car.

Ummmmm....you do know you are posting this on a bankruptcy forum, right? Ain't nobody here who has good credit