Car lease

[Jasonc126]

If you file a chapter 7 and you are leasing a car and you make you payments on time, will I be able to reaffirm on this debt or will they take my car away?

[debtfreeplease]

Good question, I am wondering the same thing. From what I have heard so far, the bank would rather you reaffirm and just keep paying them rather than them reposessing the car and having to go through selling it again. As long as you keep paying on time they don't really have any reason to repo it since it is a lease, and you have no equity in it.

[TEW]

If you keep up the payments you can do a ride throw. You may not have to reaffirm to keep it. I am keeping my car and not reaffirming the loan. It gives me options.

[rockyroad]

anyone know what happens when lease is up as far as mileage fees, disposal fees or whatever fees they try and assess if you do NOT reaffirm but just ride through?

[TEW]

If you keep up the payments you can do a ride throw. You may not have to reaffirm to keep it. I am keeping my car and not reaffirming the loan. It gives me options. Sounds like you have a good lawyer.
If the loan is discharged you have no obligation to pay it. But you have to turn the car in if you stop. It’s a secured loan

[rockyroad]

TEW...well I don't have a lawyer yet, just trying to figure all this out! My lease is up in March but my credit will be shot by then so the chances of getting into another lease or reasonable loan is slim. I need a vehicle so trying to weigh out buying a new one in the next few days and reaffirming it or just see what happens in March. I may not even file before then.

[laurannm]

I am going through this exact scenario. We filed Ch 7 in July and have a lease through Chrysler Financial (DCFS Trust).

When you have a lease (or an unexpired executory contract in BK terms) you must make one of two choices: either you assume or reject the lease (I believe it is Schedule G). You don't really reaffirm per se since it technically it is not a secured asset (i.e. there is no lien against the car).

Assuming the lease means you are agreeing to be bound to the same terms and conditions of the original lease agreement, whereas rejecting the lease means you wish to surrender the vehicle.

If you assume, the finance company will send over a lease assumption agreement (also called a Stipulation when it gets filed with Pacer). I am not sure if you can not sign the assumption agreement and keep the vehicle if you state you want to assume the lease on your Schedule G, but I assume you could.

[WoodSprite]

I am going through this exact scenario.

Me too...exactly right, Laura.

[Jasonc126]

That still did not answer my question. If you file a chapter 7 and you are leasing a car and you make you payments on time, will I be able to reaffirm on this debt or will they take my car away?

[WoodSprite]

That still did not answer my question. If you file a chapter 7 and you are leasing a car and you make you payments on time, will I be able to reaffirm on this debt or will they take my car away?

If you are making payments on time, and you reaffirm the debt, AND you can show that you can afford to keep making those payments (which is on the reaffirmation paperwork), they will not take the car away. If it looks as if you can't afford the car, the trustee will ask you about the discrepancy.

[Jasonc126]

Thank you

[laurannm]

Again though, from how it was explained to me, don't confuse reaffirm and assumption of lease. An assumption of lease is different from a reaffirmation agreement, and from what I was told by my lawyer, the same hardship rules do not apply. Our lease assumption agreement didn't mention anything about our layer certifying that these lease presents an undue hardship, nor did we even have to sign it (just our lawyer and their lawyer). There is no "debt" with a lease since you technically didn't take out a loan.

So that being said, I am not sure if you can ride-through on a lease. I would think you could, but I would verify with your lawyer if you have one

[BearChaser303]

I did a ride through on a car lease with Chase, and had no problems whatsoever. They happily accepted my payments each month.

I did later decide to surrender the car and get one with lower payments, and again no problems. I called Chase Auto BK department, said I was surrendering the car. They said ok we'll pick it up or let us know what dealer you dropped it at. I dropped it at a dealer, let Chase know which one, and I havent heard a word since and that was 3 months ago.

[rockyroad]

So if you choose NOT to assume the lease and return the vehicle does it report as a repo on your report?
Not even sure it really matters if filing a BK, but I really didn't want a BK AND a REPO both on my record!

[Jasonc126]

I thought my attorney said you could reaffirm on the debt as long you continue to make payments and keep the car.