What can I do with my leased car?

[celtic1]

I am in the data collection stage of my BK. I will be sending all of my documents to the attorney at the end of the week for him to file a petition. Still not sure if we will be CH7 or CH13.

I currently have a leased 2005 Dodge Magnum $565/mo that I would like to turn in. I would also like to buy a car to replace this one and reduce my payments by at least $200/mo.

My questions:

1) When should I/can I turn in my Magnum and do the least damage to myself?
2) My attorney says I should purchase another car within 24 hours of filing my petition and then go drop off my leased car, does this sound right?

[hhou812hh]

I am in the data collection stage of my BK. I will be sending all of my documents to the attorney at the end of the week for him to file a petition. Still not sure if we will be CH7 or CH13.

I currently have a leased 2005 Dodge Magnum $565/mo that I would like to turn in. I would also like to buy a car to replace this one and reduce my payments by at least $200/mo.

My questions:

1) When should I/can I turn in my Magnum and do the least damage to myself?
2) My attorney says I should purchase another car within 24 hours of filing my petition and then go drop off my leased car, does this sound right?

Normally I can't imagine the lawyer telling you to buy a car so close to filing in either chapter, but since it's so you can save over $300 a month I guess it will look good explaining to the trustee that you needed to free up money every month. Depending on your monthly expenses saving the $300 will probably put you into a ch13.

Good luck!

[celtic1]

I asked whether the trustee would have a problem and he said it didn't matter once we filed the petition... any suggestions on when I should turn in my leased car?

[nk29]

I experienced a similar situation. I met with my lawyer and explained my concern to him about a leased vehicle and how likely it would be for me to get financing on either this car or a new one in the two years that the lease would be up, and he suggested I go and finance a new vehicle asap. So, that weekend I went out and bought a new car for about the same payment as my lease. I had the peace of mind in knowing the car was mine and I could keep it for however long I wanted. I was afraid that it may cause problems being so close to my filing date but my attorney said it didn't matter. We are including my leased vehicle in my Chapter 13 bankruptcy so I can turn it in without penalty. I called the lease company yesterday and advised them I was giving the car up as a result of BK, and they just said to drop it at the nearest dealer and they would arrange to pick it up. They were actually totally nice and understanding about it. So, now I have my new car and I am turning in the leased vehicle this weekend. My attorney held off on filing my paperwork until Monday so that everything would be finalized with the new car. I hope this helps! I was very skeptical, too, so don't feel bad.

[celtic1]

Awesome thanks!..so you bought your vehicle prior to filing the petition?..my lawyer is recommending buying the new car on the day of or dafter we file the petition...can you think of any reason to do this?

[nk29]

Well it was actually the day after I signed all the paperwork in my attorney's office that I bought the car, but he mentioned that he would hold off on formally filing until a day or two after I bought the car, just so there wouldn't be any issues with the new car financing company. I felt more comfortable that way because I was paranoid that they (American Honda Finance Co.) would for some reason cancel the financing if they saw I filed Chapter 13. Once the paperwork was signed for the car I felt more confident that the deal was done, but that was just me. I am not sure why your attorney would advise to wait until afterwards, maybe because he doesn't want to list the new car loan as one of your creditors? Technically you could leave the new car off your list if you sign the petition before buying it. The only problem I saw with that was that it would then look like you had no car payment, and you wouldn't be able to include this in your list of expenses when calculating your Ch 13 payment to the trustee. My attorney is listing both the leased car and the new one, with the intention that the leased car is being given up and replaced. I am still nervous about all of this and haven't gotten that far into the process, but I trust my attorney is giving me good advice. I will keep you posted on what happens, my paperwork is probably either just getting entered tomorrow or was just filed Friday. My court date is supposed to be at the end of September.

[cpginvegas]

We leased a new nissan 2 months before our bankruptcy and traded in our toyota for another (purchased) new nissan five days before we filed our chapter 13. The trustee's only coment was "you must really like nissan products". Our chapter 13 was confirmed on August 17th!

[celtic1]

You turned it in before you filed?...I thought the idea was to turn it in after you filed so you didn't get hit with all the penalties?...Thanks for the feedback so far!

[hhou812hh]

We leased a new nissan 2 months before our bankruptcy and traded in our toyota for another (purchased) new nissan five days before we filed our chapter 13. The trustee's only coment was "you must really like nissan products". Our chapter 13 was confirmed on August 17th!

Did they grill you much with the ch13 filing? I was told my many that it isn't anywhere near as nerve racking as a ch7 filing. After the holiday weekend I am visiting my atty and getting the ball rolling.

Good luck to you and before you know it you will get the discharge!! The 3 years (or more) will just fly right by!

[nk29]

I don't think it mattered whether I filed yet or not, the lease company sent me a voluntary repo form to fill out and asked for my case number. It seemed pretty standard procedure to them. The form basically says I gave it up and am responsible for any resulting fees, but like the lawyer said, any fees assessed are going to be discharged as per the BK. Basically the lease company will file a claim to get a portion of the monthly amount that I will pay, so they will get something. From what my attorney tells me this monthly amount will be in the $200-$250 range, I am hoping he was accurate in his calculations!

[celtic1]

$200-250 total for all of your bills or was that waht was going to be paid for the lease?

[nk29]

$250 total for unsecured bills, the car loan payment will be paid directly to Honda Finance outside the bankruptcy. I had about $60k in credit card debt.

[celtic1]

NK29, I'm in a similar situation and will prob do the same thing. Now that I'm preparing to file I've been told to not pay anything except for my cars and house. Do you think I will screw up an chance I have at finacing another car by not paying the other items until I file my petition? Obviously, my credit can't be that great as it is, but as of right now I've been offered 12% through Wells Fargo.

[nk29]

Honestly it takes at least a 30 day late payment for anything to show up and affect your credit report, so as long as you buy the new car before this happens you should be fine. I just got confirmation that my Ch 13 was filed August 30th, and I just sent my first payment to the trustee. I have my Meeting of Creditors on Sept 29th, I am so nervous and I just hope it all goes smoothly! I am satisfied with the payment that was agreed upon and I just want it to get approved so I can have the peace of mind. I have to say, I felt so stressed and nervous before deciding to do this, but now that the leased car is turned in, I have my new car, I filed the paperwork, etc, I feel a huge sense of relief. I haven't really felt the effects yet, really the only thing I would need credit for at this point was for a car, so I am hoping that I can get myself back on track as quickly as possible