If you are considering filing bankruptcy you may be concerned about how your car lease will be handled in the bankruptcy. When you file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy you will either assume or reject your car lease. If you elect to assume the car lease you will be able to keep the vehicle and will remain legally obligated under the terms of the lease contract. If you reject the lease you will give back the vehicle and will be released from the lease contract, meaning you will no longer be liable for the payments or fees associated with the lease. Only an experienced Kansas bankruptcy attorney can review your specific circumstances to determine if assuming or rejecting your car lease is in your best interest; however, there are some general guidelines that people use when deciding to assume or reject a care lease.
When Should You Affirm a Car Lease?
Deciding to assume your car lease as part of your Chapter 7 or Chapter 13 bankruptcy may be the best decision if:
- You are current on your lease payments and are financially able to remain current
- Your lease payments are relatively low
- You plan to purchase the vehicle when the lease terminates
Keep in mind that if you decide to assume your car lease you will remain legally obligated as though you never went through bankruptcy. You will have no protection from repossession should you be unable to make your payments in the future.
When Should You Reject a Car Lease?
Rejecting a car lease in your Chapter 13 or Chapter 7 bankruptcy is often an appropriate action if:
- You are not current on the payments
- You cannot afford the payments
- You will owe excessive fees for mileage or damage when the lease term expires
While rejecting a car lease releases you from your financial obligation it also means you will lose your vehicle. Qualifying for another lease or loan could be difficult. Be sure to discuss the likely status of your credit post-bankruptcy with your Kansas City bankruptcy attorney before proceeding.
Bankruptcy is a very personal decision – one that should only be made after careful consideration and consultation with an experienced Missouri bankruptcy attorney. Call the Sader Law Firm for a free initial consultation and speak with one of our Kansas City bankruptcy attorneys.