Should I Lease before Filing Chapter 13

[minan]

My current lease is coming to an end and I need to get a new car. The payment on my current lease is 454/mo (too high for me now). I just got an offer from Honda to lease a Civic for around 250/month.

I am planning on keeping current on the lease payments because I need the car to get to work and also go back and forth between my work and another work location.

Is this a good idea?

Really need some advice from those that have filed bankruptcy especially Chapter 13.

I don't have the choice to file Chapter 7 nor do I want to. I am choosing 13 so I can repay my debts, however need the protection offered by the law against collection activities/judgements/levies/etc...

[momofthree]

Why not buy? Then you will pay off the car while you're in bk, lowering your payment to unsecureds, and end your bk with a paid off car that you get to keep.

[minan]

The offer from Honda is 383/mo at 1.9 if I finance. I'm trying to lower my bills so I can be sure to make my chapter 13 payments when I go through that process.

The dealership stated that at the end of the 3 years, I could buy the car at residual value (quoted at 11538), turn in the car and walk away or extended the lease up to a one year.

I talked to another dealership and they offered 369/mo on approved credit if I finance.

I'm just so scared right now that I'm trying to put myself in a position where my chapter 13 doesn't get dismissed for any reason. I don't want to give the trustee any reason not to accept whatever plan my atty and I come up with.

I picked a civic because it has just great reviews on reliability and maintenance if you keep up on regular maintenance. This should get me through the 5 years.

[NoTomatoCan]

The dealership stated that at the end of the 3 years, I could buy the car at residual value (quoted at 11538), turn in the car and walk away or extended the lease up to a one year.

Is this based on your current credit situation or are they aware of and factoring in that you will be in an active BK? Transportation is one of the biggest concerns for heading into a CH13. It is tough, and sort of a pain, to get approved and then get permission to enter into a loan agreement while in CH13.

If you have the option of purchasing, it just seems so much easier than having to worry in 3 years whether you will get approved or not.

[momofthree]

I personally consider leasing a bad financial decision at any point in time. It is an especially poor decision when heading into a bk. Get your low-rate financing now before filing. Trying to buy a vehicle while in a ch.13--which you will inevitably have to do if you lease now--will not only be a pita due to having to get trustee approval and find a finance co. that will finance you while you're in bk, but you'll also end up with a high interest rate. No getting around it--except to buy now and lock in your low rate for the next 5 years.

Is there a reason you think your 13 would be dismissed if you buy rather than lease? You are allowed a car payment of up to $489/mo without being questioned about it. We bought our minivan ($468 pymt) about 6 months prior to filing and it's the only debt we're paying into our bk and we got zero objections.

[minan]

To NoTomatoCan: I haven't even started the bk. I'm only considering it and planning. The offer is based on my current credit.

To MomofThree: Thanks for the info. I'm just nervous and don't want to screw up. Thanks for reminding of about the allowance.

It appears I'm better off financing than getting into a lease. I'll continue to try a few other honda dealerships and see what they offer. I'll go with the lowest offer and finance. I want to avoid as much hardship later on as possible should I file.

I'm just scared. I can't sleep, eat and cry all the time. I made a poor decision in becoming self-employed and didn't realize all that was entailed with taxes etc..I live in fear of IRS and FTB.

[debtinohio]

As someone who has a lease up 1 year into the plan, trust me FINANCE the car. If you save $$ on the payment by leasing, they'll just throw the savings towards unsecureds anyway.

[indebt00]

BUY BUY BUY don't lease.

that is my advice. You will own the car after the bk and not have any car payments. this is way better than leasing and having to worry about getting another lease/buy during your BK. we are learning this the hard way. We have to get another car duing bk. should have bought the darn car...but we didn't know at the time...we were still not in bk pre planning yet.

you have the foresight of pre-planning...make good use of it.

just my humble opinion

[HappyCatNC]

Seriously, read 100 pages on the matter if you must, but the answer is:

Buy A Car.

Preferably a new one, that will last and be under warranty the duration of your plan. We bought a brand new car just a few months before filing, on the advice of our attorney, because our old loan was about to be paid off. The money freed up would have just gone to unsecured debt - so either way it was going somewhere - better to go toward a reliable vehicle than to CC's.