Getting out of auto lease after Ch 7 discharge?

[Detroit]

Hi - I've found previous answers to this topic, but they're several years old and many of the answers weren't definitive, so I thought I'd ask - what's the best way to deal with my auto lease, now that my Ch 7 has been discharged (12/14)? I want to get into something less expensive. I didn't reaffirm the lease and I have no plans of purchasing the car.

Timing is probably the biggest issue - I want to get out soon, but not so soon that I can't get tolerable terms. I'm concerned because I'm over my miles, owe a few hundred in late fees (from the pre-filing days) and my lease doesn't end until mid-summer 2011.

The late fees are from pre-filing, and I went over the miles right after my 341. I wasn't able to get rid of it pre-filing or pre-discharge, for several reasons.

I've talked a few dealers, but I get very different answers (it's like they don't know!). Also, I've received a dizzying array of varying offers since my discharge and can't make heads or tails out of them, without knowing what to do with my current car.

Question is, if I turn in my lease early, do I owe the remaining months payments, over mileage and late fees (apprx $3400 to $4k total)? Thanks!

[newbie2]

You didn't reaffirm your lease (I don't think you can reaffirm a lease anyways..but I could be wrong) so you have no obligation to pay them any remaining months or late fees or other fees. Just drive the car to the dealer and turn it in. Get a receipt showing that you did so..

[Klesko]

Did you say you were keeping the car during the filing but never signed the reaffirmation papers?

[Detroit]

Yes, Klesko. I "intended" to reaffirm, but declined once they sent the paperwork to my attorney. I still have the car and am still making monthly payments (until I figure out what to do).

Newbie, the financing company gave me the options (in the reaffirmation paperwork) to reaffirm the lease or to assume the lease, neither of which I wanted to do. So I'm not really under any obligation - if I don't keep making payments, they'll come get it (unless I surrender). I'm just not sure if they can charge me back for any outstanding fees.

Some dealers may offer to buy me out of the remainder of the lease, but I know I'd pay for it somehow! But if I'm not obligated for any of those fees, buying me out is a moot point.

[Detroit]

You didn't reaffirm your lease (I don't think you can reaffirm a lease anyways..but I could be wrong) so you have no obligation to pay them any remaining months or late fees or other fees. Just drive the car to the dealer and turn it in. Get a receipt showing that you did so..

Hi Newbie - After some research, I better understand your comment about reaffirming a lease (and I misunderstood the terminology as it related to a lease). On my petition, my intention was to "assume" the lease. However, I declined the agreement from the financing company before my discharge. I have been paying month-to-month, but need out soon (early).

My attorney's paralegal said I also have no obligation; I was just looking for confirmation, as she's always so busy and doesn't always stop to think through a person's particulars, and I wasn't able to speak with the attorney (both are great, I just need to be sure!). I've also been reading through the "Repossession" board, and there are several similar questions, but again, no definitive (and mixed) answers. Thanks again for your insight.

[df04527]

May as well keep driving it until they come get it is my humble opinion. I believe you are free from that vehicle and can just go get another one and leave that one in the driveway or wherever they want it. Someone with more knowledge will respond though as we re-affirmed.

[Klesko]

When you indicate you plan to ASSUME your lease on the BK fillings that is all is required. Leases are handled differently then loans. Loans need to be reaffirmed, leases need to be assumed. However the big difference is when you say you plan to assume the lease nothing else is required by the leasing company.

If you said you plan to assume the lease in the BK fillings and you are discharged then you are responsible for the lease and its terms to full.

I have researched this because I thought the opposite before. Now I owe 5k because of this.

[Detroit]

Thanks for the responses. I thought I'd share what my attorney said today:

Regarding the leased vehicle, my initial reaction would be that if you did not assume the lease, you should be able to turn in the vehicle without liability for the rest of your payments. However, I am wondering whether the car creditor could argue that you “assumed the lease” by continuing with payments. That would required Court proceedings on their part, which is very unlikely likely to happen.

I would call the car creditor and state that you would like to turn in your lease early and confirm that because you did not assume the lease in your bankruptcy that there would be no liability. I think you are safe in turning in the car, but I am not willing to make any promises.

That being said, it's a little weird to call the creditor and ask them how they feel about me planning to not pay them a few grand! That's not really a call I'm looking forward to - I've learned through this process to not give people advance warning!

Klesko, if you don't mind, I'm wondering who your creditor was (major auto finance or bank/credit union would be fine if you're not comfortable giving the name), how early you turned your car in (before the lease ended), how long after your discharge it was before you turned it in, and what happened next, etc. Did they sue you? Did they send you nasty letters? How long did that take? I don't want you to have to dredge up your past, but I would find this all very helpful. Was it a long time later that they decided you owed them money, etc?

Thanks again! My lease is up in a few months anyway, so I might just take the time to make other arrangements. If I call the creditor, I'll let you know what happens!

[Klesko]

My lease was with VW credit. I turned the car in two months after BK discharge, I had 12 months left on the lease. They have not sued yet and have sent it to a collection agency. I got calls about 4 months after I turned the car in saying I owed.

[Detroit]

Thank you for the info and I'm sorry that happened to you! That's what I'd like to avoid. I assume you tried to tell them it was included in your BK, and they disagreed?