Car Lease

[wesleyh09]

Morning All. Filing Chp 7 next week, and we are re-affirming our mortgage and we wanted to also do both of our car leases, but wondered if that was a good idea. I mean, if I wanted to keep the cars, you don't HAVE to reaffirm them do you? Is it EVER a good idea to re-affirm car leases? We still have about 24 and 33 months on them.

[Drazil65]

Hi, why are you reaffirming your mortgage? Read, read, read everything here on reaffirmations before you do anything...you know its not typically a good idea to get yourself back on the hook with the mortgage right? You never know what will come in the future, I mean look where you are right now in life and I'll bet you never thought you would be here either. Read everything you can and ask a lot of questions, knowledge is power. In most cases as long as you keep making your payments and you are not in arrears on the mortgage to begin with at filing you should be able to stay and pay with no issues. Good Luck!!!!

[dischargedbk]

As I understood it in my chapter 7, we had to list the leases in Schedule G of the filing. You would have to affirm or reject those leases within 60 days or the BK court will deem them rejected automatically.

I surrendered both of my vehicles which both had high interest rates and payment for each. I have a 3rd car... not as new and fancy, but it is a car and paid for. (used exemption in filing so I got to keep) Would you believe I actually received an offer for financing a new vehicle yesterday which was 4 days after my discharge was granted and my case was closed?

Bottom line, everyone's situation is different and you may very well need to keep the cars, reaffirming the leases. Just weigh your options closely and do what is best. Remember, the objective of filing BK is to get you a fresh start. Don't ruin that opportunity by keeping things that will just end up putting you right back to square one because you can not file for another 8 years, should you need that down the road.

I don't know if you are going at this Pro Se, but a consultation with an attorney is a good start to gaining an understanding of all your options. I highly recommend it. It made my case run along smoothly and I had not one issue along the path.

Good luck!

Morning All. Filing Chp 7 next week, and we are re-affirming our mortgage and we wanted to also do both of our car leases, but wondered if that was a good idea. I mean, if I wanted to keep the cars, you don't HAVE to reaffirm them do you? Is it EVER a good idea to re-affirm car leases? We still have about 24 and 33 months on them.

[bcohen]

I would NOT assume a car lease, especially with over 2 years remaining. A lot can happen in 2 years, such as damage to the cars, excess mileage, etc, and then you'd be liable. In fact, unless the lease payments are super-cheap ($150/month or less), you're just throwing money away. You may be better off to quit paying, drive the cars payment-free for the duration of your case (about 4 months), and then let the lender have them back. By then, you should have saved up enough money to buy a beater car outright, or to finance a new or recent-model one with a good down payment.

[AngelinaCatHub]

I concur with bcohen. Reaffirm NOTHING. As long as you keep paying they cannot take your items away. However, if things go bad, your reaffirmation will hang you as you lose your BK rights to discharge those debts. Takes the whole meaning out of the "new start" idea.

You are here because you have NO MONEY, right? So things get better later? No, not without working on it. DO NOT give up your BK privileges. 'Hub

[wesleyh09]

Interesting perspective and I agree with everyone! Now with the mortgage, I was torn. I have a 3.25% FHA mortgage right now and it is for 30 years so I dont think I would do any better and we aren't going anywhere. I thought by reaffirming it it would help my credit after the BK? I do have counsel and am actually filing tomorrow coincidentally enough. You still think I should not reaffirm?

[keepmine]

I wouldn't reaffrim.

If you do, and disaster strikes you'll be responsible for any deficiency balance.

[dischargedbk]

You do understand that a bankruptcy remains on your credit report for ten years? I am not sure the point on how reaffirming the debt helps your credit?

Interesting perspective and I agree with everyone! Now with the mortgage, I was torn. I have a 3.25% FHA mortgage right now and it is for 30 years so I dont think I would do any better and we aren't going anywhere. I thought by reaffirming it it would help my credit after the BK? I do have counsel and am actually filing tomorrow coincidentally enough. You still think I should not reaffirm?

[bcohen]

Reaffirming a debt DOES NOT HELP YOUR CREDIT very much, if at all. The bankruptcy will still be there, and creditors who would decline you would be doing so because of that. Having a car lease--or any other loan--reporting payments isn't going to change these creditors' minds to make them want to lend to you, for at least several years. Furthermore, assuming the car lease carries with it a lot of risk, such as the risk you won't be able to make the payments, the risk that the car will be damaged, and the risk that you will be liable for excess mileage/wear and tear when the lease is finished.

My advice remains the same--DO NOT ASSUME THE CAR LEASE!!! Make sure to list the lease on your Schedule G, and say "reject" on your statement of intentions. If you want to rebuild your credit after bankruptcy, get a Capital One--or other REPUTABLE bank's credit card--and pay it off each month.

[btbeme]

Simple explanation...

Bankruptcy is a calculated risk that creditors take when they loan you money. Really smart creditors ask for (and get) title to the product you buy when they lend you money. This is called a "secured debt" (or a mortgage, or an auto loan, or a lease, or extortion). They only release their interest in your property after they have declared that they have been paid in full according to their rules.

So... they will say anything, promise anything, and do anything to threaten, coerce, beg, wheedle, plead, and shove you bodily toward any resolution where they can make you pay through the tightest orafices they can. They will call this "being fair" and they will allow you to sign away your rights in order to satisfy their loan on their terms as best they can.

Reaffirm nothing.

And reaffirming to "help" your debt score (some people call it a credit score) is ... Well... It rhymes with "Cupid."

Doesn't a credit score help you obtain more debt? And isn't it debts that have you in this forum to begin with?

[LadyInTheRed]

Interesting perspective and I agree with everyone! Now with the mortgage, I was torn. I have a 3.25% FHA mortgage right now and it is for 30 years so I dont think I would do any better and we aren't going anywhere. I thought by reaffirming it it would help my credit after the BK? I do have counsel and am actually filing tomorrow coincidentally enough. You still think I should not reaffirm?

If you don't reaffirm, you will still have the same mortgage at 3.25%. There is rarely a good reason to reaffirm a mortgage. So far, you haven't mentioned a good reason to reaffirm yours.

[wesleyh09]

Thanks for the insight. So question, what would you suggest if I don't assume the leases on our two cars. We need them to get around and I don't have enough cash to buy two cars right now. Should I just stop paying the two lease payments (300 and 525) and just save that for a payment? If I stop paying wont they reposess them?

[dischargedbk]

As soon as you file your BK, the automatic stay will go into effect, preventing any creditor from taking any action, including repossessing your cars. If they wanted to repossess the cars after the BK is filed, they would have to file a motion with the BK court asking their permission to lift the automatic stay. Our lenders would not come and get the cars (which we surrendered in the BK) until the discharge. They wouldn't even discuss such a thing. This was in fear of violating the automatic stay... they took the "better to be safe" route than taking any chance in violating the automatic stay. This is how powerful the automatic stay is.

I would say that if you are not wanting to keep the cars, then I keep your $$ and not pay the lease payment. Save that money for car after BK. We were discharged a week ago and have already had two offers for car financing. So I would not panic about not being able to get a car after BK.

[wesleyh09]

My Issue is that if I DON'T keep the two cars I don't think I will have enough cash by the time this is over to purchase even two cheaper cars. This forum does have some good advice. I love it. I am schedule my Meeting of creditors on Dec 5. Wish me luck.

[walkers4]

I filed Chapter 7 and I have a car lease that is up in December I've continued to pay the payments in fact I paid the last November 11th no payment is due in December that is when I'm suppose to turn the car in and pay the amount due for excessive mileage.. My 341 meeting was scheduled for 11-18 but it has been postponed until Dec 11.. Do anyone know if they will come and get the car or will I have to turn it in before my bankruptcy discharged ? I don't anyone who filed and had a lease that was up before discharge.