Lease Expiring and Filing BK in 30 Days

[cap350z]

Hello Group,

My friend's lease is expiring and she is going to be filing BK with her attorney in 30 days.

Should she enter another contract with Ford Credit? and when it comes time to re-affirm the debt, proceed with an arangement with Ford Credit. I think she should get another vehicle and finance it instead of leasing while her credit isn't too damaged as of yet. Medical bills are forcing her into BK.

I am no help to her because I filed CH. 7 a year ago before all the new rules went into effect. Either way, she is going to need a car.

Some friendly opinions on what to do would be greatly appreciated.

[CATCHMEIFYOUCAN]

YES, she should get into a new/used car before she files ! ! !

Good Luck, Catchmeifyoucan

[FilingOnMyOwn]

She can probably do either or, but I don't think a lease is even considered a debt, its just a contract.

[CindyLou]

she can actually do NOTHING in regards to the car with ford motor credit. keep paying it and she keeps it. Doesn't need to reaffirm through ford. Then when her credit is better she can get a new car and just give it back with nothing owed. Just went through the same thing with ford and they were very friendly with the whole process and i even kept my other vehicle that i had financed through them!!!

[CATCHMEIFYOUCAN]

i never understood why people lease, its like throwing money away on something you dont own in the end, but people have their reasons, i guess its like renting and apt/condo or house you never own it in the end, but im one to talk cuz i rent an apt, but i dont lease a car. if she needs a reliable car better to buy one (whether new or used) because it will be hard while in the bk, i was forced to buy a new car just a month before i filed, my original car got flooded, but life works in mysterious ways, my car had 140,000 miles on it so it was time! you'll get a better interest rate too just before you file.

best wishes, catchmeifyoucan

[CindyLou]

Forgive me....I just had a very blonde moment and didn' t make the connection between lease and the car. Sorry. My case was a case where I had financed. A lease may be different. Please disregard my post. But DO call Ford and ask for the BK department and ask their policy on leases. They are very very easy to work with.

[SinkingFast]

You didn't say if we're talking Ch 7 or Ch 13 here. Either way, there's gonna be a time period where your friend may not be able to do a thing about his/her transportation situation.

Ch 7 will run approx 90-120 days from filing to Discharge if your friend's case goes smoothly. During that time, no Lender will touch him/her. While in an open and active BK, the Filer can add a Creditor at any time and Lenders know that. Most likely, your friend would not find anyone to finance a car during Ch 7.

Same with Ch 13 in many respects. During Ch 13, you have to get permission from the Trustee to take on new debt first. So the process is a bit more complicated there as well. People have done it, but it's a lot of work. And finding a cooperative Lender in Ch 13 is tough.

[riverlady]

Your friend may ahve a problem as this is within 30 days of filing. The trustees are really getting picky aobut stuff in the last 90 days and if it is within the last 30 days may cause major problems. She really needs to address this with her attorney. Planning a bk and going into debt right before can be considered a big no no!

And how is she going to get another lease if she is in bad enough shape to file any BK?

[SinkingFast]

Your friend may ahve a problem as this is within 30 days of filing. The trustees are really getting picky aobut stuff in the last 90 days and if it is within the last 30 days may cause major problems. She really needs to address this with her attorney. Planning a bk and going into debt right before can be considered a big no no!

And how is she going to get another lease if she is in bad enough shape to file any BK?

If the payments go up, that definitely could be an issue.

In this case, a payment already exists on an, at this time anyway, Unexpired Lease. Those get reported on Schedule G. Executory Contracts and Unexpired Leases.

The Debtor/Filer trading in the lease and "buying" a car would most likely be considered reasonable, provided this person does not own another car. Now if the person owns a 2nd car, then that puts a whole different spin on the situation.

[LoserBoy]

i never understood why people lease, its like throwing money away on something you dont own in the end, but people have their reasons, i guess its like renting and apt/condo or house you never own it in the end, but im one to talk cuz i rent an apt, but i dont lease a car. if she needs a reliable car better to buy one (whether new or used) because it will be hard while in the bk, i was forced to buy a new car just a month before i filed, my original car got flooded, but life works in mysterious ways, my car had 140,000 miles on it so it was time! you'll get a better interest rate too just before you file.

best wishes, catchmeifyoucan

You actually have it backwards...people lease cars because they are depreciating assets. People BUY houses or condos because they are APPRECIATING assets. when you lease a car, you just pay for the part you use and then turn it in (or trade or sell--whatever), in the mean time the cars value has decreased drastically. Conversely, when you rent a house you are still just paying for the part you use, only now the property is increasing in value. you invest in real estate--you use a car.

[tradewiz50]

You actually have it backwards...people lease cars because they are depreciating assets. People BUY houses or condos because they are APPRECIATING assets. when you lease a car, you just pay for the part you use and then turn it in (or trade or sell--whatever), in the mean time the cars value has decreased drastically. Conversely, when you rent a house you are still just paying for the part you use, only now the property is increasing in value. you invest in real estate--you use a car.

Actually thats not true. Some housing markets are on the decline.

[arkienurse]

i never understood why people lease, its like throwing money away on something you dont own in the end, but people have their reasons,

Ultimately, leasing that darn Jeep is what drove us (literally) over the edge to bankruptcy. There is some sort of turn in fee that the sales person told DH he would waive since we were buying a new truck when we turned the Jeep in. Sales person lied, and left the dealership shortly after. DH refused to pay the fee on principle. When Chrysler finally wrote it off as bad debt several years later, Citi immediately upped his interest rate to the max and that snowball started a downward spiral that no one could stop.

[Grace]

If you lease a car, you don't own one. You'll always have a car payment. If you finance at a good rate and keep the car for a long time, past the end of the loan, you'll own it and not have to make a payment. Generally, people who lease want a new(er) car every couple of years. And then there's always buying used. You have to look at the total cost of ownership over a given period of time.

[Spartan]

I have driven over a couple dozens of different cars and trucks (and even boats ) Good cars, junks, terrific cars, luxury cars. It is certainly nice to lease, if you can negotiate a good lease. New cars are really really nice to drive. And leasing get you into new cars that you can't otherwise afford.

But for pragmatic reasons, the ideal thing to do, is to invest in a solid used car and drive it a long time. You are really getting the max utility out of the money you spend. Save the money you would have spend on a new car, and invest those in solid mutual funds.

I have driven in really nice SUV and just couldn't be happy. Don't get me wrong. Nice cars are one hell of a thing to ride and drive. If you are happy in other areas of your life, a nice car will be icing on the cake. But if your life is in limbo, driving a really nice car simply cannot make up for it.

OTOH, I have driven junk cars and was extremely happy in life. Well, except that, I was wishing for a better car then. lol Human nature.


The point is, invest in a solid used car/truck in the $5 k range. And invest the money that your otherwise spend on a new one. You will have reliable transportation and you will have a nice slush fund. Happy happy...