Leased car - turn in or try to sell?

[cometkitty]

I have a Jeep that is 3 months away from the end of the lease. It was included in our BK (discharged March 2014). We did not sign any sort of reaffirmation but did continue to drive it and make the payments.

My husband got the opportunity to get a great deal on a used car from a friend that was moving. So we no longer need the Jeep and I need to get rid of it as it is a bit of a financial strain.

I called Ally Financial about turning it and and they were very nice and said oh we can just have someone come by and get it. But then at the end of the conversation she said that she would get the information entered to start the repossession. So I am guessing if I turn the car in early it goes on my credit as a repossession?

If so I might try to sell it to CarMax but I might be upside down a few hundred dollars on it so I hate to do that but I don't want the repo on my credit report since the BK is bad enough

Any advice/info on how leases are handled under Chapter 7 is greatly appreciated.

[Geeznowwhat]

You do not mean it is a leased car...surely

A leased car is never owned by the driver. It never stops being owned by the leasing company. You can't sell it...you don't own it

I conclude you do not mean lease.

You purchased the jeep, and now want to surrender it. So....if you just let them take it back, that is a repossession. In what way was it included in the BK? Did you just decide to let the trustee take it. Did you have equity to protect? How much exemption did you claim? Is the car worth more than you owe?

[cometkitty]

It is a leased car but CarMax says they can still purchase it from me and they just pay the PayOff amount that the leasing company wants. Ally Financial also said the same thing and gave me the phone number for CarMax to call for the payoff amount.

In our BK paperwork I think we put surrender but then just continued to make the payments and never heard a word from them. My online access disappeared, we did not get any bills and if I call them I get directed to their bankruptcy department. It was upside down at the time we filed for the BK and at this point it is probably even or a few hundred dollars upside down.

I keep reading conflicting things online. Some say that they can't report it as a repossession if they take it AFTER the BK and it was not reaffirmed and then other articles say it would be a voluntary reposession.

It would obvisouly be easier to just give it back to them but if it will add another ding to my credit report I would prefer to sell it to CarMax even if it has a few hundred dollars of negative equity if that prevents the repossession from showing up on my credit report.

[bcohen]

If the car is indeed leased, and is indeed scheduled to be turned in in 3 months, then you really have nothing to lose by letting the lessor pick it up now. Just because the lady on the phone used the word "repossession" doesn't make it so. You have already rejected the lease by default if you didn't explicitly reaffirm (assume) it, so you are not liable for any end-of-lease fees or over-mileage fees. If you no longer wish to make the payments, stop paying and have the lessor pick it up. They cannot legally report any "repossession" or any "debt" stemming from this lease. The bankruptcy discharge prohibits that.

[LadyInTheRed]

They cannot legally report any "repossession" or any "debt" stemming from this lease. The bankruptcy discharge prohibits that.

Exactly. If you don't want the car, let them come get it. If they report negatively on your credit report, dispute it. This, of course, assumes that Ally Financial got notice of your bankruptcy or your case was a no asset case (i.e., unsecured creditors received nothing).