Unexpired Car Leases in Bankruptcy: When to get Out of an Expensive Lease

During the bankruptcy process, individuals present their assets and debts to the court. The goal of bankruptcy is to liquidate any specific assets not protected under bankruptcy exemptions. The liquidated property results in funds that the bankruptcy court can use to repay any creditors with claims against the bankruptcy estate. One of the assets in the bankruptcy estate includes any unexpired car leases. However, these are not always lost during the bankruptcy.

Deciding What To Do

Individuals who have unexpired car leases need to determine the best course of action for their financial future. One of the rights afforded to Americans is the right to bankruptcy to offer individuals an opportunity to improve their financial futures. As such, bankruptcy is an opportunity for individuals to get out of debts he or she cannot afford and that would keep the individual from financial freedom in the future. To determine if you should include unexpired leases for vehicles in a bankruptcy, consider these steps:

Determine if the debt can be caught up. In order to keep any lease during bankruptcy, the lease holder must agree to reaffirm the debt. This will not happen if the lease holder is owed significant back payment.
In an expensive lease, individuals need to determine if they have the financial means to continue to make payments on the lease over the rest of its life. If the individual does not have the means to continue paying it, he or she should include it in bankruptcy.
Focus on the financial future rather than the past investments in the car leases to determine which route to take. If remaining in the expensive lease will hinder financial success and stability, include it in the bankruptcy as property to discharge.

Unexpired car leases in the bankruptcy process are considered secured debts. Without payment according to the original terms of the country, the vehicle is confiscated by the lender who will own it outright. No refunds for previous payments are provided. However, if the bankruptcy estate discharges the debt during bankruptcy filings, the individual does not need to repay any remaining debt owed.

Hiring An Attorney

If you are not sure if you should keep an expensive car lease when you are filing bankruptcy, consider using the advice of an attorney. An attorney can help you to make the right decision for your situation and then provide steps to ensure your needs are met during the bankruptcy process.

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