Bankruptcy And Car Lease
Needless to say, bankruptcy and car lease do not work together very well but if this situation occurs, you’ll have to be prepared for all the consequences and the ramifications. Breaking up a car lease is a very expensive proposition. However, in most cases you should be able to discharge this obligation as part of the bankruptcy filing. It is advisable to talk to a bankruptcy attorney in order to find out if this is true in your state. If you find out that you can, breaking the car lease as a part of the filing for bankruptcy, it will be better than breaking it after the bankruptcy has been discharged. However, keep in mind that you will no longer be able to use the car and at the same time you will lower your chances of getting finance for a new car.
The current lessor will be satisfied with the fact that you will be able to keep up making the payments through the aforementioned bankruptcy filing. However, your payment history will not be to your advantage when time comes to get a lender to finance a new car. If you want to start working on your credit score, your best way would have to be an unblemished payment history after the bankruptcy discharge. But, keep in mind that it will be more difficult for you to obtain the approval for a new car lease and if you get it, you’ll have to pay more financing costs.
In most common situations, you will have to wait about 24 months from the date of the bankruptcy discharge before a new lender will be able to extend your credit once again.
If you file for Chapter 7 bankruptcy and you are at the moment leasing a car, you have to options: either continue making the monthly installments or take the vehicle back to the creditor. If you choose the latter option, any of the obligations under the lease will be removed from your Chapter 7 bankruptcy case. If you have problems paying your lease, filing for Chapter 13 bankruptcy is one way to go in order to stop the repossession of the car.
As far as the 910 Claims are concerned, you need to understand that if you have purchased the car within 910 days before filing for bankruptcy, you will have to repay the entire loan for the car. Probably the only good news in this situation is that the interest rate at which you are obliged to pay may be significantly lowered, but not in all situations. If more than 910 days passed since you acquired the vehicle, you will have to pay an amount equal to the present value of the car.
If you want to get a car lease after the bankruptcy, you will have to improve your credit score. In order to do so, you should take out a credit card and pay it off in full monthly, without having to carry a balance. You have to understand that the interest rates on credit cards will be higher and for this reason you should pay it off in full in order to avoid having to pay the interest charges.
As you can see, there are a lot of things to take into consideration regarding bankruptcy and car lease. We advise you to talk to a bankruptcy lawyer in order to find out what you should do if you are in this rather difficult financial situation.