November 2nd, 2005 by Questions
I am leasing a car with 3 years left in the lease. Will I lose the car if I file for bankruptcy?
November 04, 2005 at 1:07 pm, Barton Goth, GCO Inc. Bankruptcy Trustees said:
The leased vehicle is ultimately a secured creditor and most circumstances secured creditors, as long as you are up to date with your lease obligations, prefer people keep the secured property and continue making payments as originally contracted.
Having said that, the filing of a bankruptcy is technically considered an â€œact of defaultâ€ and gives the secured lender the ability to terminate the contract and seize the vehicle should they choose, this is an ability that they would prefer not to exercise (as selfishly they will make more money on the contract if they allow you to pay until full term) and normally, as long as the payments on the vehicle are up to date, secured lenders are please to see someone continue paying the loan as originally contracted.
While secured contracts are often a sensitive area, I recommend contacting a trustee in your local area (see “Find A Trustee” on the right hand side of this page) and have him review the contract. I also recommend that prior to filing a bankruptcy, to avoid any panicked reaction by the leasing company, to inform them in advance of the impending bankruptcy and your intention to continue making payments.
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