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Car Lease Default

My car lease states that I will be in default and they can terminate the lease if a bankruptcy proceeding is filed or I am the subject of a receivership or insolvency proceeding or if my creditors seize the vehicle. Would a Consumer Proposal be considered a default of the lease agreement in this case?

One Response to “Car Lease Default”

Barton Goth GCO Bankruptcy Trustees said...

Technically speaking this clause is valid and should they choose the lender could call the lease upon the filing fo a bankruptcy or a consumer proposal. However, just because they have this ability doesn’t mean it is going to be exercised. We find in practice most lenders are willing to permit you to retain the vehicle and pay until term as they will financially be better off.

The key usually is that you need to have good payment history and up to date on your lease payments.

In addition to this I always suggest you contact the leasing company, explain your intentions, request they note your inteintions on their system and see if they will give you confirmation as to whether they will permit you to retain the vehicle. Now normally they won’t provide anything in writting, but often they will give verbal confirmation that it shouldn’t be a problem.