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Car lease

My husband and I separated early last year. We have not yet come to terms over our separation agreement therefore the separation of our debts have not been settled. My husband declared bankruptcy last month leaving me responsible on joint debts of close to $40,000. I have already seen a trustee and although I was considering a proposal, I was laid off from my job last week and will not have a choice but to declare bankruptcy myself.

Two days ago, my 1991 car died and the repairs are too expensive and not worth it at this point. I have not signed bankruptcy papers yet. If I lease a car, will the lease be affected by the bankruptcy? When I filled out the application with the trustee, I obviously only mentioned my 1991 car which has a value of approx. $500-$1000. Should I advise my trustee of what happened with the car and should I tell him about my intention to lease a car?

I reside in Ontario. Thank you.

One Response to “Car lease”

Barton Goth, GCO Inc. Bankruptcy Trustees said...

Technically speaking a leased vehicle is a secured debt. As all debts must be listed on your bankruptcy documents if you lease a car you must notify your trustee so it can be accurately listed on the required documents. Having said that, all secured creditors operate outside of the Bankruptcy and Insolvency Act and upon the filing of a bankruptcy or a proposal must make a decision, they can either repossess the vehicle or allow you to keep it and continue to make payments. In my experience most leasing companies are very cooperative as long as you are up to date on your payments. I do recommend consulting with your trustee in advance as many lenders have different practices depending on which region you are residing and your trustee will be more familiar with what the practices in your area.