January 31st, 2011 by Questions
We are in financial disaster at the moment. I am considering debt counselling and management or possibly even consumer proposal to deal with unsecured debt. However I am not sure how to deal with a vehicle lease that still has three years left on it. The payments are 800 a month and we simply cannot continue to make them. What options are there for dealing with leases? If you return the vehicle early what can happen?
Posted from: British Columbia
One Response to “CP”
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February 01, 2011 at 9:46 am, A licensed trustee said:
Neither debt counselling or a debt management program will allow you to break your car lease. If you need to break the lease then you should be looking into a consumer proposal (or possibly bankruptcy).
If you return a leased vehicle early the leasing company will sell the car at auction and then send you a bill for the total value of any remaining leasing payments plus the residual value of the vehicle per the lease less what they got for it at auction. Since vehicles ususally sell for about 50% of their retail value at auction you can expect a very large bill.
If you file a consumer proposal, this bill will be added to all of your other unsecured debts and be dealt with.