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If youve been considering filing bankruptcy but youve had the fear of not being able to move to a new place, let us help ease your fears.
A bankruptcy is nothing to be afraid of, especially when you have an experienced law firm to help you make the decision as to whether or not its right for you.
Call us at 327-2100 today to schedule your free appointment. Or you can contact us online.
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Do You Lose Your Car If You File For Bankruptcy
The good news is you dont automatically lose your car if you file a bankruptcy or consumer proposal in Canada.
If you financed your car, truck, van or any vehicle with a loan or lease, then when you file for bankruptcy in Canada, you can keep your vehicle as long as you continue to make the monthly payments.
The key here is you must continue with your obligations under the loan or lease agreement. Your lender or leasing company can repossess the vehicle if you dont keep up with the required payments.
Your creditor cant demand the vehicle back just because you filed personal bankruptcy. Even if your loan or lease contract contains a clause that says your lender can demand full payment, cancel the lease and take the vehicle back if you become bankrupt, this clause is unenforceable.
Specifically, the Bankruptcy & Insolvency Act provides a stay of proceedings against such actions.
Section 69 prohibits secured creditors from taking possession of assets under a security agreement just because you filed insolvency unless:
- They repossessed the vehicle before you filed
- They gave notice of their intention to take possession 10 days before you filed
- You give them permission to take the car back
If you can continue to make your monthly payments, the leasing company, bank or car lender cant cancel your vehicle lease or demand full payment of your car loan.
Consider Waiting A While
Whether you can get a lease after bankruptcy depends on the lender shopping around is necessary to get the best interest rate. You may have better luck if you wait a while so you can build up your Even though you might have to do some research to find a good deal, you’ll probably have an easier time getting a lease than a purchase loan after bankruptcy, simply because lease amounts are less than purchase amounts. You pose less risk to the lender.
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Be Careful Be Very Careful
There are unscrupulous car salespersons. They will try to sell a junk car at a high price with high interest rates.
Many lawyers have dealers who sell cars to Chapter 7 clients. These dealers have decent used vehicles at reasonable terms. I know our firm has a couple of places we refer clients.
Actively Work To Improve Your Credit
By working with our Bensalem Bankruptcy attorneys, you have discharged a significant amount of debt. However, there are more steps you could take to improve your financial situation. Applying for a secured credit card is one way to start improving your credit score. Ensuring you continue to pay any current bills timely is also vital in keeping your credit score moving up. If you are taking these steps and being proactive, a potential landlord might be willing to overlook a recent bankruptcy.
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The Final Steps Of Your Journey Towards Lasting Debt Relief
Getting all of your bankruptcy forms prepared and filed with the bankruptcy court is usually the most time-intensive process of a Chapter 7 bankruptcy. But that doesnât mean that your job is done. There are a few things everyone filing Chapter 7 bankruptcy has to do to successfully complete their bankruptcy case and receive a discharge. Letâs take a look at what you can expect will happen in your Chapter 7 bankruptcy.
Pay Filing Fee in Installment Payments
If you can’t pay the entire Chapter 7 bankruptcy filing fee and you don’t qualify for a fee waiver, then you can apply to pay the filing fee in installments. You can ask to make four installment payments. The entire fee is due within 120 days after filing.
If the bankruptcy court approves your application, it will grant an Order Approving Payment of Filing Fee in Installments. Your installment payment due dates will be in that order. You must pay all installments on time or your case is at risk of being dismissed.
Take Bankruptcy Course 2
You will complete a credit counseling course before filing bankruptcy. There’s a second course you must take after filing bankruptcy. It covers personal financial management and can help you take advantage of your fresh start after erasing your debts through bankruptcy.
You have to take this course after your case is filed but make sure itâs be completed within 60 days from the date of the meeting of creditors. A certificate of completion must be filed with the court.
Beware Of Bankruptcy Fraud Regarding Car Leases
Keep in mind that if you leased a luxury vehicle shortly before filing bankruptcy expecting to keep that vehicle but to get out of paying your other creditors, that wont work. Not only will the Trustee or your other creditors object to the discharge, but you may find that your Bankruptcy case winds up being dismissed for not being filed in good faith.
Chapter 7 is for the honest but unfortunate debtor who, through no fault of his or her own, is in financial distress. While you cant expect to profit from bankruptcy by driving away from all of your unsecured debt in your luxury vehicle, you can expect help with unaffordable debt when you really need it, and be able to keep your car.
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Following Through With Your Intention
Some courts might treat your actions as evidence of your intentions, regardless of what you indicate on the Statement of Intention form. This means that if you continue to make payments on the lease after your bankruptcy, the creditor might interpret your actions as evidence that you wish to assume the lease and argue that you should be held responsible for it.
If you are considering Chapter 7 bankruptcy and you lease a vehicle, it is important to decide whether you can afford the payments or whether you should return the car to the dealerthen make sure your actions match what you indicate on the Statement of Intention.
Keeping A Car Thats Not Paid Off
First, if youâre close to having it paid off, there is a good chance you have at least a little bit of equity in the car. In this context, equity is calculated by subtracting the current loan balance from the carâs value. As long as the equity is less than the exemption amount , your bankruptcy trustee canât touch your car.
About your car loan
Chapter 7 bankruptcy is not a way to get a free car. If youâre still making payments on a car loan, you havenât paid for your car yet and the only way to keep the car is to pay for it.
Redeem the car by paying only how much itâs actually worth
One way to do this is through a redemption, where you pay for the car’s current value in a single payment, no matter how much you owe. If that sounds like an option for you, here’s where you can learn more about how to redeem your car.
Is paying a lump sum to redeem your car not possible? You have other options!
If you’re like most, you probably don’t have access to that kind of money right after your bankruptcy filing. That is where reaffirmation agreements come in.
Reaffirmation Agreement Basics
A reaffirmation agreement allows a bankruptcy filer to keep their car by preventing the car loan from being discharged. They exist, in large part, to protect banks and credit unions after a Chapter 7 bankruptcy. Here are some details about the process of reaffirming a car loan.
If you were facing repossession, a reaffirmation may not be the way to go
Keep the car, keep the debt
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Lawyer To Help With My Car Lease In Bankruptcy
So youve decided you need to file bankruptcy and you happen to be leasing a car. This article will go over your four options concerning the disposition of your car lease.
Bankruptcy law is nuanced in that it varies state-to-state. This article will give you a broad outline of your rights and responsibilities if you have a car lease, and you file bankruptcy. However, the law and facts of your particular situation should be reviewed by an experienced bankruptcy attorney so that you can be sure you are going to get the outcome you intend.
If you are in need of a bankruptcy lawyer in Philadelphia or the surrounding areas, give us a call at 625-9600. We have helped thousands of people just like you straighten out their finances. We will discuss all of your available options during your free, no-obligation consultation, and help you decide what course of action is best for you.
So Go Rent Your New Place To Live
Im confident that if you follow these steps you will not have any problems finding an apartment or house to rent you can afford after you file bankruptcy. Frankly, its one of the things you least need to worry about.
Oh yes, and one last bit of post-bankruptcy information, check your own consolidated credit report before you head out to start applying. You should check to make sure all your credit reports are accurate following your bankruptcy and keep an eye open for any debts that were discharged in your bankruptcy that might still be reporting as open or delinquent.
And while youre at it, you should also get cracking on rebuilding your new great credit following your bankruptcy. Its easy to do if you follow this process.
You are not alone. Im here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Dont give up.
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Assuming The Car Lease
If you want to assume the lease, review the written lease carefully to make sure you can still afford the terms. Many car leases contain undesirable clauses such as mileage limitations, odd term lengths, or residual or other fees that may no longer be in your best interest.
If you assume the car lease, then the lease continues in full force and effect, as written. To assume the car lease you must notify the car lessor in writing. The car lessor is not required to respond, but it might.
Car lessor says yes. The car lessor may notify you that it will allow you to assume the lease. If so, it can require you to cure any outstanding defaults. After 30 days you should then notify the car lessor in writing that the lease is in fact assumed.
Car lessor says no. If the car lessor does not agree to your assuming the lease, or you cannot work out an agreement on this issue, then it can pursue its remedies under state law .
If the car lessor does not respond. If the car lessor does not respond, you should not rely on its silence as an agreement to continue with the lease. The car lessor may have already decided to pursue its remedies under state law.
|Take our bankruptcy quiz to identify potential issues and learn how to best proceed with your bankruptcy case.
Search For A Good Lender
Most finance companies will shy away from car leases following bankruptcy because of the risk. But that doesn’t mean there aren’t any lenders that will be willing to work with you. As you search for a lender, make sure you:
- Ask plenty of questions, such as:
- What are my leasing options?
- Are there any incentives or rebates I can qualify for?
- What’s the best interest rate I’ll be able to get?
- What’s the minimum accepted credit score?
- Are there are any short-term leases available?
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How It Works In Chapter 7 Cases
In Chapter 7 cases, the trustee has 60 days to decide whether to assume or reject your car lease. In practically every case, the trustee will elect to reject, because it has no value to the trustee and it is too burdensome and of little or no value to administering a Chapter 7 case.
Typically, the San Diego bankruptcy trustees will not do anything and after 60 days your car lease will be deemed rejected since the trustee is not likely to assume it. Once a lease is deemed rejected, you can assume it if you want to do so, by notifying your car leasing company or finance company, in writing, that you want to assume the lease and keep the car.
In a Chapter 7, car leases will generally be assumed by you, at your option, unless you dont want to keep your leased vehicle anymore. If you don’t want to keep it, you can give it up, in which case the lease will remain rejected and you need not make any further payments to the leasing company or finance company.
If you want to assume, the way it works, mechanically, is that within 60 days of your bankruptcy filing you will sign a Lease Assumption once your case is filed and the Lease Assumption becomes operative and is valid and enforceable upon the trustee’s rejection.
Finding A Car Loan After Chapter 13
If youve successfully completed your Chapter 13 bankruptcy, received your letter of discharge, and need an auto loan, you may not know where to turn. Here at The Car Connection, we can help with that. We work with a nationwide network of special finance dealerships that have the lending resources to help people in many types of credit situations get into the cars they need. Our process is simple, free, and fast. Fill out our online auto loan request form now, and well get to work matching you with a local dealer!
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Where To Look For A Good Car Loan After Bankruptcy
Immediately after a bankruptcy, it wont be easy to get a car loan. Your best bets:
- The bank or credit union where youre already a customer. Since your accounts are with them, they may treat you differently from someone walking in off the street.
- Bad credit auto lenders. Some car lending companies specialize in working with customers with bad credit. Again, you wont get great rates, but this can still work for you if it fits inside your budget. Check whether having a cosigner preferably one with excellent credit would lead to a lower interest rate.
- Swap leasing. This involves taking over someone elses lease and payments from them. You pay whats left on the car and they escape a loan that isnt working for them. Of course, read the terms closely and check out the vehicle before the exchange to make sure its worth buying.
Talk To A Bankruptcy Lawyer
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The Debtor’s Decision To Continue The Lease Or Surrender The Car
If the bankruptcy trustee rejects the lease, you have the opportunity to “assume” the lease, or end the lease and surrender the car.
Even though the bankruptcy trustee must first reject the lease before you can assume the lease or surrender the car, you must generally indicate your preference ahead of time in your bankruptcy papers. You do this on Schedule G — Executory Contracts and Unexpired Leases. You must also list the car lease on the bankruptcy form titled Chapter 7 Individual Debtor’s Statement of Intention under Part B “Personal property subject to unexpired leases.” On this form, you must state the car lessor’s name, a description of the property, and whether you will assume the lease. You must provide a copy of this form to the trustee and the car lessor.
What Is Surrender In Chapter 7 Bankruptcy
If you file a Chapter 7 petition, you can surrender the car to the lessor and have the remainder of the lease discharged as unsecured debt. This means you give the car up and walk away with no debt under the lease. Also, you can get your other unsecured debt, such as credit card debt or medical debt, discharged at the same time.
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Can You Break A Vehicle Lease Or Car Loan In A Bankruptcy
While you can keep your car if you file insolvency in Canada, that does not mean you should. An expensive car lease payment can be one reason you face debt problems, especially after factoring in other costs of driving, including gas, insurance, and repairs.
You can file bankruptcy in Canada, give up your vehicle voluntarily, terminate the lease and eliminate any remaining obligation for future payments due to the end of the lease term.
There are several reasons why surrendering your leased, or financed vehicle makes sense:
- You can no longer afford the monthly payments.
- You owe more than the car is worth. Longer-term vehicle financing has resulted in many Canadians finding their car loan or lease underwater. Facing a debt after your vehicle is no longer serviceable makes no sense.
- You no longer need the vehicle. Working from home during COVID-19 has made many people living in a city like Toronto, for example, rethink ownership of a car entirely.
You can walk away from an auto loan or lease before filing for bankruptcy. You simply return the vehicle to the leasing company but make sure you do it before declaring bankruptcy. The lessor will then be responsible for selling or auctioning the vehicle for fair market value. Any lease payments owing above the sales proceeds become an unsecured debt that can be discharged by bankruptcy.