Is it better to file for bankruptcy before turning in a leased vehicle before the contract is due?
I was told by a car dealership salesman that the only way I could get into a car was through a lease, so I did. I have not had the vehicle for a year yet, but have put about 40K miles on it and am having a difficult time making the lease payment and paying the considerably higher insurance requried. I want to turn it back in, but am unsure about how much money they are going to try and bill me for for the mileage and wear and tear, and a host of other penalties etc. Will they put a lien against my home for this, garnish wages, etc.? Would filing bankruptcy before turning it back to them protect me from this? Would a bankruptcy be better than a repo on my credit history?
Posted February 7th, 2010 in Bankruptcy Q And A. Tagged: car dealership, credit history, filing bankruptcy, garnish wages, how much money, insurance, lease payment, mileage, repo, wear and tear.
banrupcy clears your record but it will be very hard to get a good loan or other credit if you do that.
February 7th, 2010 at 2:48 amNot sure how long a repo stays on your credit history. Bankruptcy stays on there for 7 years. I would take the car back and talk with the auto-dealer’s financial person to work out some sort of payment plan for any outstanding money that you owe.
February 7th, 2010 at 2:48 amBankruptcy is pretty much the worst thing for your credit history. It would be years before you could get any kind of credit again. A lien on your home or garnished wages would be small potatos in comparison. Avoid bankruptcy at all cost–it happened to my brother, and he’s still suffering for it, despite the fact that he has been financially solvent, even successful for six years. He and his wife still haven’t been able to get a mortgage. Talk to an accountant.
Leased cars are rarely the most cost-effective transportation. They’re usually a rip-off. You should get advice from a more unbiased source next time.
February 7th, 2010 at 2:48 amYes, file first then you have an option to keep the car or let it go back.
Ask your bankruptcy attorney to be sure that it’s the best way for you on a chapter 7. Although I’m sure it is.
February 7th, 2010 at 2:48 amGet a second job to pay for it. Find the money elsewhere. Do whatever you can do to NOT do what you are thinking about doing. It will cost you SO MUCH MONEY!!!! Your credit is going to get nailed (future loans will cost 10’s of 1000’s more). You are going to get billed and possibly sued for the balance of the loan.
This is the worst possible thing you can do financially besides throwing money out the window as you drive down the freeway.
Don’t worry about the miles. When the lease is almost due, just trade it in like you have a regular simple interest loan. It’ll be CONSIDERABLY cheaper than what you are conisdering doing, and you won’t be billed for the miles. The car will simply be worth less money, but that’s 1000’s cheaper than a milage penalty for turning in the car.
February 7th, 2010 at 2:48 amUnder the new bankruptcy rules it is much harder to file personal bankruptcy.
February 7th, 2010 at 2:48 amFirst, you must actually be bankrupt. If you have equity in your home or other assets, you might not actually be bankrupt.
If you do not pay what you owe the car company, it can and will get a judgment against you, which they will seek to collect by any means, including the possibility of garnishing your wages and/or filing a lien.
Even if you file for bankruptcy, under Chapter 13 you will have to submit a plan the involves paying most if not all the money you owe.
If you file Chapter 7, you face the possibility of losing your home (depends on where you live. Some states have an unlimited homestead exemption, such as Florida).
Also, under the new bankruptcy rules, you MUST seek credit counseling prior to filing, along with other requirements.
Best to consult an attorney familiar with bankruptcy.
Good luck.