The Bankruptcy Code gives you two options when you file for Chapter 7: assume your lease (keep it) or reject it (get rid of it). But why would you do either?
You might want to assume your lease if you can afford the payments. It helps if you are keeping current with the payments and plan on buying the car. However, if your creditor accepts your assumption agreement, you will be responsible for paying off the arrears-money owed.
You may want to reject your lease if you cannot afford the high payments and are behind on the payments.
Whether you can assume or reject your lease is up to the trustee. The trustee has 60 days from the petition date to assume or reject the lease. Once 60 days has passed without a decision, the lease is automatically rejected. At this point you can notify your creditor of your intention to assume the lease.
If you have any questions about bankruptcy, please call 1st California Law at (949) 735-8499 for a free attorney consultation.