Vehicle Leases

In the article Dealing with Vehicles, I listed 6 ways to deal with a vehicle in bankruptcy:

Alternative 1: You can let your vehicle be repossessed

Alternative 2: You can surrender the vehicle.

Alternative 3: You can keep the vehicle and reaffirm the loan.

Alternative 4: You may be able to keep the vehicle and “Pay and Retain”.

Alternative 5: You may be able to keep the vehicle and Redeem.

Alternative 6: Get a Ride Through Order.

In the case of a VEHICLE LEASE, you also have the option of ASSUMING the lease.  This is similar to reaffirmation.  If you assume the lease you can be sued by the leasing company if you default on the lease after bankruptcy.  But if the leasing company allows you to PAY AND RETAIN you can keep driving the vehicle as long as you continue to make the payments.  If you PAY AND RETAIN you can not be sued for defaulting on the lease after bankruptcy.

Note: In Bobka v TMCC, 2018 U.S. Dist. LEXIS 87989 (S.D. Cal. 5/24/2018) the 9th Circuit (our circuit) held that an assumption agreement is effective without a reaffirmation agreement.

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