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Hello Lee,

I filed for Chapter 7 Bankruptcy recently and have a leased car through Toyota. The meeting of the creditors is in a few weeks.

Toyota sent my lawyer a notice about a Lease Assumption Agreement and sent me a copy.  I asked my lawyer about it and he said that he doesn't recommend that I sign a Lease Assumption Agreement because it makes me responsible for the payments even though my responsibility with Toyota has been erased by the bankruptcy, and says, that if I continue to make the payments voluntarily they will not repossess the car (but not guaranteed).

So my question is if I don't sign the Lease Assumption Agreement, will Toyota repossess my car? I live in New Jersey and I still have 2 1/2 years left on the lease. I have made all my payments on time, but am wondering if Toyota can/will repossess my car.  I don't have a 2nd car nor the funds right now to buy a used car.

What do you suggest I do?  


I personally do not like car leases;  many have huge mileage penalties and "damages" that are assessed for dog hair and dirty floor mats, for example;  of course I don't know what kind of lease you have -- if it's closed end with no mileage calculations in the mix that's one thing;  but if it's got penalties for mileage and you expect to be in the penalty range, think about it.

I can't say for sure what they'll do if you just keep paying.  So far as I have heard it is only Ford Motor Credit that, nationwide, repossesses vehicles that are not reaffirmed even with current payments.  What I've heard is other lenders will just cooperate with you and let you keep the car as long as you pay for it.  I have not heard of Toyota Motor Credit repossessing up to date vehicles, but no one can guarantee that won't happen.

Because I don't like leases, I would go along with your attorney, not sign anything, and keep paying to keep the car.  You'll have to get something in 2 yrs anyway and by then you'll have 2 yrs of post-bankruptcy payments showing on your credit.

While you're at it, you might want to get a secured visa/master card as long as there are minimal to no fees involved;  Wells Fargo Bank if you have them back there has a $19/yr secured credit card (NOT a debit card) program; and I've learned that many credit unions do as well.  That will also help you re-establish.  The cash you deposit is the collateral for the card and they typically pay 0% on the deposit.

Good luck.

Lee Horner

Bankruptcy Law

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Consumer bankruptcy questions invited. I've been filing Chapter 7, 11 and 13 cases since 1985 in Calif and Arizona. I do NOT do homework questions. Let me know what state you're located in when you write. My bankruptcy practice is limited to California and Arizona but inquiries from other states are welcome. Your local jurisdiction determines exemptions. Find more background information at our website, Individual Chapter 11 and small business chapter 11 questions invited. We can also advise on the creditor's side if for example you have a fraud case, money judgment etc against someone who has filed (or is threatening) bankruptcy. We have filed and defended numerous adversary complaints in bankruptcy court and opposed trustees' demands for turnover of assets from time to time.


My partners and I have filed over 5000 consumer and small business cases to date in California and Arizona.

I've been a member of the California bar since 1984 and Arizona since 2004; also a member of the National Association of Consumer Bankruptcy Attorneys, Bankruptcy section of the Arizona State Bar, Tucson Association of Consumer Bankruptcy Attorneys, Arizona Consumer Bankruptcy Counsel and American Hellenic Educational and Progressive Association (AHEPA).

I've written a booklet on land trusts for real estate owners, players and dealers, and co-authored a special edition of "Stop Sitting on Your Assets". I was a writer of a monthly law review article relating to California real estate issues and pending and recently enacted legislation.

Attorney at law, experienced in trial procedures, adversary complaints filed and defended and numerous claims objection proceedings as well as filing cases for consumer and small business debtors.

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