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Bankruptcy Law/Lease and Bankruptcy

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Expert: - 2/15/2004


Question
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Followup To
Question -
If a vehicle is turned back during a chapter 13 would anything be owed to the lease company. Could they some how collect the difference between what they still owe and what the car is worth. Thanks
Answer -
The deficiency would be an unsecured claim which would have to be treated accordingly in your Plan.
If the pay back was .20 on the dollar would I owe 20% of the difference? Thanks again. Tim

Answer
Theoretically, yes. Although many lease contracts have all kinds of penalties, etc. built in to returning a vehicle early, so it may be a higher amount than just the difference betweeen the amount due on the lease and the value of your car.  This also assumes that they timely filed a proof of claim and is subject to variations in Local Rules in the jurisdiction in which you filed your case.  However, what difference does it make?  You are paying whatever percentage to unsecureds that your budget dictates, so it shouldn't matter whether you're paying 20% or 100%.

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Mark J. Markus- California Bankruptcy Attorney

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Mark J. Markus is a Los Angeles bankruptcy attorney who has practiced exclusively bankruptcy law in California since 1991 and is rated A+ by the Better Business Bureau and is AV-rated by Martindale-Hubbell. He represents debtors, creditors, and Trustees in Chapter 7, Chapter 11, and Chapter 13 of the bankruptcy code throughout California.

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Visit our California bankruptcy webpage at http://www.bklaw.com for more information on bankruptcy in general and Mark J. Markus in particular. Many questions are answered on the web page (hint, hint).
The Markus webpage also contains more information on

  • Which Chapter to File,
  • business bankruptcy,
  • chapter 7 bankruptcy,
  • chapter 11 bankruptcy,
  • chapter 13 bankruptcy,
  • Do You Need a Lawyer to File Bankruptcy?
  • Frequently Asked Bankruptcy Questions

    Also visit our Los Angeles bankruptcy blog for interesting articles and much more.



    Organizations
    Central District Consumer Bankruptcy Attorneys Association (CDCBAA) Los Angeles County Bar Association (LACBA) Commercial Law & Bankruptcy Section of the Los Angeles County Bar Association Financial Lawyers Conference (FLC) National Association of Consumer Bankruptcy Attorneys (NACBA) Los Angeles Bankruptcy Forum (LABF) American Bankruptcy Institute (ABI) San Fernando Valley Bar Association (SFVBA)

    Publications
    Central District Consumer Bankruptcy Attorneys Association Newsletter September 2007 (Vol. 1, Issue 2)

    Education/Credentials
    J.D., University of Arizona 1990. B.A. Economics, California State University, Northridge 1986. For more details please click here

    Awards and Honors
    AV Rated by Martindale-Hubbell (http://www.martindale.com) A+ Rated by Better Business Bureau

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