When you file a Chapter 7 bankruptcy you have two basic options: You can assume the lease or you can reject the lease.
If you decide to assume the lease, then you will still be responsible for honoring the terms of the lease.
When you reject a lease you are stating that you no longer want to honor the lease terms, and you will have to surrender use of the leased property.
In addition, by rejecting a lease agreement in a bankruptcy, you receive a discharge from any further obligations under the lease agreement.
You can only assume or reject an unexpired lease, and when you assume a lease you are responsible for curing any defaults in your obligations under the lease. This means that any money you owed on the lease will need to be paid.
Remember: A bankruptcy is an opportunity to get a fresh start. You should carefully consider whether to assume a lease where you are behind on your monthly payments.
If you assume the lease and can’t catch up on the monthly payments after your debts are discharged in a bankruptcy, you will once again run the risk of being sued by the lessor to force you to honor the lease.
by Kevin Gipson, New Orleans, Louisiana bankruptcy lawyer.
