What can my father do if he owes an earlytermniation fee on a car lease, but has no money?

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What can my father do if he owes an earlytermniation fee on a car lease, but has no money?

My father is currently unemployed and has no assets. He was no longer able to afford the lease payments so he didn’t pay it for a couple of months and finally he returned the car 1 month before the expiration of his lease. We got a letter about the “gross early termination” amount. And depending on how much they sell the car for, we are going to owe the difference (which is the deficiency). Can they sue him in court for the deficiency? Will they if they see he has no assets? Could it be possible that they will just bill him and it will go to collections?

Asked on February 25, 2011 under Bankruptcy Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

There's legally and there's practically.

Legally, unless the agreement allowed early termination without penalty and your father followed those terms, he is responsible for any deficiencies and also for any early termination penalties or fees provided for in the agreement. So legally, the creditor has the right to proceed against him for these amounts, whether by turning it over to collections, suing him, etc.

Practically, depending on the amount, it may not be worth their pursuing him--but that's their call to make. They can decide what to do. If you could pay some of the amount due by your father for him, you may be able to get them to settle; but if you can't or won't do that, or they won't take a settlement, you need to wait see whether they will sue him or take other action. If they do, one option for your father would be to file for bankruptcy to eliminate the debt.


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