Reject a Lease or Contract

Reject a Lease or Contract

You can reject a lease or contract with a a Chapter 7 or Chapter 13 bankruptcy.

That is, in addition to discharging debt and surrendering underwater real estate, a bankruptcy provides another important mechanism: the ability to choose to assume or reject a lease or an executory contract. This applies to apartment or home rental leases, automobile leases, cell-phone contracts, personal service contracts, and any other kind of lease or contract that you can think of.

Thus, if you are stuck with a cell-phone contract with a hefty fee for breaking it, or, more commonly, an auto lease in which you are already near the termination date of the lease and you know that you will be over the allowed mileage with heavy fees to result, you can reject the lease in your bankruptcy and treat the other party to the contract as an unsecured creditor.

Discharge the debt entirely, that is. The other party to the contract, whether it is Ford Motor Credit, a landlord, or Verizon Cellular, will be unable to pursue you for collection on the penalties imposed in their contract.

Of course, if it is a contract for occupation of premises such as a rental lease or for use of property such as an auto lease, you will have to vacate the premises or surrender the property in questions.

If you feel stuck with a lease or contract with unmanageable penalties attached and are considering filing for bankruptcy, contact The Hilla Law Firm to schedule a free, initial consultation. We are experienced not only with bankruptcy law but also landlord-tenant and contractual matters.

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