If you need a car to drive to work every day, you know how stressful not having enough money can be. After all, car payments can be tremendously expensive. Leases are sometimes a good option for using a car without having to make such high payments. If you are thinking about filing for Chapter 7 bankruptcy protection, though, you need to know how your filing may affect your car lease. 

The status of your lease during a bankruptcy filing probably depends on whether you are current or behind on lease payments. If you are behind, your bankruptcy filing gives you the benefit of an automatic collections stay. That is, the lessor may not engage in collections activity, including repossession of the vehicle, for a period of time. Nonetheless, the lessor can petition the bankruptcy court for a lift of the automatic stay. If the court grants the motion, collections activities may resume. 

Assume or reject 

After you file for Chapter 7 bankruptcy protection, the trustee has the option of assuming or rejecting your car lease. If the trustee assumes the lease, it remains valid and enforceable. By contrast, if the trustee rejects the lease, the automatic stay ends in 60 days. The lessor can then exercise its legal options under state law, including repossessing the vehicle. 

Keep or surrender 

Bankruptcy trustees typically only assume car leases if there is some financial benefit to the bankruptcy estate. As such, there is a good chance that the trustee will reject your lease. If that happens, you have the option of keeping your car and continuing to make lease payments or surrendering it. First, though, you should seek approval from the lessor to keep the car. You should also be certain that you can afford to make monthly payments. 

If you are contemplating filing for Chapter 7 bankruptcy protection, you may worry about losing your leased car. By understanding your options, you can better plan for either keeping your mode of transportation or figuring out a new way to get to and from work.