§ 31.7     Leases and Rental Agreements
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 31.7, at ¶ ____, LundinOnChapter13.com (last visited __________).

A debtor’s financial picture often includes leases and rental agreements. If the debtor rents a home or apartment, counsel should insist on reviewing the lease to determine the exact rent, the term of the lease, and any other features of the lease that may affect the debtor’s performance of a Chapter 13 plan.


After the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA),1 landlords and lessors have new rights and powers2 that can have a significant impact on the course of a Chapter 13 case from its earliest stages. Counsel has to collect lease information before filing the petition to be prepared to deal with potentially disruptive action by landlords and lessors.


Car leases are common in Chapter 13 cases and present special problems. The typical car lease represents a big initial investment for debtors and most car leases will complete or terminate by contract before completion of the Chapter 13 plan. Counsel has to read the car lease itself to figure out what can be done and when during the term of the plan to keep the debtor mobile and minimize loss on the contract.


Debtors often rent other personal property such as washing machines, stereos and VCRs. Many of these agreements are not true leases or are terribly unfavorable to the debtor.3 The debtor should bring all rental agreements to counsel for discussion. Assumption, rejection, renegotiation or treatment as a secured claim are options that cannot be determined without careful review of the contracts.


If leases or rental agreements are to be assumed by the debtor in the plan, the amounts required must be calculated from the agreements and budgeted in Official Forms 6 and B22C.


1  Pub. L. No. 109-8, 119 Stat. 23 (2005).


2  See §§ 414.1 [ Preconfirmation Assumption and Rejection of Leases and Executory Contracts ] § 51.4  Preconfirmation Assumption and Rejection of Leases and Executory Contracts after BAPCPA and 427.1 [ Preconfirmation Rights of Landlords and Lessors ] § 57.4  Preconfirmation Rights of Landlords and Lessors after BAPCPA.


3  See § 175.1 [ Fake Leases and Rental Agreements ] § 102.8  Fake Leases and Rental Agreements. See, e.g., Consumer Lease Network, Inc. v. Puckett (In re Puckett), 60 B.R. 223 (Bankr. M.D. Tenn. 1986).