Can I Lease a Car after a Chapter 7 Bankruptcy?

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

, - December 4, 2019

A Chapter 7 bankruptcy is called a liquidation bankruptcy, where any non-exempt assets – possibly even your car – are sold (liquidated) to pay back your creditors. But as long as your vehicle equity is under your state’s exemption limit, you can keep it during a Chapter 7 bankruptcy. However, if you’re forced to give up your car, you may be wondering if you can lease a new vehicle once the bankruptcy is discharged. It’s not impossible to do this, but it isn’t going to be easy.

How to Lease a Car after Chapter 7 Bankruptcy

The very first thing you need to do if you want to lease a car post-bankruptcy is to wait until you’ve received the discharge papers. Chapter 7 bankruptcies are relatively short, usually only lasting three to six months.

Once you receive your discharge papers, you’re in the clear to get a new vehicle. From there, you need to do two things:

  1. Check your credit – Your credit score is going to be lower after a Chapter 7 bankruptcy, and it’s important you know where your score stands before you begin searching for a lease. You’re entitled to a free copy of your credit reports every 12 months from the three major credit bureaus: Equifax, Experian, and TransUnion. You can request them at Make sure all the information is accurate, and dispute any errors you find immediately. When it comes to your credit score, most lenders and lessors look at your FICO score. You can typically view your score for free through your lending institution or credit card company. If they don’t offer this service, you can pay a small fee to get it with your reports from the credit bureaus or directly from FICO at
  2. Consider additional options – Leases come in tiers, and the better your credit score is, the higher the tier you generally qualify for. If your credit score is too low, it’s possible you aren’t going to qualify. If you’re worried you won’t even qualify, or were turned down already, you may want to consider financing your next car, or waiting until your credit score improves and try to lease then.

Bad Credit Lease Qualifications

If you’re determined to lease your next vehicle but your credit is damaged, it may be difficult to find a lessor. When you find a lease with bad credit, it’s common for the lessor to do two things:

  1. Ask for multiple security deposits – Besides paying the usual tax, title, and license fees and first month’s payment up front, it’s not unusual for lessors to ask for one or more security deposits. Security deposits aren’t down payments; as long as the car is in good condition and within the mileage limits, you get the deposit(s) back at the end of the lease term.
  2. Qualify you at a high interest rate – A common thing lessors do is qualify lessees with less than perfect credit at an interest rate that’s higher than average. The higher the interest rate, the higher the monthly lease payment. However, you can lower the monthly payment by making a down payment.

Ready to Find Your Next Car?

The bottom line is this: it’s sometimes possible to qualify for a lease after a Chapter 7 bankruptcy, but it isn’t guaranteed. The key is to work with the right leasing company.

If you need assistance in finding a lease deal, we can help. On the other hand, if you’re simply looking to finance with a bad credit auto loan, we can assist with that, too.

At CarsDirect, we work with a nationwide network of dealers that have the lending resources to handle unique credit situations. Our process is simple, free, and fast. Just fill out our car loan request form to get started right now!


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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

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