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What is an Assumption of Lease in Bankruptcy

    An assumption of lease in bankruptcy is the process by which a debtor takes over an existing lease for property, such as a home or a car, as part of a bankruptcy case.

    In a Chapter 7 bankruptcy case, the debtor may be able to assume a lease if the property is exempt under state law or the bankruptcy code and if the creditor who holds the lease consents to the assumption. If the lease is assumed, the debtor is responsible for continuing to make payments under the terms of the lease and the lease remains in effect after the bankruptcy case is completed.

    In a Chapter 13 bankruptcy case, the debtor may be able to assume a lease as part of the payment plan submitted to the court. If the lease is assumed, the payments on the lease are included in the monthly payment plan and the lease remains in effect after the bankruptcy case is completed.

    Assuming a lease in bankruptcy can have a significant impact on your finances, as you will be responsible for making payments under the terms of the lease and you may also be responsible for any damages to the property during the lease.

    Before assuming a lease in bankruptcy, you may want to consider speaking with a bankruptcy attorney to determine whether assumption of the lease is in your best interests and to determine your rights and options.