Can I keep my car lease in Chapter 7?

It is possible, but it requires action rather than silence. A personal property lease in a Chapter 7 case is deemed rejected if it is not assumed or rejected within 60 days after the order for relief, absent additional time from the court. Section 365 also provides a route in subsection (p) for an individual debtor to assume a personal property lease after rejection, and local rules such as Nev. LBR 6006 describe the notice that takes.

Does filing bankruptcy let me break an apartment lease?

Rejecting an unexpired lease is the mechanism people mean by breaking it, and 11 U.S.C. § 365 authorizes rejection subject to the court's approval. Rejection generally leaves the landlord with a claim in the case rather than a contract the case performs. That claim is capped by 11 U.S.C. § 502 at the rent reserved for the greater of one year or 15 percent of the remaining term, not exceeding three years, plus unpaid rent.

What happens if nobody assumes or rejects my lease?

The deadline decides. In a Chapter 7 case, a lease of residential real property or personal property that the trustee does not assume or reject within 60 days after the order for relief is deemed rejected unless the court grants more time. For a nonresidential real property lease where the debtor is the lessee, the period is 120 days after the order for relief or the order confirming the plan.

Do I have to catch up missed payments to keep a lease?

Generally yes. Section 365 provides that a lease in default may not be assumed unless, at the time of assumption, the default is cured or the trustee gives adequate assurance of a prompt cure, the other party is compensated for actual pecuniary loss from the default, and adequate assurance of future performance is provided. Certain defaults, such as those based on the filing of the bankruptcy case itself, are treated differently.

Is a rent-to-own agreement treated as a lease?

That depends on the agreement's terms and on state law, and we do not publish a verified rule on how a given rent-to-own contract is classified. The distinction matters, because an unexpired lease runs through the assume-or-reject process in 11 U.S.C. § 365 while other arrangements do not. Bring the actual contract to a lawyer in your district rather than assuming either answer.

Who files the motion, me or the trustee?

It varies by chapter and district. Section 365 speaks in terms of the trustee, subject to the court's approval, and Fed. R. Bankr. P. 6006 sets the procedure. Some districts assign the work to the debtor in Chapter 13: W.D. Mo. LBR 3092-1 states that it is the debtor's responsibility, not the trustee's, to assume, reject, or assign a lease and to serve the affected parties.

Can the landlord force a decision instead of waiting?

Yes. Fed. R. Bankr. P. 6006 provides that in a Chapter 9, 11, 12, or 13 case, a party to a lease may proceed to require the trustee, debtor in possession, or debtor to determine whether to assume or reject it. Several districts also have a specific motion to compel assumption or rejection with its own notice requirements, such as S.D. Ind. B-6006-1.

Debts & discharge

Leases in Bankruptcy: Assuming or Rejecting an Unexpired Lease

In bankruptcy, an unexpired lease is either assumed (kept, with any default cured) or rejected (given up, leaving the other side a claim instead of a contract). Under 11 U.S.C. § 365 the trustee may assume or reject a lease subject to the court's approval, and in a Chapter 7 case a residential or personal property lease nobody acts on within 60 days is deemed rejected.

Key points

Assumption means the lease continues on its existing terms; rejection means giving it up and leaving the lessor with a claim rather than a contract the case pays in full (11 U.S.C. § 365).
A lease in default generally cannot be assumed unless the default is cured or promptly cured with adequate assurance, the other party is compensated for actual loss, and future performance is adequately assured.
In a Chapter 7 case, a residential real property or personal property lease the trustee has not assumed or rejected within 60 days after the order for relief is deemed rejected unless the court extends that time.
After a real property lease terminates, 11 U.S.C. § 502 caps the landlord's damage claim at the rent reserved for the greater of one year or 15 percent of the remaining term, not to exceed three years, plus unpaid rent.
Local bankruptcy rules control what the motion must say, who gets notice, how long the objection period runs, and in some districts whether the debtor rather than the trustee has to act.

If you are behind on a car lease or an apartment lease and thinking about bankruptcy, the first thing to understand is that the case does not simply erase the lease. Every unexpired lease has to be dealt with one way or the other: kept and brought current, or given up. This page explains how that choice is made, who makes it, when the clock runs out, and what happens to the other party when a lease is rejected.

How does assuming or rejecting a lease actually work?

Two words carry the whole decision. Assuming a lease means keeping it on its existing terms; rejecting it means giving it up. Under 11 U.S.C. § 365, the trustee, subject to the court's approval, may assume or reject any executory contract or unexpired lease of the debtor. The decision is made by motion, not by a phone call to the lessor. Fed. R. Bankr. P. 6006 applies the contested-matter rule to a motion to assume, reject, or assign, and requires notice to the other party to the lease, to other parties in interest the court identifies, and, outside a Chapter 9 case, to the United States trustee. Timing is tight at the front end: the Middle District of Florida's procedure manual notes that such a motion generally cannot be granted within 21 days of the petition unless the relief is needed to avoid immediate and irreparable harm. A lessor who wants an answer can move to compel the decision instead of waiting.

Assume: the lease continues, defaults are cured, and payments go on under the contract.
Reject: the lease is given up, and the lessor is left with a claim in the case.
Do nothing: a deadline in section 365 can make the decision for you by default.

What changes the answer between assuming and rejecting?

Start with whether you still need what the lease covers, then look honestly at whether you can catch up. Section 365 does not allow assumption while a default sits unaddressed: at the time of assumption the trustee must cure the default or give adequate assurance of a prompt cure, compensate the other party for actual pecuniary loss caused by the default, and provide adequate assurance of future performance (11 U.S.C. § 365). So the practical question is rarely just whether you want to keep the car. It is whether the arrears can be cured and the payment sustained afterward. Facts that commonly move the answer include how far behind you are, whether the payment fits a post-filing budget, whether the lease price is worse than what you could get elsewhere, whether the item is a car you need for work or furniture you do not, and which chapter you are in. None of this decides the question for you; these are the inputs a lawyer and the court weigh.

Size of the arrears and whether a cure is realistic now or over a plan.
Whether the payment is sustainable after filing, not just today.
Whether the lease is personal property, residential real property, or nonresidential real property — the deadlines differ.
Whether the lessor is willing to deal, which matters a great deal for personal property leases.

What does federal law say about leases in bankruptcy?

Section 365(a) is the grant of authority: subject to the court's approval, the trustee may assume or reject any unexpired lease of the debtor. Subsection (b) sets the price of assumption — cure, compensation for actual pecuniary loss, and adequate assurance of future performance. Subsection (b)(2) narrows what has to be cured, carving out defaults that are breaches of provisions about the debtor's insolvency or financial condition, about the commencement of a bankruptcy case, about the appointment of a trustee or custodian, and about penalty rates or penalty provisions tied to a nonmonetary default (11 U.S.C. § 365). Rejection is not costless for the other side either, but it is bounded: 11 U.S.C. § 502 limits a lessor's claim for damages from termination of a real property lease, as set out below. Deadlines carry as much weight as standards, because a missed one produces rejection without anyone choosing it.

Deadlines that decide a lease when nobody files a motion
Situation	What happens	Source
Chapter 7 — lease of residential real property or personal property	Deemed rejected if the trustee does not assume or reject within 60 days after the order for relief, absent additional time granted by the court	11 U.S.C. § 365, as summarized in the Bankr. M.D. Fla. Procedure Manual
Any chapter — unexpired lease of nonresidential real property where the debtor is lessee	Deemed rejected if not assumed or rejected within 120 days after the order for relief or the order confirming the plan	11 U.S.C. § 365, as summarized in the Bankr. M.D. Fla. Procedure Manual
An order authorizing assignment of a lease	Stayed for 14 days after entry unless the court orders otherwise	Fed. R. Bankr. P. 6006
Landlord's damages after a real property lease terminates	Claim limited to rent reserved, without acceleration, for the greater of one year or 15 percent of the remaining term, not to exceed three years, plus unpaid rent	11 U.S.C. § 502

Where do state or local rules differ?

The assume-or-reject framework is federal and does not change from state to state, but two other layers do. First, the lease itself is a contract governed by state law, along with eviction procedure, notice requirements, and security deposits — those questions belong on your state page and with a lawyer licensed there. Second, local bankruptcy rules control the mechanics, and they vary district to district. Arizona's rule lists exactly what a motion must contain (Ariz. LBR 6006-1). Montana requires the lease documents to be attached and an objecting party to state the grounds and the terms of any cure with specificity (Mont. LBR 6006-1). The District of Columbia automatically extends the time to decide on a nonresidential lease while a timely motion is pending, but not beyond 210 days after the order for relief without the landlord's written consent (D.C. LBR 6006-1). Read your district's rule before you assume anything about the timeline.

Nevada limits the notice an individual debtor must give to assume a personal property lease after rejection to the other party and the trustee or U.S. Trustee (Nev. LBR 6006).
Southern District of Indiana requires a 14-day objection notice with the motion and a certificate of service (S.D. Ind. B-6006-1).
Massachusetts treats a timely extension request as approved on an interim basis when the court cannot reach it before the deadline (D. Mass. LBR 6006-1).
Southern District of West Virginia allows an initial extension motion to be granted without a hearing on good cause (S.D.W. Va. LBR 6006-1).

What does this look like in practice?

A car lease in Chapter 7 is the most common version. If nobody assumes or rejects it, the 60-day rule generally does the rejecting, and the vehicle goes back. Section 365 also contains a route in subsection (p) for an individual debtor to assume a personal property lease after rejection, which is why several districts have rules describing the notice that takes — Nevada, for example, requires notice only to the other party to the contract and the trustee or U.S. Trustee (Nev. LBR 6006). An apartment lease usually presents the opposite instinct: you want to stay. Assumption then means curing the missed rent and showing adequate assurance you can keep paying. In Chapter 13, several districts put both the decision and the payments on the debtor. Western Missouri, for instance, directs the debtor to pay the lessor directly for post-petition obligations and for prepetition arrearages on assumed leases, and states plainly that assuming or rejecting is the debtor's responsibility, not the trustee's (W.D. Mo. LBR 3092-1).

Rent-to-own agreements are a genuine open question here: whether one is an unexpired lease under section 365 or something else turns on the agreement's terms and on state law, and we do not publish a verified rule on that classification. Bring the contract itself to a lawyer.
We also do not publish a verified excerpt covering how the automatic stay applies to an eviction already underway, so we state no rule on it — ask a lawyer or your local court about that timeline.

What documents or information are involved?

The local rules are unusually specific about this, which is helpful, because the list doubles as a preparation checklist. Arizona requires a rejection motion to state the date of the lease, the names of everyone known to claim an interest in it — original parties, assignees, sublessors, sublessees, and holders of a security interest — the subject matter and essential terms including the street address for real property or a description of the items for personal property, the balance of payments or performance still owed, and the reasons for the request. A motion to assume adds how the movant will cure any default, how the other party will be compensated for actual loss, and how adequate assurance of future performance will be provided (Ariz. LBR 6006-1). Montana requires the lease documents themselves to be attached unless they are already in the file (Mont. LBR 6006-1). Gather the lease, the payment history, and the arrears figure before anyone drafts anything.

The signed lease and any amendments, assignments, or sublease.
A current payoff or arrears statement from the lessor.
The remaining term and the balance of payments still owed.
Names and addresses of every party entitled to notice, including any sublessee (S.D. Ind. B-6006-1).
A concrete cure plan if you want to assume — what you pay, and when.

What should you ask a lawyer?

Bring the lease to the meeting. The questions worth asking are specific and mostly about sequence and money, and a lawyer who practices in your district will know the local rule and the local trustee's habits without looking them up. Ask what happens on your particular timeline if nobody files a motion, because deemed rejection is a real outcome and not a theoretical one. Ask what a cure would actually cost, including any compensation for the lessor's loss from the default. Ask whether the lessor in your case is one that commonly agrees to keep a personal property lease in place. If you are considering Chapter 13, ask who in your district carries the responsibility to assume or reject, and whether payments run through the plan or go directly to the lessor. Then ask what the realistic downside is if the answer turns out to be rejection.

What is my deadline, measured from the order for relief, and who is responsible for meeting it?
What is the total cure amount, and can I sustain the payment after the case?
If this lease is rejected, what claim does the lessor have, and how is it treated?
Does my district's local rule change the notice, objection period, or motion contents?

Frequently asked questions

Can I keep my car lease in Chapter 7?: It is possible, but it requires action rather than silence. A personal property lease in a Chapter 7 case is deemed rejected if it is not assumed or rejected within 60 days after the order for relief, absent additional time from the court. Section 365 also provides a route in subsection (p) for an individual debtor to assume a personal property lease after rejection, and local rules such as Nev. LBR 6006 describe the notice that takes.
Does filing bankruptcy let me break an apartment lease?: Rejecting an unexpired lease is the mechanism people mean by breaking it, and 11 U.S.C. § 365 authorizes rejection subject to the court's approval. Rejection generally leaves the landlord with a claim in the case rather than a contract the case performs. That claim is capped by 11 U.S.C. § 502 at the rent reserved for the greater of one year or 15 percent of the remaining term, not exceeding three years, plus unpaid rent.
What happens if nobody assumes or rejects my lease?: The deadline decides. In a Chapter 7 case, a lease of residential real property or personal property that the trustee does not assume or reject within 60 days after the order for relief is deemed rejected unless the court grants more time. For a nonresidential real property lease where the debtor is the lessee, the period is 120 days after the order for relief or the order confirming the plan.
Do I have to catch up missed payments to keep a lease?: Generally yes. Section 365 provides that a lease in default may not be assumed unless, at the time of assumption, the default is cured or the trustee gives adequate assurance of a prompt cure, the other party is compensated for actual pecuniary loss from the default, and adequate assurance of future performance is provided. Certain defaults, such as those based on the filing of the bankruptcy case itself, are treated differently.
Is a rent-to-own agreement treated as a lease?: That depends on the agreement's terms and on state law, and we do not publish a verified rule on how a given rent-to-own contract is classified. The distinction matters, because an unexpired lease runs through the assume-or-reject process in 11 U.S.C. § 365 while other arrangements do not. Bring the actual contract to a lawyer in your district rather than assuming either answer.
Who files the motion, me or the trustee?: It varies by chapter and district. Section 365 speaks in terms of the trustee, subject to the court's approval, and Fed. R. Bankr. P. 6006 sets the procedure. Some districts assign the work to the debtor in Chapter 13: W.D. Mo. LBR 3092-1 states that it is the debtor's responsibility, not the trustee's, to assume, reject, or assign a lease and to serve the affected parties.
Can the landlord force a decision instead of waiting?: Yes. Fed. R. Bankr. P. 6006 provides that in a Chapter 9, 11, 12, or 13 case, a party to a lease may proceed to require the trustee, debtor in possession, or debtor to determine whether to assume or reject it. Several districts also have a specific motion to compel assumption or rejection with its own notice requirements, such as S.D. Ind. B-6006-1.

Sources

11 U.S.C. § 365 — Executory contracts and unexpired leases · official source
11 U.S.C. § 502 — Allowance of claims or interests · official source
Fed. R. Bankr. P. 6006 — Assuming, Rejecting, or Assigning an Executory Contract or Unexpired Lease · official source
Bankr. M.D. Fla. Procedure Manual — Motion to Assume or Reject Executory Contracts and Unexpired Leases
Ariz. LBR 6006-1 — Executory Contracts and Unexpired Leases
Mont. LBR 6006-1 — Motions for Assumption or Rejection of an Executory Contract or Unexpired Lease
Nev. LBR 6006 — Individual Debtor's Ability to Assume a Personal Property Lease After Rejection
D.C. LBR 6006-1 — Assuming, Rejecting, or Assigning an Executory Contract or Unexpired Lease
D. Mass. LBR 6006-1 — Motions for Assumption or Rejection of Executory Contract or Unexpired Lease; Motions to Extend Deadline
S.D.W. Va. LBR 6006-1 — Executory Contracts
S.D. Ind. B-6006-1 — Assumption, Rejection, or Assignment of Executory Contracts or Unexpired Leases: Notice
W.D. Mo. LBR 3092-1 — Executory Contracts and Leases

By Antonio G. Jimenez, Esq. · Florida Bar No. 21022

Last reviewed July 26, 2026 · Sources verified July 26, 2026 · How we verify

Every figure on this page is drawn from a primary legal source and checked against our canonical legal database before publication. Bankruptcy.law is not a law firm and does not provide legal advice.

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