What Happens if You Stop Paying Your Car Lease After a Reaffirmation?

Repossession has significant consequences. If your vehicle was recently repossessed and you paid the lender to get the car back, it will repossess the vehicle a second time if you stop making payments. Your credit becomes further damaged and obtaining another lease may prove impossible until you reestablish your credit. If you reaffirmed your car loan after bankruptcy and then stopped making payments, the leasing bank will likely sue you soon after repossession.

Your Credit

The first repossession is already noted on your credit report even though you reaffirmed the car lease. The notation of a second repossession further damages your credit score. Future opportunities for car loans, lines of credit and other retail loans significantly decrease while the repossession exists on your credit report. The repossession remains on your credit report for seven years, although the impact on your credit score is most significant immediately following repossession. If you reestablish your credit by paying your bills on time, you may decrease your lending risk and increase your score as time passes.

Debt and Payments

Following the second repossession, you must pay your lender for the car's total cost value, which is more than the lease amount. When you purchased the car, the leasing bank paid a dealership for the total cost of the car. The bank then leased the vehicle to you. Once the leasing bank resells the vehicle, you're responsible for the difference between the car's selling price and loan balance, plus repossession fees. Contact the bank to set up a payment plan. You don't have to pay the total balance in one payment.

Result of Nonpayment

Many states allow creditors to garnish your wages for a judgment. If you don't pay your debt, the leasing bank will sue you for the amount you owe. When it wins its case, the court issues a judgment, which is also reported to the credit bureaus and lowers your credit score. After obtaining a judgment, the bank can take up to 25 percent of your wages before taxes. Once you're served a notice from the court regarding the debt, you must act fast to avoid the judgment and wage garnishment. Call to arrange a payment plan instead.

Bankruptcy Considerations

If you declare bankruptcy, you won't have to pay the repossession debt and the bank won't garnish your wages. Bankruptcy isn't for everyone, but if you aren't able to pay your debts and the balance of your car lease, exploring the option might prove worthwhile. If you reaffirmed your car loan after bankruptcy, you cannot discharge your debts again for four to eight years after the original bankruptcy. During this time, the lender may sue you and garnish your wages if your state allows it.