As the pandemic continues to impact people and the economy across the United States, it is reasonable to expect an uptick in consumer bankruptcy filings in the near future. According to an article published by CNBC on July 8, 2020, 32% of households missed their housing payment for the month of July. Unemployment claims continue to climb and the extra $600 unemployment payouts are set to expire at the end of the month. Even if these are extended, they will not last forever and the continued increase in cases and rollbacks of re-openings likely indicates further distress in the future for the subprime consumer base BHPH and LHPH dealers service.
One of the many benefits of the product offered by Lease-Here, Pay-Here dealers is the bankruptcy remote nature of the lease. Unlike the retail installment sales contract in Buy-Here, Pay-Here, a lease cannot be included in a BK. The lessee must decide to either “accept” the lease and continue making the agreed upon payments, or “reject” the lease and return the vehicle to the lessor (the dealership). There are no cramdowns available for Chapter 13’s or other headaches for the creditor typically associated with the bankruptcy process.
In today’s environment, migrating from the traditional BHPH model to the LHPH model continues to make even more sense.
Learn more about all the benefits of the LHPH model by downloading our FREE E-Book below.