If You File Bankruptcy Can You Keep Your Car
What happens to my car if I file bankruptcy?
Very few people who declare defalcation in Canada lose their vehicle. You need your car to get to work, then losing your vehicle is non an selection. All provinces accept laws that exempt one automobile or truck worth upward to a certain dollar limit from seizure by the trustee. To find what happens to your auto after yous file bankruptcy, we wait at two primal questions:
The first question that you volition be asked is" what is your machine worth?" To make up one's mind this you'll need to have the vehicle appraised. Most trustees will accept an contained value of opinion – that is, the opinion of someone who is qualified to sell cars or value cars, that is not related to you or a friend, that is willing to write out a alphabetic character indicating what they believe the fair market value of your auto is. Fair market place value is the corporeality that someone (not related to you) would pay for your machine.
The second question will exist"is your car financed or do you have clear title to your motorcar? "Clear championship means that there are no liens or other claims to your auto. A "lien" is the technical term for pledging your car as security for a debt. In other words, is your automobile financed, leased or has some other creditor placed a secured charged confronting your vehicle.
If you file bankruptcy, there are options that can allow you lot to keep your vehicle no matter its value. Yous tin can also cull to keep, or hand back, a leased or financed vehicle depending on what makes the almost sense for you financially.
Keeping a vehicle that you own outright when you file bankruptcy
In Ontario, you tin keep any motor vehicle worth upward to $7,117 when you declare bankruptcy. Yous can research other provincial exemption amounts across Canada hither.
Almost older vehicles qualify for this exemption. Your trustee will look up what is known equally the blackness book value of your automobile or truck to decide whether your vehicle will be considered holding in your defalcation or will fall under the provincial exemption limit.
If yous ain a car outright and the fair marketplace value is more than than the exemption limit, you can suggest to 'purchase out' the realizable portion from your trustee over the period of your bankruptcy.
If for instance, you accept a car worth $8,517, you lot would accept to pay your trustee $1,400. You could exercise this past making additional payments of $156 during a typical 9-month bankruptcy. If that monthly payment is too much, talk to our trustees most a consumer proposal.
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Many people who file for bankruptcy in Ontario, own or lease a car and they need their motorcar for work or for personal reasons. The good news is, in Ontario if you own a vehicle and it is worth $5,650 or less, you get to keep it. Fifty-fifty if it's worth more, you can still keep your car by paying the difference to the trustee.
If you take a lease or a car loan, yous can still proceed your vehicle equally long as you proceed current on your payments. Although it doesn't happen often, sometimes people determine that their auto payments are merely too much. If yous desire, you can give your motorcar back to the lender and permit bankruptcy eliminate whatsoever rest y'all have owing.
When you see with your Hoyes Michalos professional person we'll explain how your car or any other avails are affected past filing bankruptcy.
Close Transcript
You lot can keep one motor vehicle under these exemption rules. If you own more than than 1 vehicle and would similar to keep both, a consumer proposal may be a meliorate option.
What happens to a leased or financed auto in defalcation?
Bankruptcy in Canada deals with unsecured debts. If your car is financed, through a lease or motorcar loan, then that debt is considered a secured debt.
If you lease or finance a vehicle and file for bankruptcy, you can keep your vehicle as long as you lot are, and remain, current on your car loan or lease payments.
Your car lender can, however, repossess your vehicle if you lot fall behind on your payments, and bankruptcy won't stop that.
What if yous owe more than fair market value or you can't beget the payments?
If yous have a meaning shortfall on your car, it may be prudent to simply surrender the car to the lender when yous go bankrupt so that you are not overpaying for the vehicle. If y'all think your car loan or charter is likewise expensive, and you tin can't beget to keep up with your payments, you have the option of handing back the vehicle to the lender.
In either instance, you must return the vehicle to lender before you file. If yous exercise surrender the car to the secured lender, any resulting shortfall after they sell the vehicle is eliminated as part of your bankruptcy.
In rare circumstances, people sometimes offering their vehicle as collateral for a larger consolidation loan. This is slightly more complicated all the same a trustee can walk you through options that tin help yous keep the vehicle if that makes sense.
File a consumer proposal to keep your auto and other avails
A consumer proposal is not a bankruptcy. In a proposal you make a settlement offer to repay a portion of your debts. Whatsoever offer you make is affected by assets yous ain that are not exempt in a defalcation. All the same, in a consumer proposal, you continue all your avails, including your car and your home.
A proposal may make more sense if you:
- Own multiple vehicles
- Own a car or truck worth more than than the allowable limit
- Tin can afford to brand a settlement offer to your creditors.
If you are struggling with debt, know that yous don't lose everything when y'all merits bankruptcy. Book a gratuitous, no-obligation consultation with i of our Ontario Licensed Insolvency Trustees to explore your options.
Source: https://www.hoyes.com/personal-bankruptcy/claim-bankruptcy-and-keep-your-car/
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