Can I Keep My Car If I File for Bankruptcy?
Helping You File for Bankruptcy in New Westminster, BC
If you’re in financial trouble, filing for bankruptcy may be the answer, but will you be able to keep your car? It can be challenging to get around without a vehicle if you live in New Westminster, Port Coquitlam, or North Vancouver, BC. If you need to get out of debt, it helps to understand the rules about bankruptcy and car ownership. The experienced trustees at J. Bottom & Associates are here to assist you with filing for bankruptcy and learning if you will be able to keep your current vehicle. Everyone wants to keep their car, and you may be able to. The answer to whether or not you can keep your car in a bankruptcy depends on whether or not you have a loan on your vehicle and how much the car is worth. Learn more about if you can keep your car if you file for bankruptcy, and get in touch with us to schedule a free consultation.
You Can Keep Your Car If You Have a Loan
A common misconception is that you have to give up everything you own if you file bankruptcy in Canada. If you have a car loan for your vehicle, the assets provide collateral for the loan, making it exempt from bankruptcy. If you want to get out of your loan, you can make arrangements to sell it by getting in touch with your lender or finance company. Once your car or truck is sold, the process will pay off the loan. If your car sells for less than your loan amount, you still owe the remaining balance. That outstanding balance would become an unsecured debt, allowing it to be included in your bankruptcy if you sold your vehicle before declaring.
If You Don’t Have a Loan, It Depends
The answer to whether or not you can keep your car if you file for bankruptcy gets a bit more complicated if you do not have a loan because you own your vehicle fully. You will lose your vehicle in bankruptcy if it’s worth more than a certain amount. If you have no loan or lien on your car, your bankruptcy trustee will assess its value. Most Canadian provinces allow you to keep one vehicle, as long as it’s not worth more than a certain amount. If your vehicle is assessed to be worth more than the allowed maximum, you may still be able to keep it. You can do so if you pay the difference between the appraised value and the maximum limit. For example, if your vehicle is appraised at $6,000 and you live in BC, you can pay your trustee $1,000 to make up the difference of the province’s $5,000 maximum. Your trustee will put that money into the pool that gets sent to your creditors, allowing you to keep your vehicle. Check out the maximum vehicle values for these Canadian provinces:
- Alberta: $5,000
- BC: $5,000
- Manitoba: $3,000
- Ontario: $6,600
- Saskatchewan: $10,000
Helping You Repair Your Credit
Money is a source of problems for most people at some point in their lives. One of the best ways to avoid repeating the same mistakes is to learn from them. Some people have gone on to become very successful even after filing for bankruptcy. While a bankruptcy will hurt your credit, keeping up with your auto loan payments during and after the process can be good for your credit and credit score. The truth is it will take many years for your credit to recover after bankruptcy, but having debt such as a car loan and keeping up on payments will provide some positive impact on your credit, allowing you to repair it faster than you would without a car payment.
Exploring Alternatives to Bankruptcy
Bankruptcy is not the only way to solve your financial problems. Canada also offers the option of filing a consumer proposal. While a bankruptcy will allow you to keep one motor vehicle as long as it falls below the maximum value amount, you would have to surrender any additional vehicles or purchase back equity above the maximum amount on your primary vehicle. On the other hand, a consumer proposal will allow you to keep all owned vehicles, no matter how much they’re worth. You can choose to keep any financed or leased vehicles in a consumer proposal as well. The downside to this is that if you miss any payments, your secured lender will repossess your vehicle. Our experienced legal team is here to help you explore all your options, whether you want to keep your car or not. You may be able to cancel a car lease you can’t afford as part of a consumer proposal. We will work with you and assess your unique situation and circumstances before recommending the best course of action for debt relief.
Helping You Break the Debt Cycle
The financial trustees at J. Bottom & Associates are here to help you break the debt cycle. If filing for bankruptcy is an option, you’ll need to know if you will be able to keep your car or have to make other arrangements. We can help you explore other options if losing your vehicle will not work for you. Whether you’re in over your head in debt from student loans, car payments, or other loans, there are options available in New Westminster, North Vancouver, and Port Coquitlam, BC. Bankruptcy is a complicated process and is not right for everyone. Our experienced trustees are here to help answer any questions you might have, and there’s no such thing as a silly question to us. Our proven strategies have helped many of our clients get out of debt and reduce the amount of stress in their lives. We want to help you avoid detrimental strategies such as cash advances from credit cards. Contact us today to get started with your free consultation.