How can I file for bankruptcy and keep my car equity?

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In Canada, you can keep your car when filing for bankruptcy if it stays within provincial exemption limits. For example, Ontario allows you to keep a vehicle worth up to $7,117. Keep up with car loan payments to maintain ownership. A Licensed Insolvency Trustee can guide you through options to protect your assets.

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Question

How can I file for bankruptcy and still keep my car? I’m hoping to find a way to keep my car even if I need to file for bankruptcy.

From: Anonymous Question, Ontario (ON)

Debt Insiders Answer

In Canada, holding onto your car while filing for bankruptcy isn’t just a dream—it’s possible if you tick the right boxes. The nitty-gritty comes down to the equity in your car. If you fully own the vehicle or have hefty equity, there might be a little hiccup. But generally, if your ride’s value stays within provincial exemption limits, you’re golden. Take Ontario, for example - they let you keep a vehicle worth up to $7,117. So, if your car’s not in luxury territory, you’re likely safe. Still paying off a car loan? Keep those payments rolling to retain ownership. Creditors often allow you to reaffirm the loan to keep the wheels in motion.

Got a financial Rubik’s Cube you’re trying to solve? A Licensed Insolvency Trustee (LIT) can be your financial whiz. They’ll help crunch the numbers and map out a strategy to potentially dodge bankruptcy, saving your car and possibly your other prized possessions. Navigating your rights and duties can make all the difference in your journey back to financial stability.

From: Insider Scott

Office of the Superintendent of Bankrupty (OSB) Answer

To file for bankruptcy and still keep your car in Canada, you should consider the following provisions:

1. Exemptions: Under the Bankruptcy and Insolvency Act (BIA), you may be able to retain your vehicle if it falls within the exemption limits set by provincial regulations. Each province has specific dollar limits for exempt vehicles. For example, in many provinces, vehicles worth less than a certain amount are exempt from seizure (BIA, section 67).

2. Ownership and Debt: If the vehicle is financed, you need to continue making the payments. If you are behind, the lender may take possession, but you can keep the vehicle by proposing a reaffirmation of the debt. This allows you to maintain ownership while continuing payments (BIA, section 68).

3. Consumer Proposal: Instead of filing for bankruptcy, consider filing a consumer proposal, which may allow you to retain your vehicle while negotiating a repayment plan for your debts (Consumer Proposal Regulation, section 4).

It is crucial to verify the specific exemptions applicable in your province and consult with a licensed insolvency trustee for personalized advice tailored to your situation.

From: This answer is provided by scanning the OSB Bankruptcy & Insolvency Act and related directives

Related Questions

To address the common concerns of individuals considering bankruptcy and wanting to keep their car, here are the top 5 frequently asked questions, along with brief answers:

1. Can I keep my car if I file for bankruptcy?

You can keep your car if you are current on payments and the car’s equity is within the exemption limits, or if you reaffirm the loan or redeem the vehicle.

2. How do I protect my car’s equity during bankruptcy?

You can protect your car’s equity by using bankruptcy exemptions, reaffirming the loan, or redeeming the vehicle for its current market value.

3. What happens to my car if I am behind on payments when filing for bankruptcy?

If you are behind on payments, you may need to catch up on payments through a Chapter 13 repayment plan, or risk the car being repossessed if you cannot make the payments.

References

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