If you’re considering bankruptcy, you may be wondering:
“Will I lose my car?”
The answer depends on whether it’s financed, leased, or fully owned.
If Your Car Is Financed
A car loan is a secured debt.
If you:
Continue making payments
Stay current on insurance
You can usually keep the vehicle.
If you fall behind, the lender can repossess it.
If You Own the Car Outright
If the car is fully paid off:
Its value matters.
Each province has vehicle exemption limits.
If your vehicle’s value exceeds the exemption, the excess may need to be paid into the bankruptcy.
If You Lease Your Vehicle
Leased vehicles are typically returned unless:
The lender agrees to continue the lease
Payments remain current
Can You Surrender the Car?
Yes.
If payments are unaffordable, you can surrender the vehicle and include any shortfall balance in the bankruptcy.
Review Before Filing
A Licensed Insolvency Trustee will:
Determine vehicle value
Explain provincial exemptions
Review loan balance
Calculate options
You may have more flexibility than you think.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Bankruptcy in Canada must be administered by a Licensed Insolvency Trustee.