A common misconception that we come across is that a vehicle will be seized in a bankruptcy. This is often a major consideration as most people require a car for daily travel. To answer this question, the Licensed Insolvency Trustee will need some more information from you.
When filing for bankruptcy in Ontario, what can happen with your car depends on a number of factors, primarily: whether you own your vehicle or are financing or leasing it, and the value of the vehicle.
If you own your vehicle, under the Ontario Executions Act, you are permitted to keep one motor vehicle provided it is worth less than $6,600. If your vehicle is worth more than $6,600, you will be required to pay to the bankruptcy estate the difference in order to keep it (often through regular monthly payments). If you own a second vehicle, the value of that vehicle must be paid to the bankruptcy estate in order for you to keep the vehicle.
If your car is leased or financed, the loan amount is subtracted from the value of the car to determine the net value. If there is equity in the vehicle, you will be required to make payments to the bankruptcy estate for this net value. As long as you are up to date with your car payments and plan on continuing to make them, you are able to keep your vehicle. You also have the option to surrender the vehicle back to the secured lender prior to filing for bankruptcy. In such a case, if there is an unsecured shortfall after the vehicle is sold by the secured lender, that amount can be included in your bankruptcy.
If you are looking for more information particular to your situation, the best person to advise you in this situation is a Licensed Insolvency Trustee. Since there more is involved in the decision to file a bankruptcy, it is prudent to discuss your financial affairs in its entirety with a Trustee.
At Spergel, we are committed to helping you resolve your debt problems. Why not book a consultation to review your finances and see what options are available before making any final decisions?
Find out more by visiting www.spergel.ca today or call 310-4321.