Can I Keep My Truck if I File for Bankruptcy?

Filing Bankruptcy & Keeping My Truck

‍Filing for bankruptcy is a significant financial decision with far-reaching implications. One of the concerns that often arises is the fate of vital assets such as a truck. If you’re asking, “Can I Keep My Truck if I File for Bankruptcy?”, this extensive guide aims to provide clarity.

Understanding Bankruptcy and Asset Repossession

Bankruptcy is a legal process initiated by an individual or a business unable to pay their debts. It involves the sale of the debtor’s assets and the distribution of the proceeds to the creditors. A key element of this process is asset repossession.

Repossession, in the context of bankruptcy, refers to the act of a creditor reclaiming an asset (like a truck) that has been used as collateral for a loan. However, as we will see later, not all assets are subject to repossession during a bankruptcy proceeding.


Note: When considering bankruptcy, it’s essential to consult with a Licensed Insolvency Trustee (LIT). They can guide you through the bankruptcy process, including understanding your rights and the potential next steps.


Bankruptcy and Vehicle Ownership

The fate of your truck in a bankruptcy proceeding largely depends on its value, your equity in the vehicle, and the bankruptcy exemptions in your province or state.

Valuation of the Vehicle

The first step is to determine the market value of your truck. To do this, you’ll need a qualified appraiser’s services, not a relative or friend. The appraiser will provide a letter detailing the fair market value of your truck — i.e., the amount a willing buyer would pay for it in a sale.

Leased or Financed Trucks

If you’re currently leasing your truck or making loan repayments, the terms of your lease or loan agreement will play a significant role in determining whether you can keep your truck.


Leased trucks: If you’re leasing your truck, you’re essentially renting it, and there might be mileage limits and costs associated with the lease’s termination.

Financed trucks: If you’ve financed your truck, it’s a secured debt. If you default on your payments, the lender can repossess the truck to recover their money. But if you’ve been making consistent payments before filing for bankruptcy, you stand a better chance of keeping the truck.

Owned Trucks

If you own your truck outright (i.e., you’ve paid off the loan or purchased it outright), you’ll still need to account for it when filing for bankruptcy. Its value will be crucial to determining what assets are used to pay off your debts.

If it’s valued more than the allowed exemption in your province or state, you can ‘buy back’ the amount exceeding the exemption from the trustee. This money then goes into the pot of money used to pay your creditors.

Bankruptcy Exemptions

Bankruptcy laws allow for certain exemptions — assets that you can keep despite filing for bankruptcy. These exemptions vary by province.

In Alberta, for instance, bankruptcy exemptions include:


Unsecured furniture, household appliances:
Up to $4,000

Motor vehicle:
Up to $5,000

Food and fuel:
Sufficient for debtor and their dependents for 12 months

Up to $4,000

Tools of trade:
Up to $10,000

Medical aids:
Required for debtor or dependents

RRSPs, RIFs, RESPs, RDSPs and certain life insurance policies:
Exempt, subject to conditions

Equity in Primary Residence:
$40,000 for the property, subject to conditions

Consumer Proposal: An Alternative to Bankruptcy

If your debts are overwhelming but you’re anxious about losing your truck, a Consumer Proposal might be an option to consider. This procedure involves a settlement offer where you agree to pay back a percentage of your debt at a lower interest rate over a specified period (usually up to five years).

In a Consumer Proposal, you can generally keep your vehicle, regardless of its value, as long as you continue making your monthly payments9.


So, “Can I Keep My Truck if I File for Bankruptcy?” The answer largely depends on your specific circumstances, including the value of your truck, the terms of any lease or loan agreement, and the bankruptcy exemptions in your jurisdiction. It’s crucial to seek advice from a Licensed Insolvency Trustee to understand your options and the potential implications of each.

Get in touch with a Licensed Insolvency Trustee today to start the journey towards financial freedom

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