Will I Forfeit My Automobile Under a Consumer Proposal?
A consumer proposal is a viable option for individuals grappling with debt, as it allows for the possibility of paying off creditors a fraction of the amount owed, potentially up to a whopping 75% off. However, the actual figure is contingent on the specific debts and creditors involved. Rarely does such an arrangement necessitate forfeiting assets like your car.
Your Car’s Value in a Consumer Proposal
If your car is fully paid off and doesn’t have any outstanding loans from a bank or finance company, it’s crucial to declare its value as part of your assets. It’s worth noting that in Ontario, a car exemption of up to $5,650 exists. This exemption doubles to $11,300 under the condition that the car is used for business purposes.
Car Loans and Consumer Proposals
In instances where there’s an outstanding loan against your car, the bank or finance company is usually more interested in receiving the monthly payments as opposed to claiming the car. This is how they generate revenue. If you’ve been consistent with your payments, the trustee or administrator managing your consumer proposal can help you retain ownership of your car.
Exceptional Circumstances
There may be situations where your car payments are significantly higher than what you can afford. Or maybe the debt on the car is more than its worth, and you wish to escape an unfavorable contract. In such cases, your consumer proposal’s trustee or administrator can assist you by making arrangements to surrender your car to the secured creditor (usually a bank or finance company) before signing the consumer proposal documentation.
The outstanding loan amount, minus the car’s sale price, is then included in your consumer proposal. The estimate is updated once the car is sold and the creditor’s exact loss is determined. The trustee or administrator can also aid you in securing a more affordable car during the early stages of your consumer proposal.
Your consumer proposal’s trustee or administrator should act as a resource for solving your financial issues. They are experienced professionals who have dealt with numerous similar situations and can guide you through your financial recovery.
For more information on bankruptcy and debt solutions, consider reaching out to Bankruptcy Canada.
Remember: “The bank or finance company does not want your car – they want your monthly payments to continue – that is how they make money.”
Do I Lose My Car in a Consumer Proposal? Not necessarily. Each case is unique and dependent on several factors. Always consult with a professional to understand your options.
