Voluntarily Giving Up Your Car in A Bankruptcy
What if I Don’t Want to Keep My Vehicle?
Filing for bankruptcy can be a very difficult situation.
After all, you may worry that you are not going to be able to keep your home and your car, and this can lead to even more concerns.
After all, you may not be sure how you are going to get to work if you lose your car and this may impact your finances even more overall.
If you have a Loan, then you will Keep your Car
A lot of people think that if they go bankrupt then they will lose everything.
In Canada though, this is not the case.
The reality is that if you pledged something which would then be seen as a security for a loan then this will be exempt from bankruptcy.
If you have a car loan and your car is being used as collateral for the loan and you happen to file for bankruptcy then the car and the loan for the car will be kept out of the picture.
If you want to get out of your loan, then you would need to make arrangements to either sell the vehicle with the lender agreeing to this.
When the vehicle has been sold then any proceeds would then be used to pay off the loan.
If the vehicle sells for less than the total loan amount, then you would still owe on the remaining balance.
When You Fully Own the Car then you May Lose it in Bankruptcy
If you fully own the car or if there is no loan then the bankruptcy trustee will then assess the value of your vehicle.
In most of Canada, if you do go bankrupt then you will be able to keep one vehicle that is worth up to a set amount.
In Canada- this is:
If your vehicle happens to be assessed and is worth more than the maximum in your area, then you can redeem it from bankruptcy by paying the difference.
Voluntarily Giving up your Car
If you have a car on loan or on lease and you can’t afford it then you can give up the vehicle on a voluntary basis.
This needs to be done correctly because if you don’t then you may face financial repercussions.
If you want to hand your car back, then you need to call your car provider and tell them that you no longer need the lease.
You can then ask them to pick up the vehicle.
A bailiff will normally do this for you.
You will need to tell them where the vehicle is going to be and you will also remove the personal items and license plate.
Leave the insurance on the vehicle until it has been picked up because you will be responsible for any damages.
Keeping your Car May be a Good Idea
Although you may be tempted to give up your car to help your situation, keeping your car may give you some benefits.
If you are thinking about going bankrupt and you have a car loan, then keeping up with the payments may help you in the long-run.
Going bankrupt is one of the worst things that you can do for your credit so you have to make sure that you do everything you can to avoid this.
If you need some help and support with your current bankruptcy situation then you can contact us at Bankruptcy Canada.
When you do, we can then advise you on anything you need to know, and we can also support you through any difficult processes that you might need to go through as well.
If you are not sure whether or not to go bankrupt then you should know that there are other options available and when you look into them, you will soon see that this is not the only option.