Will I Lose My Motorcycle, ATV, and Snowmobile if I Go Bankrupt?

The fear of losing cherished possessions like a motorcycle, ATV, or snowmobile often accompanies the prospect of bankruptcy. However, the reality may be less grim than you think. Here’s a comprehensive guide to understanding what happens to such recreational equipment when you declare bankruptcy.

Bankruptcy and Your Assets

Bankruptcy might seem like a black hole that swallows all your assets, but that’s not quite accurate. Let’s break down what happens to your assets when you file for bankruptcy.

Secured Creditors and Your Recreational Equipment

When there’s a loan against your recreational equipment like a motorcycle, ATV, or snowmobile, you’re dealing with a secured creditor. This means the loan company has a legitimate claim over your recreational equipment as collateral. In a bankruptcy scenario, secured creditors generally remain unaffected.

If you can afford to continue making the monthly loan payments, you may keep your equipment. The secured creditor has no reason to repossess the assets as long as you’re fulfilling your end of the deal.

Dealing with Equity in Your Recreational Equipment

Equity is the difference between the value of the item and the amount owing on the loan. You’ll need to negotiate arrangements with the Trustee if there’s equity in your recreational equipment. If you wish to keep your equipment, you’ll typically have to pay the equity to the Trustee.

This payment is usually arranged as a monthly installment, allowing the individual declaring bankruptcy to gradually pay off the amount of equity.

Surrendering the Equipment

If you find yourself unable to afford the monthly payments, you can choose to surrender the recreational equipment as part of the bankruptcy process. Doing so absolves you from worrying about the creditor suing you for the remaining amount on the loan.

Exempt Assets in Bankruptcy

Not all assets are fair game in bankruptcy. Certain federal and provincial laws allow you to retain some assets. Here’s a list of exemptions for personal bankruptcy in Ontario:


  • Personal possessions
    valued up to $5,650 (This includes clothing, jewelry, sports equipment, etc.)
  • One motor vehicle
    worth up to $5,650
  • Home furnishings
    valued up to $11,300
  • Tools of the trade
    valued up to $11,300
  • Certain types of life insurance
  • All RRSP, RRIF, and SPSP (Deferred Profit Sharing Plan) savings, excluding contributions made in the 12 months before your bankruptcy.


Consultation with a Licensed Insolvency Trustee

If you’re contemplating bankruptcy but are anxious about losing your possessions, consider scheduling a consultation with a licensed insolvency trustee. They can help you review all your options and choose the solution best suited to your situation.

Remember, bankruptcy isn’t an end, but a chance to start anew. It’s a legal process designed to offer a fresh start to individuals who can’t reasonably pay their debts. So, while it might mean parting ways with some assets, it doesn’t necessarily mean waving goodbye to your motorcycle, ATV, or snowmobile.

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