Navigating ICBC Debt: Can Bankruptcy Be a Solution?
Filing for bankruptcy can be a daunting process, especially when you’re dealing with debt from the Insurance Corporation of British Columbia (ICBC). Many individuals grapple with the question, “Will my ICBC debt go away if I file a bankruptcy?” The simple answer is that it largely depends on the type of debt and your specific circumstances.
Bankruptcy and ICBC Debt: The Basics
Bankruptcy often provides relief from numerous types of consumer debt, ICBC debt being one of them. However, every situation is unique, and ICBC’s position will depend on the specifics of each case. Here are some scenarios in which bankruptcy can affect your ICBC debt:
ICBC Payments
If you have outstanding payments and you include these in your bankruptcy, ICBC may implement certain restrictions. For example, they may no longer permit you to use their financing services. You would still be allowed to purchase insurance, but the payment methods would be restricted to cash, credit card or certified payment. Moreover, these payments would need to be made annually or in three-month increments.
ICBC Judgments for Motor Vehicle Accidents
If you owe ICBC due to a motor vehicle accident, they will scrutinize the details of your case to decide on their next course of action. Factors influencing their decision include the nature of your conduct during the accident (reckless or negligent), your attempts to pay off the debt, and whether ICBC is the primary creditor. Depending on these factors, ICBC may oppose your discharge from this debt and seek a Conditional Order of Discharge, which could require you to repay some or all of the debt before exiting bankruptcy.
Debts That Remain Despite Bankruptcy
Certain debts are not discharged by bankruptcy. When it comes to ICBC, these could include:
- Debts resulting from a fraud conviction backed by court proceedings
- Various fines such as Court Services Fines, Criminal Code Fines, Court Ordered Restitution, and Federal Contravention Fines
- Charges from the Driver Point Premium, Driver Risk Premium, and Multiple Crash Premium programs
- It’s important to note that even if ICBC debts are included in your bankruptcy, ICBC may still cancel or refuse to issue licenses and insurance during the proceeding.
ICBC Debt and Bankruptcy: The Personal Impact
Debt can be a significant source of stress. Some individuals are uneasy with a debt of $10,000, while others are comfortable with a debt ten times that size. A significant contributor to this debt can be motor vehicle indebtedness to ICBC. Thankfully, bankruptcy can extinguish most types of ICBC debt upon discharge.
However, ICBC is a unique creditor with certain rights. Unlike credit card debt, for example, ICBC can force you to pay in order to continue driving. This makes understanding your rights in regards to ICBC debt crucial when contemplating bankruptcy.
Driving: A Privilege, Not a Right
ICBC’s stance on its debt depends on the specifics of each situation, making it hard for them to have a general policy. However, it’s important to remember that ICBC views driving as a privilege, not a right. Despite this, most individuals are able to continue driving after filing for bankruptcy.
License Renewal and Bankruptcy
The date of your driver’s license renewal can significantly impact your situation. If your license is due for renewal during bankruptcy, ICBC may refuse to renew it until after your discharge from bankruptcy. The duration of this waiting period can vary. However, if you choose to pay off all the debt that wouldn’t be cleared under the Bankruptcy and Insolvency Act (BIA), ICBC may lift their “Refusal to Issue” on your driver’s license or Insurance renewal.
ICBC’s Compassionate Side: Exceptions for Hardship
In cases of proven hardship, ICBC may reconsider the renewal status of your license. These situations could include a requirement for a driver’s license for employment or a lack of public transportation in your area.
Financing Restrictions
If you seek bankruptcy protection for ICBC debt, expect some restrictions on financing. You may not be immediately eligible for financing. However, ICBC offers alternative payment plans, which you would discuss with an ICBC representative.
ICBC Debts That Survive Bankruptcy
Certain types of ICBC debt survive bankruptcy. These include Driver Penalty Point premiums (DPP), Driver Risk Premiums (DRP), and Multiple Crash Premiums (MCP). Amounts incurred from these premiums prior to the bankruptcy filing date are discharged by bankruptcy, while amounts incurred after the bankruptcy start date will survive.
Vehicle Repossession
If you have a secured vehicle loan and wish to stop payments because the loan exceeds the vehicle’s value, you can permit the secured creditor to seize the vehicle. Under the Personal Property Security Act of BC (PPSA), once the vehicle is seized, the loan is terminated. However, ensure the plates have been removed and returned to ICBC for cancellation to prevent post-bankruptcy debt from continuing to be billed.
Avoiding Unpleasant Surprises
To avoid surprises regarding ICBC debt, you can have an inquiry made to ICBC Collections on your behalf. This would confirm the portion of the debt that may survive bankruptcy, if any, before you decide to proceed with filing a bankruptcy or a Consumer Proposal.
To summarize, the question, “Will my ICBC debt go away if I file a bankruptcy?” is complex. Each case is unique and requires careful consideration. Consulting with a Licensed Insolvency Trustee can provide a more detailed explanation of your situation and help you make an informed decision.
