Will They Repossess My Vehicle During a Bankruptcy?

Understanding Vehicle Repossession During Bankruptcy

When you are swimming in debt, the fear of losing your prized possessions, like your vehicle, to creditors can be overwhelming. But will they repossess my vehicle during a bankruptcy? Let’s delve into the subject to find an answer.

The General Rule

The general perception is that filing for personal bankruptcy leads to the automatic repossession of your vehicle. However, this is not accurate. As long as you are up-to-date with your vehicle payments, creditors cannot repossess your car solely on the grounds of personal bankruptcy.

The Exception

Will they repossess my vehicle during a bankruptcy if I default on my car payments? Yes, they will. If your car payments are in arrears, then the lender has the right to repossess the car.

Equity Matters

Equity in your car plays an important role during bankruptcy. If your car is worth more than the outstanding loan amount, you’ll need to pay the equity to your Trustee in Bankruptcy for the benefit of your unsecured creditors.

Seeking Professional Help

If you are struggling with debt, it’s advisable to consult a Trustee in Bankruptcy (Licensed Insolvency Trustee) to explore your options.

What BankruptcyCanada Offers

  • Personalized services.
  • Prompt responses and resolution of issues.
  • Debt solution options review including filing a consumer proposal or personal bankruptcy.
  • Assistance with overwhelming debt for fresh financial start.
  • Direct dealing with your creditors once you file a consumer proposal or personal bankruptcy.
  • Free consultations to review your financial situation and practical debt resolution options.

Consumer Proposals

A consumer proposal is a government-legislated debt relief solution. It allows you to consolidate your debt or settle your debt for less than you owe and without any interest charges. Here are the top 10 benefits of a consumer proposal:

  1. Part of your debts can be written-off.
  2. Collection calls are stopped.
  3. Wage garnishment is stopped.
  4. Your bank account is unfrozen.
  5. It is legally binding on all unsecured creditors.
  6. It deals with the CRA and payday loan companies.
  7. You keep your assets including your tax refund.
  8. Your monthly payment is reduced to something that is affordable.
  9. There’s no interest on monthly payments.
  10. Bankruptcy is avoided.

Debt Consolidation vs Consumer Proposal

If you have significant credit card debt, tax debts or other unsecured debts, you might be considering a debt consolidation loan, home equity loan or second mortgage to consolidate your debts. An unsecured consolidation loan can be difficult to get if your credit score already reflects poor or too much credit. A debt professional can help you review your debt restructuring options.

Filing Personal Bankruptcy

Personal bankruptcy should be a last resort, but sometimes it is the right solution to help you get out of debt. A licensed insolvency trustee can help you decide if filing bankruptcy is the best option to eliminate your debt.

Break Free From Credit Card Debt

If you are only making minimum payments on your credit cards, it will take you years to pay off your balances. A debt settlement plan can help you consolidate your payments or make a settlement offer that can lower your credit card balances.

Stop the Payday Loan Cycle

Payday loans cause financial stress as the interest accumulates faster than you can pay it off. If you fall behind, payday lenders use aggressive collection tactics like calling your employer and garnishing your wages. Payday loans can be included in your program to help you break the payday loan cycle.

Get Tax Debt Relief

Only a Licensed Insolvency Trustee has the options that can help you reduce your tax debt liability. If CRA has frozen your bank account or garnished your wages, these actions can be reversed.

Student Loan Debt Forgiveness

If you have been out of school for 7 years, your government student loan debt can be discharged through a bankruptcy or consumer proposal.

Eliminate High-Interest Installment Loans

High-cost financing loans can help you deal with immediate demand for repayment, but they come with a high interest rate. Installment loans meant for those already in debt or with poor credit just postpone, rather than solve the problem.

Why Talk with a Licensed Insolvency Trustee?

A Licensed Insolvency Trustee is licensed by the Government of Canada to help you with your debts. They can help you break free from debt.

If you need help becoming debt free, call the team at Bankruptcy Canada and book a free consultation today.


In conclusion, the fear of having your vehicle repossessed during bankruptcy can be daunting. However, as long as you stay current with your vehicle payments, you can keep your vehicle even if you file for bankruptcy. If you are experiencing financial hardship and considering bankruptcy, it’s crucial to seek help from a Licensed Insolvency Trustee who can guide you through the process and help you explore all available options.

Find Your Personal Debt Relief Solution

Licensed Insolvency Trustees are here to help. Get a free assessment of your options.

Discuss options to get out of debt with a trained & licensed debt relief professional.