When I meet with people in the Cambridge office, this is one of the most common questions people ask when they meet with me when considering filing for personal bankruptcy.
The general concept of bankruptcy is this – you assign (surrender) ownership of your assets to a trustee for the general benefit of the people you owe money to.
When we review your finances and circumstances, we’ll let you know what affect bankruptcy will have on all of your assets, including you car. There are some basic rules for whether or not you will lose your car in a bankruptcy.
Under new rules that are being proclaimed into force on Sept 18th 2009, a leasing or financing company will no longer be able to automatically repossess a vehicle based solely on the grounds that you have filed a bankruptcy. They will, however, still have the option to repossess the vehicle if you are behind with your payments to them. Remember, if you are leasing or financing a car, technically, you do not fully own it until you have finished paying for it.
This important new rule, should allow more people the option to decide on keeping the vehicle without having to fear losing the vehicle automatically because they have filed for personal bankruptcy. In general, the finance or lease company wants your money more than the car back so as long as you keep your payments up-to-date, they like to let you keep it.
The Bankruptcy and Insolvency Act and property rules in Ontario state that you may keep a car that you own, if it is worth up to $5,650.
In order to find out if your car meets this requirement, you can take it to a dealer to be appraised. Lots of local dealers in Cambridge will be happy to help you with this.
The value of the car is what somebody would pay for it given its make, condition and mileage. If your car is worth more than the allowed amount, you can still keep it as long as the difference is paid to the bankruptcy estate (to the trustee). So, if you car is worth $6,500, you will need to find a way to pay the trustee $850. ($6,500-$5,650 = $850)
If you would like to find out more about how filing bankruptcy is going to affect your car or any other assets, contact me today by sending an email or calling 519-622-3773.
how's it going me old mucker? - posted on 2 days ago
