Do I Lose My Car If I Go Bankrupt?

"What happens to my car if I go bankrupt?" is one of the most common questions I am asked. People in Toronto, Hamilton, and other large cities may be able to survive using public transit, but often our clients in Brantford, Cambridge and other smaller cities are dependent on their car to get to work.

If you own a car worth less than $5,650, and there are no liens or loans against the car, you are permitted to keep your car if you go bankrupt in Ontario. Please note: these rules only apply in Ontario. Go to the Bankruptcy Canada website for information on the rules in other provinces.

However, if your car has a lien against it, you may be forced to surrender your car in the event of a bankruptcy. Certain lessors and lenders (such as most of the car companies), let you keep your car if you go bankrupt, provided you continue to make your monthly payments. However, certain banks and finance companies will repossess your car if you go bankrupt, even if your payments are current.

To find out if you might lose your car in a bankruptcy, contact us today.

Editor's note: when this blog was originally published, the exemption limit for cars in Ontario was $5,000; on December 14, 2005 the exemption limit was raised to $5,650.

Posted by J. Douglas Hoyes, CA, Trustee @ 10:56 AM

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