Will I Lose My Car?
When people are considering their options under the Bankruptcy and Insolvency Act they often ask “will I lose my car?”. The answer is based on circumstantial information (your particular set of circumstances that is) that we may not have. The short answer is “probably not” although it may be “it depends”. If you have ceased making payments and have a lien registered against the car then the car will most likely be repossessed by the creditor, not because you filed a bankruptcy or proposal but because you stopped making payments.
If your car has a lien against it making it fully encumbered, meaning that the value of the car is equal to or less than the value of the loan, then you may keep the car by maintaining payments to the secured creditor. If your vehicle has no liens against it and the value falls under the exempt amount (based on the province in which you leave) then you may keep it, if the value of the vehicle exceeds the value of the exemption then you would pay the trustee the difference between the exempt value and the value of the vehicle.
In a situation where the vehicle has a lien against it but the value of the vehicle exceeds the value of the loan (lien) but not the value of the exemption you may keep it as long as you maintain payments to the secured creditors. If the vehicle has a lien against it but the value of the vehicle exceeds the value of the loan and the value of the exemption you may keep it as long as you maintain payments to the secured creditors and make settlement with the trustee for the value that exceeds the loan and exempt values.
As you can see the answer to the question “will I lose my car?” might very well be “it depends” but is most often “probably not”.