Can You Keep Your Car After Filing Bankruptcy
Each province and territory in Canada allows an exemption for certain assets to be kept by a consumer debtor. In Ontario, you can keep your car if it is valued at $ 5,650.00 or less. If the vehicle is used for business purposes, it is called a “tool of trade” and the exemption doubles to $ 11,300.00. If the vehicle is valued at more than the exempt value, the consumer debtor (i.e. the person who is bankrupt) has options to consider. If you do not wish to keep your car, you can turn it over to the trustee as an asset of your bankruptcy in Ontario. The trustee will sell the vehicle and, after deducting expenses of the sale, will pay to you the lesser of the amount of the exemption or the net proceeds of the sale. If you want to keep your car, you will have to make arrangements with your trustee to pay the bankrupt estate the difference between the value of the vehicle and the amount of the exemption.
If the car is leased, bankruptcy in Ontario generally terminates all contracts between the consumer debtor and third parties. The leasing company will, in most cases under its lease, have the right to repossess the car, sell it and then claim any deficiency balance in the bankrupt estate. However, if the bankrupt is not in arrears, the bankrupt may be able to continue making payments under the lease and keep the lease in good standing. Such payments will depend upon the size of the payments and cash flow. The trustee on behalf of the creditors may object to these payments if they are sizeable in relation to the bankrupt’s income and expenses.
If you are not sure, discuss your concerns with your Trustee.
Contact Rumanek & Company Ltd. for more information. Please fill out the form on the contact us page for additional information and if you would like an evaluation please fill out the Evaluation Form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt and bankruptcy in Ontario for more than 25 years.