Can I keep my car after bankruptcy?
If you own your car in Ontario, it must be turned over to the licensed insolvency trustee on filing the assignment as property of the estate. However, if the car is required for business, then it can be declared as an exempt item, or technically as a tool of the trade. The exemption varies in each province, and is generally very low. For example, in Ontario, the person filing can keep the car if its value does not exceed $5,000.
If the car is leased, bankruptcy generally terminates all contracts between the person filinf for bankruptcy 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, they 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.
Contact Rumanek & Company Ltd. for more information on bankruptcy in Ontario and debt solutions. Please fill out the bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome bankruptcy in Ontario and debt for more than 25 years.