Tag: Bankruptcy Law

Do I Lose My Car in a Consumer Proposal?

A proposal is a scheme of arrangement whereby you offer to your creditors something less than the total of what you owe them.  That is why you see advertising that you can save up to 75% of your debts and not go bankrupt.  The key words are “up to.”  Sometimes this is possible, but not always.  It depends on who you owe and how much you owe them.  Very few proposals require you to turn over your car or other assets as part of the terms of your proposal.

If you do not owe money on your car to a bank or finance company, you need only to disclose the value of the car on your list of assets.  Note that your car is exempt in Ontario to a value of $5,650.  This increases to $11,300 if it is used for business purposes.

If you still owe money on your car, remember that the bank or finance company does not want your car – they want your monthly payments to continue – that is how they make money.  If your payment history has been good, your trustee/administrator of your proposal will be able to assist you in keeping your car.

In exceptional circumstances, you may find that your car payments are much higher that you can afford.  The debt on the car may be much higher than the car is worth and you may want to get out of an unfavourable contract.  Your trustee/administrator of your proposal can still help you by arranging for your car to be turned in to the secured creditor (the bank or finance company) before you sign the papers for your proposal.  The debt owing to the bank or finance company will be estimated as net of the selling price of the car.  This debt will be included in your proposal.    The estimate will be updated once the car is sold and the actual loss to the bank or finance company is known.  Your trustee/administrator of your proposal will often assist you in obtaining a more affordable vehicle either prior to or during the early stages of your proposal.

A good trustee/administrator of your proposal should be considered as a resource person to help you solve all of your financial problems.  He or she has seen many similar problems in the past and can assist you in your recovery.

Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.