Through a consumer proposal, you can reduce your debt, and consolidate your debts into a lower monthly payment, halt collections, lift wage garnishments and freeze interest on your debts.
But can you keep your car in a consumer proposal?
Can you keep your car in a consumer proposal?
The good news is if you own your car, you can keep it in a consumer proposal. If you are making loan payments on the vehicle, you just need to keep making payments on time.
Your Licensed Insolvency Trustee will take some information about your car, such as:
- Make, model, year and registration number.
- The purpose of the vehicle.
- Ownership status.
Then, your trustee will determine the value of your vehicle and make a fair offer to your creditors based on the value of all your assets.
A consumer proposal is a popular debt relief solution because you can keep all your vehicles, regardless of value. It does not affect your car loan.
Car financing while in consumer proposal
You can keep a financed vehicle in a consumer proposal as long as your payments are up to date.
If you have a car loan, the finance company will want your monthly payments to continue, and you’ll need to continue to make payments towards your loan.
Your trustee needs to know the finance agreement and the monthly payment. This information will allow for arrangements to be made to keep the car.
Of course, if you miss payments, the financing company will repossess the vehicle, and you would be liable for any shortfall.
Leasing a car while in consumer proposal
When you lease a car, you sign a contract to use the vehicle for a set period. You make monthly payments for the lease duration and are responsible for the maintenance and insurance.
You can continue to lease a vehicle in a consumer proposal, but you must disclose the lease terms and the monthly payment to your trustee, so they can arrange for you to keep the lease.
As a car is a secured debt, the leasing company can repossess the car if you miss payments, and you would be liable for any shortfall.
Voluntary surrender of car
If your car payments are more than you can afford, you may decide to give up your car.
Your Licensed Insolvency Trustee can arrange for your vehicle to be returned to the finance company before filing your consumer proposal.
The remaining debt owed to the finance company is estimated based on and included in your consumer proposal as an unsecured debt.
Can I get car financing while in consumer proposal?
If you want to buy a car during a consumer proposal, you can. Loan options are available even if you have bad credit and a low credit score.
They will want to contact your Licensed Insolvency Trustee (also known as a bankruptcy trustee) to ensure you have a good payment history with the proposal.
Many car dealerships in Canada offer finance designed specifically for customers in debt solutions who are rebuilding their credit. But it is vital to make sure you can afford to finance a car before proceeding as sometimes you pay a higher interest rate.
If you are in a consumer proposal and want to get an auto loan, we can connect you with a consumer proposal car dealership in your area.
You can keep your car in a consumer proposal
A consumer proposal can protect your car while helping you resolve your debts.
The next step is to contact a Licensed Insolvency Trustee to help you decide the best route forward. Arrange a consultation today.
Get debt relief
Free consultation with a Licensed Insolvency Trustee by video, phone or in person.
- Experienced trustees
- Local offices
- Personalized plan
- No fees
It only takes 30 seconds.
Share this article