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If you owe money on your car either through a lease or a loan it is considered a secured debt and may be repossessed by the lender when you file for bankruptcy, although you may be able to keep your vehicle as long as you have been making your payments regularly. Some agencies’ contracts stipulate that you cannot be insolvent, but lender’s policies change frequently, so talk to your trustee and review your loan or lease agreement together. Before you file for bankruptcy, you should contact the company that holds your vehicle loan to explain that keeping the car is a priority and you have reviewed your financial situation and will be able to make the payments. This improves the odds that your car company will decide against repossessing your vehicle.
Provincial regulations determine the amount of equity value that is exempt from bankruptcy. If your car has more value than the exemption amount, you may be required to refinance the car in order to pull out the equity to pay creditors. If you are unable to refinance, you may have to sell your car. Discuss your vehicle situation with your trustee before filing for bankruptcy.
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