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*Unsecured debt includes credit cards, lines of credit, bank overdrafts, payday loans, and unsecured personal loans (excluding student loans). It does not include mortgages and car loans.

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How can we help you?

If you have unsecured debt of under $10,000 and live in the Province of Ontario filing bankruptcy may not be the best option for you. We suggest you contact the Office of the Superintendent of Bankruptcy at 416-973-6441 to discuss your options, or you can visit their website here.

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I understand that Bankruptcy-Canada.ca does not provide debt relief services directly and agree to securely share this information with a local Licensed Insolvency Trustee (LIT) for a free, confidential consultation.

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Secured Creditors

Is a finance company allowed to take security such as household goods and my auto if I’ve pledged it as security if I go bankrupt? Or are these things exempt even though the creditor is secured? Does this vary per province?

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2 Responses to “Secured Creditors”

A licensed trustee said...

There are only three ways to deal with secured creditors (such as mortgage holders, car loans, or finance companies with household good loans): 1. keep paying them; 2. surrender the goods to them; 3. negotiate alternate payment arrangments.

It appears that you picked option number 3, which means you effectively entered into a new loan agreement with them, which you are now bound by, since it was entered into after you went bankrupt. I suggest you contact your trustee for further advice, since the solution to your problem will depend on how long ago you went bankrupt, and what payments you have made to the secured creditor since you went bankrupt.

Barton Goth, GCO Inc. Bankruptcy Trustees said...

Regardless of whether or not you file bankruptcy, once you have pledged these assets as security, the only way to retain these assets is to ensure the finance company is satisfied, otherwise they have the right to repossess the pledged items. .

The laws regarding what can and cannot be repossessed are somewhat complicated, but there may be some room to negotiate with the lender over items like furnishings (as thy have very little resale value and ultimately the finance companies normally don’t want your furnishings) so we recommended that you contact a licensed trustee to review your specific situation and advise you as to the specific options available.