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New Car and a Consumer Proposal

Recently I have been looking into filing a consumer proposal. I bought my car about a year ago, and during my research into proposals I have come to the realization that my bank didn`t register a lien on my vehicle. I was charged the lien fee at the time of purchase, but I cannot find a registered lien.

I have been advised by a top person in your profession that the safest thing for me to do is sell my current car, and get a new leased car. I won`t get as much for my car as I owe on the loan, so I will have to include the balance into my proposal.

I would like to get some feedback from you on this, as it seems like delicate ground.

Posted from: Alberta

One Response to “New Car and a Consumer Proposal”

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Barton Goth – Goth & Company Inc. – Bankruptcy Trustees said...

Interesting situation. One way to approach it is that you could simply keep the car, include the amount and see what happens. However, I see this as risky, while technically speaking the creditor looses the right to register after the proposal has been filed but it may become difficult for you if they try to register anyway.

Alternatively you could folllow the advice you have been given, which tries to prevent this registration issue after the proposal is filied. However, if you sell the proposal before the proposal is filed there is an argument that the secured loan is stil valid. This is because with the existing security laws suggest that a security agreement (in the absence of the proposal) is not invalid simply due to failure to register. As a result if you haven’t filed the proposal yet and sell the car tehn technically the money would still rightfully belong to the finance company and this may cause some difficulty for the person to whom you sell the car (this is somehting I would recommend you confirm with legal council as I can tell you the insolvency side, but details fo teh sales process and the related laws and rules is somehting that I am unfamiliar with).

If I were in your shoes I would probably file the proposal first. At that point the financer is not able to register a lien, list the loan as unsecured (if it still isn’t showing up on the PPSA search) and then I would sell the vehicle after the proposal is filed. The filing of a proposal prevents the creditor from being able to register and the selling of the car will reduce the liklihood they will try (as how can you register a lien if the car is no longer in your possession and the proposal has been filed.