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Secured Creditor

Good day. I have a secured car loan with 24 month term remaining. Unfortunately, I will be filing for a consumer proposal or bankruptcy in 2008 as my overall debts are becoming unbearable.

My car is worth about $6000 but it`s very reliable and I would like to keep it. Would other creditors consider it `preferential treatment` if I cashed in my rrsps or doubled up on my payments to ensure that my car has a clear title, prior to bankruptcy? Thank you

One Response to “Secured Creditor”

Barton Goth GCO Bankruptcy Trustees said...

Definitely, what you would have in essence done is convert a non-exempt asset into an exempt asset and this would not make the creditors very happy. The result could be different depending on whether you file a proposal or a bankruptcy, and at the very least you would likely have to repay all the funds from the RRSP into the bankruptcy or proposal.
So you are better off to keep things as they are and simply go the bankruptcy or proposal route. You shouldn’t find much risk of loosing your vehicle (assuming you are current on your existing payments).