Barton Goth – Goth & Company Inc. -Trustee in Bankruptcy said...
In most situations, assuming if you are up to date of your car payments, have the cooperation of the lender and have less then the amount of equity allowable pursuant to the exemption legislation in your province ($5000 in Alberta), then the filing of a bankruptcy really has no impact on the car loan.
If you are not interested in keeping your vehicle you always do have the ability to return the car to the finance company prior to filing for bankruptcy. The finance company will typically sell the car, apply the sale proceeds against the loan, then any shortfall would be cleared by the filing of the bankruptcy. Normally this is only done if the value of the loan far exceeds the value of the vehicle.
In most situations, assuming if you are up to date of your car payments, have the cooperation of the lender and have less then the amount of equity allowable pursuant to the exemption legislation in your province ($5000 in Alberta), then the filing of a bankruptcy really has no impact on the car loan.
If you are not interested in keeping your vehicle you always do have the ability to return the car to the finance company prior to filing for bankruptcy. The finance company will typically sell the car, apply the sale proceeds against the loan, then any shortfall would be cleared by the filing of the bankruptcy. Normally this is only done if the value of the loan far exceeds the value of the vehicle.