Keeping Cars And A House In A Bankruptcy

2010-09-15   minute read

It depends on how much equity you have in the cars and the house. Equity is the difference between what the car or house is worth and what you owe against it. It can also depend on whose name(s) the cars and the house are in. So, let's say that there is no equity in the vehicles - you owe more against them than they would sell for. In that case, you can keep them in a bankruptcy as long as your payments are up-to-date. You'd, of course, have to continue making the payments on the car loans if you keep them. For example, let's say that your equity in one of the vehicles is less than $5,000. As long as your payments on the car loan are up to date and you continue making them, you can keep that vehicle even if you declare bankruptcy. The reason is that, in BC (as in most provinces, you are entitled to an exemption (i.e., you can keep an asset up to a certain value). In BC, the limit for a vehicle is $5,000. If you have one vehicle with less than $5,000 of equity and the other is worth less than what you owe, you would be able to keep both vehicles. If both vehicles are in your name and they both have equity, you can only keep one of them (unless you're self-employed, in which case you could use your "Tools of Trade" exemption on one of the vehicles and thereby keep both of them). The same concept applies to the house (assuming that the house is your principal residence). In BC (in Metro Vancouver and in the Capital Region), each owner is entitled to an exemption of up to $12,000. In other parts of the province, the exemption is $9,000. So if the equity in your house is, say, $8,000 and you own the house jointly with your spouse, your half of the equity is $4,000. Because $4,000 is less than your $12,000 or $9,000 exemption, you would be able to keep the house in a bankruptcy. As with the vehicles, if you keep the house you would have to continue making the mortgage payments. If you are self-employed, you might also be able to use your "Tools of Trade" exemption on one or more vehicle. You can't use it on your residence, though. If that's confusing, give me a call or send me an email. There are a lot of variables, so if you can give me more specifics, I can give you a clearer (and shorter) answer. Judy Scott - Trustee Meyers Norris Penny Limited Port Moody - Burnaby - Maple Ridge, BC 604-949-2113 [email protected]

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