One of the most common worries people have when considering a Consumer Proposal is losing their vehicle. The reassuring starting point is understanding how the law generally treats a financed car differently from credit card debt.
Secured debts are treated differently
A Consumer Proposal generally deals with unsecured debts — things like credit cards, lines of credit without collateral, and unpaid bills. A vehicle loan is usually a secured debt: the lender holds a lien against the vehicle itself. Consumer Proposals generally deal differently with secured debts than with unsecured ones, and a secured loan is typically treated under the terms of that loan agreement, separate from the proposal's settlement of unsecured debts.
What that means in practice
In general terms, a customer may be able to keep a financed vehicle if they continue meeting the obligations associated with the secured loan — the regular payments and the terms of the loan agreement — depending on their specific circumstances. This is not a rule that applies automatically in every situation, and it is not a promise.
Factors that can matter include whether the payments are current, the equity in the vehicle, the terms of the lender's agreement, and the overall structure of your proposal. Some situations are straightforward; others are not.
The decision itself is not ours to make
Whether to keep, surrender, or trade a vehicle during a proposal is an insolvency-specific decision. Buy Direct Auto is an automotive retailer and financing facilitator — we do not advise on how to handle your proposal, and we do not evaluate your file. Your Licensed Insolvency Trustee, who administers your proposal and knows your obligations, is the right person to make that assessment with you.
Where Buy Direct Auto fits
Once the insolvency side is settled and you know whether keeping the vehicle makes sense, we can help with everything that comes next — from evaluating a trade (see trading a vehicle while in a Consumer Proposal) to finding a replacement vehicle that fits a tighter budget. The full resource centre covers each of those stages in detail.
Part of the Consumer Proposal & Bankruptcy Vehicle Financing Centre
Explore the full resource centreEditorial disclaimer: Buy Direct Auto is an independent automotive retailer and financing facilitator — not a Licensed Insolvency Trustee, law firm, credit repair company or financial advisor. This article is general educational information based in part on publicly available Government of Canada sources, including the Office of the Superintendent of Bankruptcy. It is not legal, insolvency or financial advice. Approval and terms are always subject to lender criteria and individual circumstances. Questions about a Consumer Proposal or bankruptcy should be directed to a Licensed Insolvency Trustee.