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What happens to a leased car during bankruptcy?

Struggling with your finances is difficult enough, but deciphering what debt solutions are available to you and which of your assets, if any, are protected require professional advice. Most individuals who owe money can feel overwhelmed. Fortunately, there are Licensed Insolvency Trustees (LIT) like A.C. Waring & Associates Inc. who can offer debt help across Central and Northern Alberta from their Edmonton office.

One option, depending on your circumstances, is filing for bankruptcy or a consumer proposal. In such cases, only unsecured debts are usually impacted, i.e. loans not attached to specific assets. The safety of your secured debts, on the other hand, is mostly dependent on whether you can afford to keep making payments on them.

Secured debt versus unsecured debt

Unsecured debts generally include such items as credit cards, personal loans, income tax, and so forth. Meanwhile, secured debts are those where the debt is tied to an asset, such as a mortgage (real estate) a car loan or car lease (which is secured by your car).

If you are leasing a car and you file a consumer proposal or for bankruptcy in Edmonton, you can technically hold on to it so long as you continue to make the payments.  If you can’t, or you don’t want to keep the car, you can either voluntarily surrender it or initiate repossession.

Your options and what happens next

Leasing a car means you are making payments on it and will use it until the lease is up. Even if you file for bankruptcy with us in Edmonton, as long as you are up to date on your payments for the leased car and you can afford to continue making them, you are legally entitled to keep it as per the terms of the lease. You must also keep the insurance in full force.

When speaking to a Licensed Insolvency Trustee who can offer debt help, it is important to let him or her know about your car lease upfront.  Usually the leasing company and the lenders would prefer that you continue to make the car payments.

Needing insurance and an LIT

Regardless of what you decide to do with the leased car after filing a consumer proposal or bankruptcy in Edmonton, always maintain insurance on the vehicle until it is no longer in your possession. If something should happen to it before you have returned it and you are not insured, you will likely be required to pay.   Also, uninsured vehicle accidents can affect your driver’s license.

A .C. Waring & Associates Inc. are experienced Licensed Insolvency Trustees who can provide debt help in Edmonton and Central/Northern Alberta on a variety of financial matters. If you currently face serious debt problems, contact our office at 780-424-9944 or toll-free at 1-800-463-3328 for a free initial consultation. We can discuss your options with you, including the spectrum of debt solutions available to you.

A.C. Waring & Associates Inc.

“The Debt Solutions People”®