What To Do About Seize Or Sue
Learn more about the seize or sue laws in B.C to better understand your options if payment becomes too much.
Dear Colleen Craig,
I currently have a lease in BC with GM financial. Unfortunately, I lost my license and have no further use of the vehicle I acquired by lease. I tried to dispose of the car through lease busters with no luck, so I stopped payments on the lease and waited for GM to contact me. I explained to them that I just cannot afford the vehicle as I am on pension, and suggested they should come retrieve it. A month later, they seized the vehicle and sent a form letter demanding payment on the unpaid balance post their disposal of the car at auction. My last resort might be to use Go Public at CBC to shame GM Financial to cease and desist. Do they have the right to demand payment under BC Sue or Seize laws?
Any words of wisdom?
Debtor in Crisis
Unfortunately, the seize or sue rules apply only to loans, not leases. The difference is complicated, but in a nutshell, depends on the nature of the lease. Generally, vehicle leases are not capital leases, as they do not confer title or ownership in the vehicle. In this case, getting out of your contract is a breach of contract and not a default on a secure loan. The PPSA seize or sue covers consumer defaults on loans, but not a breach of contract.
“Consider a lease like renting a car for a period of time. If you breach the contract, they seize the car and sell it, and you owe the balance.”
A true lease is when the lessee has contracted the right to use the vehicle for a monthly fee, with the option to purchase at the end of the lease if he/she so chooses. Or alternatively borrowing money from a lender, giving them the lenders money to purchase the vehicle, and agreeing to pay the loan in increments over time. The lender will take a security against that vehicle in case of default.
What type of income do you have apart from pensions? If your income is modest, it may be that a letter from you outlining your limited income could stop collections against you. They can proceed to get a “judgement” against you for the shortfall, but pension income cannot be garnished. If you have a bank account, they can seize what’s in the account and go after any other large assets you have above what is considered “Exempt” here in BC. ($10,000 tools of the trade, $12,000 in a house, $4000 in home furnishings and $5,000 in a vehicle.)
Unfortunately, waiting them out may be your best option. They may “offer to settle” on an amount if you drag it out, but that will depend on what you think is the best option. I would also encourage you to Go Public on this issue as most people do not understand the difference when car shopping. You may also consider a legal opinion.
You may also find these articles useful:
Seize or Sue BC – Will my Secured Creditor Sue Me or Seize My Vehicle