Upon Bankruptcy in British Columbia, can I keep my leased car?
Yes, it may be possible to keep your leased car when you file Bankruptcy in BC, however, some conditions may apply so it is important to review the details of your lease agreement. Generally, the rule after bankruptcy for a leased vehicle is that as long as your continue to make your payments, that is if they fit within your family budget, then then you can keep the vehicle.
Before you assign into bankruptcy your trustee in bankruptcy will look at the value of your leased car and your remaining lease payments. Generally the value of the car is less than the remaining lease payments, thus if you currently sold the car, what you would get would not be sufficient to pay off the lease in full. Don’t forget to look at the “balloon payment” or “buy-out option” at the end as this is usually where significant additional costs can be hiding. As well, if you have driven further than allowed under the terms of the lease, or have damage to the vehicle, then these may also be costs that you should factor into your decision when deciding if you want to keep the car or surrender it over to the secured creditors when you declare bankruptcy.
If you decide that you cannot afford the payments, you can give up the leased car and any debt associated with breaking the lease can be a debt discharged in the bankruptcy.