Seize or Sue in BC – PPSA rules

Seize or Sue Rules in BC – Provincial Property Security Act Rules. – What Does it Mean to be Sued?

Dear Colleen
I have a vehicle that I cannot make payments on anymore. So, I understand that there is a seize or sue rules in BC (under PPSA rules) that may affect me?  To date, I have notified the dealership that gave me the loan to buy the car that I can no longer pay.  But what I need to know is what happens if they decide to sue me instead of seize the car.?  What does it mean when the dealership has threatened to sue me if I don’t pay them? Does the seize or sue rules apply to me?

To be clear, do I own the car outright as soon as they say they are going to sue me?  Or do they still own the car until the end of the court case?  Thanks for you help about the Seize or Sue Laws

Confused, BC
Hello Confused BC

With respect to your vehicle and the seize or sue rules, if you reside in BC and your car is registered in BC, then the “seize or sue” rule under the BC PPSA applies to you.  So, if you borrow money to buy a vehicle, and for whatever reason, stop making the payments on the loan, the company that loaned your money i.e. “secured creditor” has two options to try to get paid back. They can seize the car, or sue you, but not both.

What does “Sue” mean?

A secured creditor can either seize or sue.  If the secured creditor has decided to “sue” you rather than “seize” the vehicle, then their security (against the car) is no longer valid.  But they actually have to “sue” you.   So, they must send you a NOTICE from the a Court saying that they file “Filed a Notice of Claim” .  The secured creditor can’t just threaten to sue you; they actually have to file claim in courts.  The secured creditor has to send you a copy of the court documents in the mail.  I have placed an example of an real court Notice so you can see what it looks like. Sometime collection agents make their letters look like court papers, but they are not.

A secured creditor, in order to be “secured” must register their loan in a Registry called the provincial Personal Property Security Registry- PPR (per the PPSA rules – Personal Property Security Act) Once registered, then they have a “secured lien” on your vehicle.  This registration lets anyone looking into ownership of that vehicle to see that there is a creditor who has a charge or security against the vehicle.  This security will stick with the vehicle, even if it is sold to someone else.  The Registry will show who owns the vehicle (ownership) and will list any secured creditor.

If your secured creditor opted to sue you, then their charge or lien against the vehicle is no longer valid.  So you are free to deal with the car as if there were no liens. So, if you are sued (served court Notice is sufficient), then you will own the car without any liens.  But , be aware, the lien will not “automatically” be removed from the Registry.  The car is now legally yours to deal with without the liens, but you may have to send a demand letter to have the lien removed from the PPSA registry system.

Yes!!!, Why you care if there is security registered against a vehicle.

A secured creditor registered against your vehicle in the PPSA does not interfere with you using the vehicle in any way.  It only really matter if you intend on selling the vehicle (or if you are going to purchase one.)  So, when a buyer comes along to buy a car or vehicle you are selling, they want to make sure that there are no liens registered under the PPSA.  The lien of the secured creditor is against the specific vehicle (it follows the VIN number).  So, the secured creditor has a right to seize any vehicle matching the VIN number and description of their security documents.  It does not depend on who the owner is.

This is true if you buy a vehicle from someone else.  You should always check the PPSA registry as there might be a secured creditor and they could come a take the vehicle from you – even if you don’t owe that creditor any money!  The liens would move along with the car no matter who is the registered owner. This is one reason why if you are purchasing a vehicle personally you should do a PPR search to ensure that you vehicle of choice doesn’t have any such charges.

Unwitting consumers can be loose out if they purchase a vehicle that has a preexisting charge.  The secured creditor, like the bank, has the right to repossess the vehicle even if you may have purchased it and paid money to the previous owner.   In these cases, and they have happened, the person who bought a vehicle without doing a search, and subsequently had the vehicle repossessed by a secured creditor,  their only recourse was be to sue the person that sold them the vehicle in the first place.  And often the seller is hard to locate.  They may be long gone or even declared personal bankruptcy which would mean you would lose the ability to proceed against that person in the courts.

Hopefully this answers your questions –

We have other blogs about Seize or Sue Issues for Vehicles

Seize or Sue between provinces

FAQ – Seize or Sue BC


Solving Your Debt Puzzle

  1. Jody 2 years ago

    Does the seize or sue rule also apply to a vehicle purchased under a company instead of personal?

    • Author
      colleen 1 year ago

      No, unfortunately the seize or sue rules only apply to consumer goods so a vehicle owed by a corporation is not considered a consumer good rather it is considered a commercial good.

    • Author
      colleen 1 year ago

      Unfortunately, the seize or sue rule only applies to consumer goods. If the car is owned by a corporation then it is not considered a consumer good and the seize or sue rule does not apply.

  2. Nicole 1 year ago

    Hi there,

    I am the only name listed on a car loan for $50,000. The car is registered to someone else who was supposed to be making the payments. That person has handed me the keys and walked away. I can’t even put storage insurance on the vehicle, as I am not the registered owner. No payment has been made for 10 months and the bank has finally contacted me. I told them the situation and was told that they will sue me, which will mean a lien will be placed on my home. What are my options at this point? If I can find the registered owner, to sign transfer papers, and then I can sell the car, will the bank still sue me for the difference owing on the load? Will they consider reducing interest charges? I could use all the help I can get. I am a single mother with 4 children and no child support. I can’t afford to pay for this vehicle.

    • Author
      colleen 1 year ago

      Yes, the seize or sue law only applies to the primary owner of the debt – I am assuming that you are a guarantor for the debt? Or did you take the debt out in your own name and loaned the money to your friend? It may make a difference.
      From what you have said it appears that the bank has no choice but to sue you (as they don’t have security on the car), so yes, the best bet is to try to find the person who owns the car to execute documents into your name to sell. Better yet, if you can find the person, just sell the car to a third party otherwise you will have to pay PST on the fair value of the car when you transfer into your name.

  3. john ingram 1 year ago

    What about snowmobiles?

    • Author
      colleen 1 year ago

      The seize or sue rule applies to “consumer goods”

  4. Debbie 11 months ago

    If someone has a $30,000.00 loan on a car and has only made one payment and the company now has a bailiff coming after the car. Is it true if the bailiff takes the car the debt is no longer owed? Or can the company keep the car and come after the dollars as well? If the person owing the $$$ hands over the car is he still responsible to pay the loan or is this debt on a clean slate just leaving the person with a bad credit rating?

    • Author
      colleen 5 months ago

      Hello Debbie. Yes, there is a rule in BC (and Alberta) that if the vehicle is seized, then the secured creditor cannot come after you for any shortfall on the outstanding debt. It will however still be reflected in your credit rating.

  5. Melanie 11 months ago

    Hi , my ex gifted me my car over a year ago. He recently went bankrupt and I had a bailiff contact my mothers home looking for my car. Can my car be repossessed even though I have owned it out right ?

    • Author
      colleen 5 months ago

      Sorry or the delay in responding. We had website issuse. Well that is going to depend. If there is a secured charge against the vehicle, the charge will follow with the vehicle even though the ownership has changed. So, if when your X transferred the vehicle to you, if he still owed money to the bank, and the banks registration is properly registered, then the bank will have the right to repossess. The lien is based on the VIN number of the vehicle, it is not based on who is the registered owner. This is true if someone buys an vehicle from a 3rd party so yo always needs to do a lien check before you buy a used vehicle.

  6. gk 11 months ago

    my vehicle has been seized. the person seizing my vehicle said, in b.c. as soon as they seize the vehicle, that i am no longer in debt in regards to what was owing on the vehicle. the bank, in a letter said i would still be on the hook for any remaining amount after sale of my vehicle, plus storage fees and other things. my question. do i still owe anyone? am i obligated to pay these extra charges or whatever is left of my car loan that is not recovered? in what way does this effect my credit score?

    thank you for your time and support.

    • Author
      colleen 5 months ago

      Sorry, for the delay in responding – website hack. No, if the vehicle is registered in BC and you have been in BC for at least 30 days, then the seize or sue law will apply to you. Even if the bank says otherwise. It is a legal defense for you.

  7. Jon adkin 11 months ago

    Does the seize or sue rule apply if I volunteer seizer ? Meaning if I drop the vehicle off at the dealership, or do I have to wait for someone to come get the vehicle?

    • Author
      colleen 5 months ago

      Hello Jon – sorry for late reply – website issues. So the banks and other finance companies try to get people to sign “voluntary surrender forms”. This unfortunately does not technically meet the test of “seizure” and as such, the bank would be able to go after you for any shortfall. It is a technicality so the best defense is to have them technically seize the vehicle to protect your rights.

  8. Mark 8 months ago

    I bought a truck in British Columbia and recently moved to Alberta where it is now insured and registered. Due to a job loss and drastic wage decrease I can’t afford the payments anymore. Does this law apply to me.

    • Author
      colleen 5 months ago

      Hi Mark The law will apply in the province where you are residing and where the vehicle is registered. It sounds like both of these, for you, is Alberta. But on the good news front, I think Alberta also has seize or sue law as well – last time I checked anyway.

  9. Vishal 5 months ago

    What is that means ,” send a demand letter for instance “ ?

    • Author
      colleen 5 months ago

      What I was referring to in this blog has to do with the secured creditor suing you. If they opt to sue, then they can’t seize the vehicle. If they sue, their security against the vehicle is no longer valid so they should remove their registration under the PPSA registry. If they don’t remove this registration right way, you should send them a letter “demanding” that they update the PPSA registry and remove their registered claim. I have updated the post to make it a bit more clear.

    • Author
      colleen 3 months ago

      “send a demand letter” means when a creditor sends a letter that demands repayment.

  10. Syd 2 months ago

    Good day.
    My question is that I’m the executor of my brothers will for my nephew. My brother had bought a new vechile last year and didn’t get the insurance on his loan. So I know I have the option to turn it back into the bank but I’ve been told also that if I don’t give it back voluntarily and have them repossess it. There would be no other financial actions taken against the estate compared to giving it up voluntarily.


    • Author
      colleen 2 months ago

      Hi Syd.
      The seize or sue option will apply to this situation as well. Phone the financial institution in question, the secured creditor, and let them know of your brothers passing, and that no payments will be forthcoming. I would imagine that they will co operate and send a bailiff to seize the vehicle.

  11. Kat 2 months ago

    I am in a position where making payments on my car is becoming too difficult to do. I am thinking of letting the bailiffs come and get the car. My questions are, if the creditor wants me to be voluntarily surrender my car.. can I choose not to do so? What happens if they try to sue you and you can’t make the payments? Suing doesnt seem to be a smart option for the creditor as they have less chances of getting any money out of the vehicle.. seizure seems the smart thing for them to do.

    • Author
      colleen 2 months ago

      Hi Kat. In answer to your first question, absolutely. Voluntary surrender is just that, voluntary. If you are unable to make the payments, you can do one of two things. You can sell the car, and whatever payments you get from the sale of the car, you can pay towards the bank, and then agree to make payments to whatever shortfall. If you choose not to do that, then your other option is to file a personal bankruptcy or consumer proposal. And yes, I agree, generally banks opt to seize the car, but they can sue from time to time.

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