Losing Car To Bankruptcy

[samlouis83]

Hi

I’m thinking of applying for bankruptcy after having built up debts and struggling to find work after a serious illness.

I’m 30yrs old so I don’t own a home but I do have a car valued at prob £6.5k which I use to go to work (when I have a job) and to hospital appointments. Would I be made to give up the car as part of the bankruptcy?

[andy-hughes]

Unless it is financed - i.e. under a Hire Purchase Agreement. If so, the car does not legally belong to you until your final payment is made, so it cannot be seized.

If you own the car, then it is legally an asset, and can be taken and sold to clear part of your debts.

[Buenchico]

If the Official Receiver believes that you can get by without a car, then you'll lose it. (NB: Simple 'inconvenience' isn't a good enough reason to retain the use of a car. If, instead of a 15 minute drive, you could still get to work by taking an 1½ hour journey using two connecting buses, the OR would almost certainly rule that you don't actually need the use of a car).

If the OR recognises that you really do need a car (e.g. because you're a painter and decorator who needs to convey the tools of his trade), you'll still lose your existing car but you'll be allowed to keep £1000 to buy a cheaper vehicle.

https://www.stepchange.org/debt-info/bankruptcy-and-my-car.aspx

Bankruptcy isn't always the easy way out that it can seem to be (if only because you have to find the £680 fee to actually enter bankruptcy). Always seek independent advice (e.g. from StepChange) before taking any form of action to solve debt problems:
https://www.stepchange.org/