Some people who own a leased or financed vehicle can’t or don’t want to keep their vehicle.

Common reasons why someone might not want to keep a vehicle are:

Can’t afford the payments

The vehicle is worth far less than the total amount owed

Lifestyle change

When someone doesn’t want to keep their vehicle they should stop making their car loan payments and be prepared to surrender their vehicle to the secured creditor. What happens when you surrender your vehicle to the secured creditor?

The secured creditor takes possession of the vehicle

The vehicle is sold, usually at public auction

The sale proceeds are applied toward the balance owing on the vehicle

Any residual balance left owing after the vehicle is sold is an unsecured debt which can be discharged by making a consumer proposal or filing personal bankruptcy

For example:

Total debt owed to secured creditor


Vehicle sale proceeds


Residual balance “shortfall”


In this example, the $2,000 residual balance owing or “shortfall” which resulted from the sale of this vehicle is an unsecured debt and could be discharged by filing a consumer proposal or bankruptcy.

NOTE: As long as the vehicle is in your possession you must maintain insurance.

My best advice would be to contact our office to arrange a FREE consultation with one of our licensed trustees to review your situation and discuss options.

We have offices across South Western Ontario plus flexible hours to meet your needs so you don’t have to miss work. Let us help you get a fresh financial start!

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