JOE ASKED: I am struggling with a lot of debt, but if I take action, will I lose my car loan?
ANSWER: I’m sorry to hear that you are struggling. When you are dealing with debt it is important to understand that there are two types of creditors, secured creditors and unsecured creditors:
Secured creditors, like your car loan, are those creditors that hold assets as collateral
Unsecured creditors, like credit cards or lines of credit have no collateral
Filing personal bankruptcy or making a consumer proposal does not affect the rights of secured creditors.
What does this mean? Even if you go bankrupt or make a consumer proposal, you have to maintain payments to your secured creditors or be prepared to surrender the encumbered property. However, it is important to note that it is your choice.
If you can afford to maintain your payments then you will be able to keep your car even if you file a consumer proposal or personal bankruptcy. If you can’t afford to maintain your payments then you would have to be prepared to surrender your vehicle.
The best thing to do would be to come in for a free consultation so that we can review your entire situation and explain all of your options.
Contact our office to get a fresh financial start!
