Do I lose my car if I file for bankruptcy?

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In the event of a successful bankruptcy petition any vehicles you own will be considered assets, and may be sold by the official receiver or trustee.

However, the following circumstances will be considered:

Is the motor vehicle essential for employment or income because:

  • You use it on the job
  • Travelling to your place of work would be difficult without a car
  • Finding work would be more difficult without a car, irrespective of employment at the time of the bankruptcy order
  • The vehicle is required for your role as a full time carer

Is the motor vehicle an essential domestic requirement because:

  • There are genuine needs that demand a car, not convenience
  • You have a disability and there is proof a car gives you an increased level of independence
  • There is no alternative for taking children to and from school, and that walking or cycling is impractical

Although the official receiver may agree the vehicle is essential based on those grounds, in instances where the car is valuable a cheaper alternative will be provided at a guideline price of £1000. This means your car may still be sold unless you can prove why you need a more expensive model.

How much will my car be valued at?

The official receiver will take ownership of any vehicle not exempt from the bankruptcy order, and use a price guide to realise the value, aside from instances involving specialist or vintage models, wherein an agent or professional will be consulted.

Is there any way I can still keep my car?

Yes, providing:

  • A current insurance certificate, registration document, and roadworthy certificate can be obtained
  • A third party will pay the guide price in cash, banker’s draft, or building society cheque, and transfer the car over to you

Can I keep my number plate?

In any event, the official receiver will have any personalised registration valued. This can be bought back if a third party is willing to pay the costs.

What if the vehicle has no value?

It may be possible to agree a sale price at a nominal amount, including any value left in the road fund licence. This includes vehicles that are not roadworthy, which the official receiver can sell to you for a token fee, providing you sign a declaration stating the vehicle will not be driven or parked on the public highway until it is fixed. The official receiver can also arrange for any unwanted vehicles to be disposed of responsibly.

My vehicle was bought on finance- what happens now?

Hire purchase, leasing agreement or conditional sale means you do not own the vehicle. Terms and conditions vary from company to company, but it is highly likely that the firm will end the arrangement, and take back the vehicle.

The value of the vehicle will be judged based on the finance company’s report to the official receiver, which details the settlement figure and any outstanding payments. If a sale would benefit your bankruptcy then this will be arranged, otherwise the vehicle will be returned to the financier. When repayments are up to date, a third party may be able to take over the agreement, based on the decision of the company.

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