Can I Keep My Car If I Go Bankrupt?

Can I keep my car if I go bankrupt? This article explains if you can keep your car when you go bankrupt and some common questions relating to car ownership and bankruptcy.


Will my car be repossessed if I file for bankruptcy?


Your car is not an asset that can be taken in the bankruptcy, as you still do not officially own it. You would, however, need to check the terms and conditions of your Conditional Sale Agreement to see whether there is a bankruptcy clause in it. Your agreement may state that should you ever go bankrupt the lender would repossess the car. If this clause does not exist the Official Receiver in bankruptcy may deem it suitable to give you an ‘Income Payment Order’, which may then make the servicing the repayments on the car unaffordable.


What happens to a car on HP in bankruptcy?


Once the bankruptcy order is made the decision as to whether you will lose the vehicle will be made by the finance company and the Official Receiver. You will need to check your ‘HP’ agreement, it will state what will happen in bankruptcy. Some finance companies demand the return of the vehicle, others allow you to keep it, as long as you maintain the payments. The Official Receiver will need to agree as to the amount of the payments.

If you are self-employed and the vehicle is in use for work your chances of retaining it are enhanced since you can argue that it is a ‘tool of the ‘trade’ and that return of the vehicle would only mean an increase to the level of debt to be included in the bankruptcy and you would have no income from which to make a contribution towards your debts until you found new employment.

You may also find this article on static caravan finance useful to read.


Can I apply for a Motability car scheme if I am bankrupt?


This will not cause any difficulty in your application as a credit check is not necessary for the assessment of eligibility for a Motability vehicle.
You can find further information about eligibility here

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