Bankruptcy and my car

Bankruptcy and my car

This section covers the questions you are most likely to ask about your motor vehicle - a car, van, motorbike or any kind of transport powered by an engine - if you go bankrupt.

The ownership of your vehicle will be affected by bankruptcy whether it's owned outright by you, or if you're paying for it through a finance package.

If I go bankrupt will I be able to keep my car?

Your car or any other motor vehicle is an asset. The official receiver can sell your vehicle to help pay your bankruptcy debts.

You can ask the official receiver to let you keep your vehicle.

The official receiver will look at all the facts before deciding whether you will be able to keep it. Each case is different.

How does the official receiver decide whether I can keep my vehicle?

The official receiver/trustee will have to decide whether it is an asset in your bankruptcy or if it is exempt property. Exempt property is something you own that cannot be claimed as one of your assets and sold to help pay your creditors (people you owe money to).

For your vehicle to be exempted, you will have to show the official receiver that it is necessary:

• for your personal use in your employment, business or vocation; or
• to meet a basic domestic need of you and your family.

How does the official receiver decide whether I can keep my vehicle?

The official receiver will only let you keep your vehicle if it’s essential and of low value.

A vehicle may be classed as essential if:

• You couldn’t do your job without it
• You or someone in your household needs it because of a disability
• There’s no possible way you could get to work or school without your vehicle

If there’s any way you could use a taxi or public transport instead for any of these journeys, the official receiver won’t usually class your vehicle as essential, even if using public transport would be very inconvenient. The official receiver will look in detail at public transport routes and costs in your area when deciding if you can keep your car.

If the official receiver agrees that a vehicle is essential for your household, they'll take into account the value of your current vehicle. They may order you to sell your vehicle and buy a cheaper alternative.

This would usually only happen if your vehicle is worth more than £1,500, and the official receiver would normally allow you £1,000 to buy a replacement.

You may still be able to keep your vehicle if you can arrange for a partner, friend or family member to pay the official receiver the money they would have raised from a sale.

Seek advice.

Before you take any action to apply for your own bankruptcy, you should seek expert advice about bankruptcy and the other options available to you. The Insolvency Service and the Courts cannot advise you on specific insolvency problems; for example, whether you should go bankrupt.

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