Can I keep a car post BR?

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joeyhawks
joeyhawks Posts: 5 Forumite
in Bankruptcy & living with it
Hi there

Having accepted that BR is my only viable option, I intend to apply in the next few weeks, however I have a car that I am due to pay the final payment of £2,800 on before the end of the year. (It is actually worth about £4,200).

I have been advised that I would probably only be allowed to keep a car which has a value of less than £1400 .... should I pay off my car finance and then sell it, which would leave me with enough ££ to buy a little runaround which the OR is likely to let me keep? If I include the car finance in my BR I would have to give the car back and would then have no means of buying another?

Any advice would be gratefully received :-)

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  • sammyjammy
    sammyjammy Posts: 7,403 Forumite
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    If you are going bankrupt presumably you don't have the £2800 to pay off the car within the next 10 weeks?
    "You've been reading SOS when it's just your clock reading 5:05 "
  • broaps
    broaps Posts: 97 Forumite
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    Hi Joey

    I saw when you posted this earlier that your parents have offered to lend you the cash to pay off the finance. The OR will not let you keep any car worth over about £1000 not £1400 so I presume you will be borrowing money in the hope you can sell the car for enough to pay them back and still have enough for a runabout. It could work but it rather depends how sure you are about getting a sale at the right price in the time you have left before bankruptcy. Fingers crossed.

    You can certainly claim for the running costs of a car if you need one for work etc. This includes tax, insurance and servicing as well as fuel.

    Hope this helps.
  • joeyhawks
    joeyhawks Posts: 5 Forumite
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    My folks have offered to lend me the money to pay off the car - they don't know the full extent of my financial issues tho!!!
  • joeyhawks
    joeyhawks Posts: 5 Forumite
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    Thanks - this is all very daunting :(:(
  • fatbelly
    fatbelly Posts: 20,617 Forumite
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    If your parents lend you money then you go bankrupt they become creditors in your bankruptcy.

    I think I would get all this sorted out and then consider bankruptcy in the New Year.

    Where did you get the figure of £1400 from? It's £1000 unless exceptional circumstances, and then only if the vehicle is declared exempt. On what grounds are you going to try for exemption?
  • joeyhawks
    joeyhawks Posts: 5 Forumite
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    I was going to borrow the money off my folks to pay the finance off, sell the car and then buy a little runaround with the equity.

    I'm new to this..... could you please explain why a car might be exempt (or not)?

    Thanks
  • fatbelly
    fatbelly Posts: 20,617 Forumite
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    You can read the guidance here

    https://www.insolvencydirect.bis.gov.uk/technicalmanual/Ch25-36/Chapter30/Part%206/Part%206.htm
  • TheGardener
    TheGardener Posts: 3,303 Forumite
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    edited 23 October 2018 at 11:27AM
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    joeyhawks wrote: »
    I was going to borrow the money off my folks to pay the finance off, sell the car and then buy a little runaround with the equity.

    I'm new to this..... could you please explain why a car might be exempt (or not)?

    Thanks

    The problem with this plan is that if your parents lend you money while you are 'insolvent' then they become creditors - if you pay them back from the proceeds of the sale of the car - it may be seen as a 'preferential' payment to a creditor and the OR has the right to ask your parents to give them the money back so it can be distributed equally amongst all creditors.

    The car will not be 'exempt' The OR will allow a car worth £1000 < . However, if there is a critical reason such as its a disability modified vehicle or if the vehicle forms part of your work - like being a Chauffeur who provides a high spec vehicle they may increase the value they will allow. If this is not the case - then not only does it have to be worth £1000 < - you also have to prove that you need (not want) the car - need as in: you can't work without one or the cost of public transport to work far exceeds the cost of running your own vehicle etc.

    Most car finance contracts will end if the owner enters BR or similar (check your agreement) so if you went BR, the car would most likely be taken back by the finance company anyway so its academic whether the OR would allow the cost of the finance
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