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Bankruptcy And Your Car
When You May Keep Your Vehicle Or Car
- The vehicle is worth less than a reasonable replacement value.
- The sale of the vehicle will produce less than £500 for your Creditors.
This can be the case when the car is owned by more than one person.
- The vehicle is essential for work or your vocation.
This means the car is used for work, for example a Taxi, or when there is no reasonable alternative for transport to and from a place of work.
If you are the full time carer of a disabled person, this may be classed as your vocation and an exemption can be granted on these grounds.
- A car is deemed necessary to ‘meet basic domestic needs’ where there is no realistic alternative.
Registered Keeper / Owner Of A Vehicle
The V5 document from the DLVA describes the registered keeper of a vehicle and clearly states that this is not necessarily the legal owner. It goes on to state that:
The registered keeper is responsible for the vehicle’s day to day use on the road and is:
- The person who is liable for licensing the vehicle.
- The person to whom the police and other enforcement authorities would direct any enquiries, eg motoring and parking offences.
The legal owner is:
- The person or company who purchased the vehicle, eg a hire purchase or leasing company.
- The person who purchased the vehicle for their spouse/child etc.
So, if your name is on the V5 document, but someone else bought and paid for the vehicle, and this is provable, then you should be able to keep it.
Conversely, if you have bought and paid for a car which is driven and insured by someone else and they are also the registered keeper, but live at the other end of the country and you’ve never seen the car, it doesn’t matter. That car will be treated as your asset in Bankruptcy.
Joint Ownership Of Cars In Bankruptcy
Any asset may be jointly owned by two parties, and a car is no exception. The Trustee may only claim your share of any asset towards your bankruptcy. However, this doesn’t prevent the Trustee from forcing a sale to release your share. In the first instance, the Trustee will allow the other parties with part ownership to buy out your share.
Sale Of A Car Prior To Bankruptcy
If you sell a car, vehicle or any asset at less than it’s market value, it could be challenged as a “transaction at an undervalue” following the making of a bankruptcy order.
High Value Cars
If a vehicle exceeds reasonable replacement value you may be required to downgrade to a more modest one.
Deciding The Value Of The Car
The Trustee will value the vehicle, using specialist agents where required.
Hire Purchase Cars in Bankruptcy
If the vehicle is subject to a hire purchase, lease or conditional sale agreement, then the finance company may seek to repossess, as your bankruptcy may break the terms of the finance agreement. This can happen whether the Trustee deems it to be exempt from the bankruptcy or not.
It may be case that the Trustee can invite the car finance company to repossess the car if there is not enough equity in the vehicle to make selling it worthwhile.
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