Before during and after vehicle repossession in BC

Sometimes, people in British Columbia (BC) who can’t make their car payments may have their vehicles repossessed. It’s important to know what happens before, during, and after a repossession. This blog will guide you through the process in a way that’s easy to understand for Grade 10 students, with specific reference to the BC Personal Property Security Act (PPSA) rules for consumer goods.

Before Repossession:

1. Review Your Loan Agreement: Take the time to understand the terms and conditions of your car loan or lease agreement. Make sure you know what can happen if you don’t make your payments, like the lender taking back the vehicle.
2. Talk to Your Lender: If you’re having trouble making payments, contact your lender as soon as possible. Discuss your situation and see if there are any options available to help you, like changing the loan terms or making different payment arrangements. Communication is key!

During Repossession:

1. The Right to Repossess: According to the BC PPSA, lenders can opt to take back a vehicle if the borrower fails to make their payments. However, there are rules they must follow during the repossession process.
2. Notice of Intent: Before repossessing your car, the lender must send you a notice explaining that you’re in default, what you can do to keep the car, and how the repossession will happen.
3. Peaceful Repossession: Lenders must take back the car peacefully. They can’t use force or cause any trouble. They’re not allowed to trespass or damage your property.
4. Respect for Privacy: Lenders can’t enter your private property without permission to repossess the car. However, they can take it from a public place or a property where they have the right to go.

After Repossession:

1. Your Right to Get the Car Back: After repossession, you can still get your car back by paying off what you owe. This includes the outstanding loan balance, repossession fees, and any other costs stated in your loan agreement.
2. Selling the Car: If you don’t get your car back within a specific time, the lender can sell it. The money from the sale will be used to cover what you owe, including the loan balance and fees. If there’s any money left over, you should get it back.
3. What If You Still Owe Money? In British Columbia there is protection for Consumer Debtors under the BC PPSA which requires the secured creditors to decide between repossession a consumer good (vehicle) or suing for the outstanding loan amount – NOT both. If the secured creditor opts to seize the vehicle, once it is sold, if there is any shortfall on the debt, they cannot come after you for the shortfall. On the other hand, if the secured creditor opts to sue for the debt (go to court to get a judgment to seize your wages etc), then they are no longer able to seize the vehicle and their secured charge against the vehicle is cancelled.
4. Impact on Credit: Vehicle repossession can affect your credit score and credit history. It might make it harder to borrow money in the future or get good interest rates. Rebuilding your credit is important.

Understanding “Seize or Sue” rights in BC

The “seize or sue” rule in British Columbia, as outlined in the BC Personal Property Security Act (PPSA), refers to the options available to secured creditors when a borrower defaults on their payments for consumer goods. It also acts as a legal defense for a debtor who has had their car seized and the secured creditor is still trying to collect on the shortfall on the loan.

It is important to understand that the secured creditor can still try to collect on any shortfall by calling a debtor or sending collection letters.  They can also negatively report on the credit bureau that a debtor has not paid the debt in full.  But the “Seize or Sue” laws in BC means that the secured creditor cannot use the court system to try to collect form the debtor.  They can call you and send letters, but they cannot get a judgement against you in the courts to use to seize your bank account or garnish your wages if they have opted to seize the vehicle.

There is also a general rules under the BC PPSA (Section 58(3)) that if the consumer good (vehicle) is more than 2/3rds paid for (66%), then the secured creditor looses its rights to repossess and it must not seize the consumer good (vehicle).
Here is an outline of the “seize or sue” rules for consumer goods in BC – Rights and remedies: Consumer Goods 

1. Security Interest: A secured creditor is someone who has a security interest in the borrower’s consumer goods. This means they have a legal claim on the goods as collateral for a loan or credit agreement.

2. Default by the Borrower: When a borrower fails to make payments or breaches the terms of the credit agreement, they are considered to be in default.

3. “Seize” Option: Under the “seize” option, a secured creditor has the right to repossess the consumer goods without going to court. This means they can take back the goods as collateral for the outstanding debt.

• Notice of Intention to Seize: Before seizing the goods, the creditor must provide a written notice to the borrower, informing them of the default, the intention to seize the goods, and the amount owed. The notice must allow the borrower a specified period (usually 15 days) to pay the debt and avoid repossession.
• Peaceful Repossession: The creditor must conduct the repossession in a peaceful manner and cannot use force or breach the peace. They are also prohibited from trespassing or damaging the borrower’s property.
• Sale of Repossessed Goods: After repossession, the creditor may sell the goods to recover the outstanding debt. The proceeds from the sale are used to pay off the debt, with any surplus being returned to the borrower.

4. “Sue” Option: Alternatively, the secured creditor can choose to sue the borrower in court for the outstanding debt instead of repossessing the goods.

• Legal Action: The creditor can file a lawsuit to obtain a judgment against the borrower. If successful, the court will issue an order requiring the borrower to pay the debt.
• Enforcement of Judgment: Once a judgment is obtained, the creditor can take legal steps to enforce it, such as garnishing the borrower’s wages or placing a lien on their property.

5. Choice between Seize or Sue: The “seize or sue” rule allows the secured creditor to choose between repossessing the consumer goods or pursuing legal action. They cannot do both simultaneously. However, they can switch from one option to the other if the circumstances warrant it.

It’s important to note that the specific procedures and timelines for “seize or sue” actions may vary depending on the terms of the credit agreement and the individual circumstances. Seeking legal advice or consulting the BC PPSA directly can provide a more detailed understanding of the rules and requirements in specific situations.

Conclusion:

Understanding vehicle repossession in BC is important.  Knowing your rights, communicating with your lender, and exploring alternatives can help you handle the situation better. The BC PPSA rules protect both borrowers and lenders during the repossession process.

If you’re facing repossession, it’s a good idea to seek advice from a legal professional or your licensed insolvency trustee. Remember, there are always options available, and with the right knowledge, you can navigate vehicle repossession more confidently..

Other Suggested Resources

Does ICBC Debt Go Away? Guide for BC Residents

What is the Effect on Credit Report after Seizure of a Vehicle?

What Assets Are Exempt From Personal Bankruptcy?

Seize or Sue – Secured Loans in BC