Client Inquiry: Seize or Sue and Secured Loans in BC under PPSA legislation
Seize or Sue law in BC is governed by the Provincial Property Security Act. Part of this act sets out that a secured creditor cannot both seize a consumer good (like a car) and then pursue the debtor for any shortfall on the debt. (one the vechicle or other goods are sold). This part of the BC PPSA is serves as a very important part of the overall consumer protection laws in BC.
Question:
Hello, I had come to see you a while back about questions regarding bankruptcy. You may still have a file on me. I was hoping for one last piece of advice. When I saw you your advice to me was to get rid of my car as I am paying too much for it. I agree and am trying to unload the car. I found a buyer for the car and was hoping the bank would settle but they have refused and are causing me problems.
I know in BC it is seize or sue laws for secured creditors under the PPSA legislation. I even wanted to voluntarily surrender the car but the bank is still being difficult. What do I do? Just cut off payments from my bank basically?
I am worried they will try and garnish my wages. Any advice you have would be appreciated.
Colleen’s Reply:
Yes, there is a seize or sue law in BC. Which means that a creditor can seize a vehicle covered by their security, or opt to sue the debtor for the full amount of the debt, but cannot do both. This means that if you stop making the payments for the car, and if the secured creditors seizes the car for non-payment, they cannot then come after you for any shortfall.
The best bet is to sell the car if it can be sold for more than the debt so you can pay it off in full and get out of your financial obligation.
However, if the car is worth less than what the debt is for, and you decide that you simply cannot afford to keep making the payments, then simply stopping the monthly payments to the bank would certainly force their hands.
Generally it is in the best interest of the secured creditor (in this case the bank) to repossess the car, but not always.
They do have the option to simply sue you for the full amount outstanding.
However, to ensure that this applies to you, make sure that the car is actually seized and not simply surrendered to the dealer as this may not make the definition of “seized” under the BC Personal Property Security Act.
We also suggest cooperating fully with any bailiff appointed to seize the car and making sure that you remove your insurance plates before the car is taken. You cannot cancel your insurance without having the plates to surrender to ICBC and will be charged for ongoing insurance if you are on a monthly financed insurance program.
Can the Bank Sue You?
The only way the bank can garnish your wages is if they first sue you for the debt, and this would mean then that the car would be yours 100% debt free. If the amount of the debt is too high for you to deal with, we can assist you with a proposal to settle with the bank or even a personal bankruptcy, but this would really be the last alternative. It is very likely that once you stop paying for the car, they bank will come and get it and you will not hear from them again.
Colleen Craig, CA, CIRP
Client Response:
Thank you SO much for replying so quickly Colleen. That really clears it up for me. It’s so stupid that they won’t settle for the amount I was offered on the car because it is more then they will get at auction for it. Not to mention less the charges of whatever it costs for them to seize the car.
But since they won’t do that I will just stop payment and hopefully they just come seize the car!
If I do need any further assistance I will let you know.
Again thank you for taking the time to reply to my email. You’ve made me I feel a bit better about this situation now.
Other Suggested Resources
Does ICBC Debt Go Away? Guide for BC Residents
Before during and after vehicle repossession in BC
What Assets Are Exempt From Personal Bankruptcy?
What is the Effect on Credit Report after Seizure of a Vehicle?
