Bankruptcy and my car

I own my vehicle

The official receiver (OR) will only let you keep it if:

• It is of a low value, and
• They decide you really do need it

You may be able to keep it if it is classed as 'essential'. This means:

• You could not do your job without it
• You or someone in your household needs it. Due to a health condition or disability
• There is no possible way you could get to work or school without your vehicle

The OR will look into if you could use a taxi, train or bus to travel to where you need to go to. If you can, your vehicle would not been seen as essential.

The OR will also take into account the value of the vehicle. They may order you to sell it, buy a cheaper one to use, and pay the difference to the official receiver.

If you live in England and Wales:

• This would usually be if your vehicle is worth more than £1,500
• The OR would normally allow you £1,000 to buy a replacement

If you live in Northern Ireland:

• Different limits may apply

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

Your vehicle is on hire purchase or conditional sale

Vehicles bought using a hire purchase or conditional sale agreement do not belong to you until the last payment to the finance provider has been paid.

The OR may let you carry on making the payments if the vehicle is essential. This means:

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

If the hire purchase or conditional sale agreement ends before you are discharged:

• Ownership of the vehicle will pass to the OR
• They may sell it at that point or allow you to keep it
• This will depend on the value

The hire purchase or conditional sale agreement may include a clause ending the agreement if you go bankrupt. If this happens:

• The lender can repossess the vehicle and sell it
• Some lenders may allow you to keep the car, even if there is a clause in your agreement

You’ve taken out a logbook loan secured against your vehicle

A logbook loan:

• Is a way of borrowing money using your vehicle as security
• Ownership is transferred to the finance company until the loan is paid back

The OR will check the logbook loan agreement to make sure it is valid.

• If the agreement was not drawn up correctly, the logbook loan company will not have security over your vehicle
• In this case, the OR will treat the vehicle as if you owned it

The OR may allow you to keep making the payments to the logbook loan if the vehicle is essential. This means:

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

If the logbook loan ends before you are discharged:

• Ownership of the vehicle will pass to the OR
• They may sell it at that point or allow you keep it depending on the value

The logbook loan agreement may include a clause ending the agreement if you go bankrupt. If this happens:

• The lender can repossess the vehicle and sell it
• If there is any money left from the sale, it will be paid to the OR

You have a vehicle under the Motability scheme

A Motability vehicle is one you get through a lease agreement. It is paid for using:

• Attendance allowance
• Disability living allowance (DLA)
• Personal independence payment (PIP)

This means the vehicle does not belong to you, so the OR cannot sell it.

Your Motability agreement can continue throughout your bankruptcy.

Get free bankruptcy advice

If you are thinking about bankruptcy, make sure you get professional and impartial advice.

To find out which is the best debt solution for you, try our online debt advice tool.

If bankruptcy is right for you, we can put you in touch with our bankruptcy team. They will give you specialist advice based on your circumstances.