Nobody wants to feel trapped by a car loan that’s become a financial burden. At Campbell Saunders, we understand the stress of falling behind on car payments. Especially if you are also carrying other debt.
There is good news in British Columbia. In the province of BC, borrowers have important legal actions under the Personal Property Security Act (PPSA). These protections are known as “Seize or Sue.” They can make a big difference if you cannot afford your auto loan.
Below, we explain your options, how Seize or Sue in BC works, and what to consider if you are struggling with your car loan payments.
Prefer to speak to someone? Our consultations are always free >
What Is “Seize or Sue” in BC?
If you default on your car loan in BC, your lender must make a choice. They can either seize the vehicle or sue the borrower, but they cannot pursue both simultaneously. This means they can’t repossess your car and demand further loan payments.
Seize: If the lender decides to repossess the item (a “non-voluntary” surrender), that’s generally the end. Once they take the car, the debt is considered settled. They cannot pursue you for any shortfall, even if the car’s value is less than the remaining loan balance.
Sue: Instead of taking the car, the lender can sue you for the outstanding balance. This might lead to collection actions such as wage garnishment. If they choose this option, you keep the vehicle, free of the secured loan.
Borrower Protections Under Seize or Sue
If you are asking “what are my options if I can’t afford my car payment in Canada?” and you live in BC, here’s what to know:
- Two-Thirds Rule: If you have repaid two-thirds of your car loan (or more), the lender must obtain a court order before they can repossess your vehicle. This is a good thing, especially if you are near the end of your loan. However, if the lender successfully sues you, they may recover the outstanding balance through measures such as asset seizure or wage garnishment.
- Voluntary Surrender Warning: If you return the car on your own, you might inadvertently void your “seize or sue” protections and still be liable for the shortfall of the loan. Always seek advice before making this decision.
- Leased Vehicles: The “Seize or Sue” rule does not apply to leased vehicles. Leasing companies can repossess your car and still require you to pay the remaining balance stated in the lease agreement or loan terms.
- Loans Outside of BC: If your car was purchased or financed outside BC, the rules may differ. Always confirm which laws apply with a Licensed Insolvency Trustee (LIT).
Have other financial worries? Discover your options >
When Rules Differ Across Canada
Not every province in Canada follows the same rules as BC. Some lenders, especially those based in Eastern Canada, may still attempt to collect a shortfall after repossession. If this happens and your loan is registered in BC, the borrower typically just needs to remind the lender that the rules in BC are “Seize or Sue”.
Finding the Right Path Forward
Navigating vehicle loan challenges can be complex with so many variables. You don’t have to face them alone. Campbell Saunders can help review your unique situation, clarify your rights and options, and work with you to create a debt strategy that reduces stress and protects your financial future.
Need someone on your side? Meet our team. We are here to help >
