Here's my situation. I have a car loan that is worth more than the car. The loan is with Scotiabank for 21,000. The car can be sold from 16,000 - 19,000. I cannot afford the payments anymore and am not going to risk my mtg payments over this car. I understand the seize or sue law in BC, but if I surrender the car, what are the chances that the bank will choose to sue me instead of coming to get the car?

Yes, what footloose said, is how it was explained to me. The credit counsellor I talked to is very experienced and was able to quickly quote the legislation to me so I am confident she is correct.

I voluntarily surrendered the car and they came and collected it. It was resold. This was over two years ago so I think if they could do something they would have already. Plus, if I actually owed $7,500 I think it would affect my credit score differently. I'm almost out of "fair" and into "good" now. Yay.

Thanks footloose.

@average_joe

Under the British Columbia Business Practices Act ( BCBPA ) unlike other Provincial and Territorial Acts, there is a provision to either seize or sue for an outstanding and unpaid debt but the creditor cannot do both.

In this case, Scotia Bank made a loan of $7,500 for the purchase of a car and presumably registered a lien against the car. When this loan was defaulted upon, Scotia Bank has the option of either seizing the car or suing the debtor for the outstanding portion of the loan, BUT NOT BOTH.

If Scotia Bank elected to seize the car and sell it privately, to a dealer, or take it to a car auction, and if there is a shortfall between the proceeds and the outstanding amount owing on the loan, they are prevented from suing the debtor for the shortfall. This is not the case in other jurisdictions where the creditor CAN sue the debtor for any shortfall. Conversely, if the proceeds exceed the outstanding amount owing, the excess MUST be returned to the debtor.

It appears that Scotia Bank believed that the value of the car exceeded the outstanding amount owing and that their loan would be quickly settled. Or, upon examination of the debtor's financial situation, it was determined that collection of this loan would be difficult due to the debtor's employment situation. In B.C., if a creditor obtains a judgment and further obtains a wage garnishment order, that order is valid for only one pay period. A creditor must obtain a new wage garnishment order for each pay period. In other jurisdictions, once a wage garnishment order is issued, it is valid for each pay period until the debt is extinguished or until the debtor leaves his place of employment at which time, the creditor will have to obtain a new wage garnishment order for the debtor's next employer.

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Educating one Consumer at a time

I can't see you getting off that easy. I can see a judgment coming your way in the very near future.

I actually talked to a credit counselor and because I'm in BC I don't have to pay it. They have a seize or sue law so they can't do both and because they seized the car I don't owe that debt.

You should search this forum. There is some great info. How long before the car loan drops from the CB?

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I have a car loan debt for $7,500 that is listed as written off. It isn't listed under collections in my credit report -- it's under "Credit Information" and is with Scotia Bank. Not a collection company.

I have paid off everything on my credit except this debt and want to know how to handle it. I plan on buying a house next year and my credit score has been going up. However, do I need to pay this off in order to qualify?

And is it possible to negotiate to pay a percentage of this debt? How would I do that? In writing to scotia bank?

Thanks for any help