Filing for bankruptcy is a significant step for anyone to take, and it comes with many questions and concerns. One of the most common questions for individuals considering this option in Nova Scotia is whether they can keep their car if they file for bankruptcy. This concern is understandable given the essential role a vehicle plays in many people’s lives, including commuting to work, transporting family, and carrying out daily errands. It is particularly relevant in Nova Scotia as many areas do not have access to public transportation.  This post will explore the nuances of bankruptcy laws in Canada, focusing on how they pertain to retaining a vehicle during the bankruptcy process.

Understanding Bankruptcy in Nova Scotia, Canada

First, it’s essential to understand what bankruptcy is. Bankruptcy is a legal process where individuals or businesses who cannot repay their debts to creditors may seek relief from some or all of their debts. In Canada, bankruptcy is governed by the Bankruptcy and Insolvency Act (BIA), which provides a framework for discharging debts under certain conditions.

When you file for bankruptcy, you are essentially surrendering your assets to a licensed insolvency trustee in exchange for the elimination of your debts. The trustee sells these assets to pay off as much debt as possible. After the process, most of your debts are discharged, meaning you are no longer legally required to repay them.

Exemptions in Bankruptcy

However, not all assets are up for grabs in a bankruptcy. The Bankruptcy and Insolvency Act contains certain exemptions and in addition, each province in Canada has its own set of exemptions that protect certain assets from being seized by the trustee. These exemptions are designed to ensure that individuals are not left destitute and can maintain a basic standard of living despite declaring bankruptcy.

In Nova Scotia, the Judicature Act of Nova Scotia and the Personal Property Security Act of Nova Scotia are the legislation that dictate what assets are are exempt in a bankruptcy. The exemptions include personal items, household furniture, tools of the trade, and, notably, a motor vehicle up to a value of $6500.00.  The value of the vehicle that can be exempted is subject to change, so it’s crucial to consult with a licensed insolvency trustee or legal professional for the most current information.

Keeping Your Car in Bankruptcy

So, can you keep your car if you file for bankruptcy in Nova Scotia? The answer is, it depends. If your vehicle’s value is below the exemption limit set by the province ($6500.00), you may be able to keep it. This means if you own a car outright and its value is less than the exempted amount, you should be able to retain possession of it through the bankruptcy process.

However, if your car is financed or leased, the situation becomes more complex. In cases where you have a loan or lease, you do not fully own the car – the financing company has an interest in it. If you wish to keep a financed or leased vehicle during bankruptcy, you must continue making payments to the finance company. Failing to make these payments can result in the finance company repossessing the vehicle.

It’s also worth noting that if your vehicle is worth significantly more than the exemption limit, the trustee may require you to pay the difference to keep the car. Alternatively, the trustee may sell the vehicle, pay you the exempted amount, and use the remainder to pay off your creditors.

Strategies for Keeping Your Car

If keeping your car is a priority, there are several strategies you might consider:

  • Assess the Value: Determine the current market value of your car to see if it falls within the exemption limit. A licensed insolvency trustee or an appraiser can help with this.
  • Continue Payments: If your car is financed, continue making payments to avoid repossession. Discuss your situation with your trustee, as they can provide advice tailored to your circumstances.
  • Buyout Option: If your car is worth more than the exemption limit, you might consider paying the trustee the difference, allowing you to keep the car.
  • Consider Alternatives: If retaining your current vehicle is not feasible, consider selling it and purchasing a less expensive car within the exemption limit.


Deciding to file for bankruptcy is a difficult decision, and understanding the implications for assets like your car is crucial. In Nova Scotia the bankruptcy laws provide exemptions that may allow you to keep your vehicle, depending on its value and whether it is financed. Consulting with a licensed insolvency trustee is an essential step in navigating the bankruptcy process and making informed decisions about your assets, including your car. Remember, bankruptcy is a tool designed to offer a fresh start, and understanding your rights and options is the first step toward rebuilding your financial future.