I have a friend who is going to declare bankruptcy. Due to her 1995 Ford Windstar lemon she still owes Royal Bank $9,000 and can't afford the payments. If she has no assets etc and walks in and gives them the keys, what recourse do they have other than take back the vehicle? She has a full time job. Can they garnish her wages? If she can dump the losing van now she will survive. Any help would be appreciated. I know GMAC has no recourse on their loans but are banks the same?

Unless the agreement is a Conditional Sales Agreement that allows a creditor to only seize or sue, creditors can sue for a deficiency balance on a vehicle under a lease or purchase. That includes creditors such as GMAC, Ford Credit and the Royal Bank. Once the cretor has a judgement it can be used to seize wages, bank accounts and assets that are not exempt. Bankruptcy will stop the judgement, however.

Ann Clarke
phone: (403) 296-2972
aclarke@moneyhelp.ca