Does the car become part of the insolvency estate in the event of private insolvency?? If you are faced with the decision of whether to enter into consumer insolvency in order to receive a discharge of the remaining debt after the good conduct period, there is often uncertainty about what the situation with the car actually looks like. There are clear rules on whether and when it can be repossessed or seized.
You have financed your car
Your vehicle is financed and the car financing is not yet completed? In this case, the seizure protection does not apply and it plays an important role in the debt analysis. In this case the bank is your creditor. This means that the trustee will contact the bank and inform it that insolvency is planned. The bank will cancel the financing. The car must be sold. The proceeds from the sale will be transferred to the insolvency estate.
Last resort from private insolvency?
You have already paid for your car
If you have already paid for your vehicle, the value is the main factor in determining whether it cannot be seized or whether it must be included in the insolvency estate. If a vehicle is worth a lot, it is sold and the money is used to pay off the debt.
Older vehicles that no longer have such a high value can also be pledged. In this case, you have the possibility to contest the claim by providing proof. If, for example, you have a disability certificate and a car that is specially adapted to your disability, this may mean that you are allowed to keep the vehicle. If you can prove that you cannot get to work without a car, this is also a reason.
Important: the trustee may still want you to hand over the car. One solution is to pay the value of the car to the trustee and buy it from him. In some cases, it may be necessary to buy a new vehicle, which is significantly cheaper.
If you receive social benefits and you are unemployed, it is not possible to state that you need the vehicle to go to work. In this case, the trustee will demand the sale. You can only avoid this if you start a job soon and can prove that you can only reach this job with a car.
Your car is leased
You drive a leased car? This, of course, cannot be included in the insolvency estate. You must return the vehicle to the contractual partner if the latter demands that you hand it over. Sometimes it is also possible to transfer the contract to someone else, such as a member of your family.
Last resort from private insolvency?
You are buying a car in the good behavior period
If you are in this phase, you are not allowed to incur debts. If you buy a car, the price can only be paid in cash. If you make an offer to buy a cheap used car, you will usually not have any problems with the trustee.
You have a car that does not belong to you
You may be permanently driving a vehicle that you do not own because it belongs to a relative. The car then has nothing to do with the insolvency estate. However, if you are thinking about transferring your own vehicle to relatives now, before you file for bankruptcy, this can cause problems. In this case, it is possible that the trustee will determine this. It is possible that you will not receive a discharge of residual debt.
The cost of the vehicle
If you have a vehicle, then there are also costs for it. keep in mind that you only have the income available up to the non-garnishable limit. So you have to pay the insurance and taxes, pay for repairs and spare parts. In some cases, it may make more sense to decide not to use a car during the period of good conduct.
Conclusion: the car belongs to the assets
Of course it is a big change for you in case of over-indebtedness to possibly be able to do without a car. However, if you are facing personal insolvency, it does not make sense to consider whether you can possibly still protect the vehicle. Be open about the fact that you have a value with the car, which can flow into the insolvency estate. If you manage to keep the vehicle, you should be aware that you will also have to pay the additional costs for it. If you do not declare the car to the insolvency court as an object of value, you may be deprived of the right to discharge the remaining debt and continue to be trapped in debt after the period of good conduct, but not debt-free.