02/16/2024
Uncovering the Consumer-Friendly Secrets in British Columbia’s Personal Property Security Act (PPSA)
Learn how surrendering your vehicle in a strategically correct manner can indeed be a powerful step toward resolving debt challenges.
If you are about to have trouble making your vehicle payment or already having financial difficulties paying your loan on a vehicle, (car, truck, recreational vehicle, all-terrain vehicle, boat, personal watercraft, etc.), which is known as a “consumer good”, B.C. has a “consumer friendly” seize or sue rule under the PPSA (Personal Property Security Act) which can provide relief to a purchaser/borrower if they become unable to repay their loan.
The PPSA in British Columbia (Personal Property Security Act), specifically in Section 67, there is a provision that allows for the surrender of a vehicle to a secured party. This provision typically comes into play when a borrower is facing financial difficulties and is unable to meet the obligations of a secured car loan agreement.
Section 67 of the PPSA reads as follows:
Rights and Remedies: Consumer Goods
67 (1)Subject to section 58 (3), if a debtor is in default under a security agreement that provides for a security interest in consumer goods, the secured party may
(a)exercise the secured party's rights as provided in section 58,
(b)proceed as provided in section 61,
(c)accept surrender of the goods by the debtor, or
(d)subject to the terms of the agreement, bring action to recover a judgment or take proceedings to obtain a certificate under the Creditor Assistance Act against the debtor.
(2)If the secured party proceeds under subsection (1) (a), (b) or (c) with respect to consumer goods,
(a)the debtor's unperformed obligations under
(i)the security agreement, or
(ii)a related agreement, other than a mortgage on land executed before July 1, 1973, and
(b)the unperformed obligations of a guarantor of, or indemnitor respecting the obligations, are extinguished.
A lender with security over a consumer good must make a choice whether they want to SEIZE and sell the item secured or SUE the customer or borrower to collect the cash owed. They cannot do both so they must pick one remedy or the other. It is important to know that if you have already repaid more than 2/3 of the amount of the original loan, and you go into default the lender is legally precluded from seizing the secured property from you. If after repaying two thirds (2/3) of the loan amount, the property is still worth less to you than the amount owed, you can still surrender it but do so only if it makes sense for some reason. The point here is they cannot take it from you if you have paid most of the loan off.
If the lender chooses to sue, they elect to try to collect on the loan through normal collection procedures including the Civil Resolution Dispute Tribunal (for amounts up to $5,000.00), Small Claims Court (Provincial Court of B.C.) for amounts up to $35,000.00, and the Supreme Court of B.C. for amounts over $35,000.00. The collection process involves commencing or filing the proceeding, obtaining a judgment for the amount owed and then taking steps to collect that judgment such as seizing other property (not the secured good), wage garnishments and so on. Suing is typically a more expensive and riskier process for a lender who must hope for collection aside from taking the goods secured by the loan. If a borrower has abused or beaten up the secured property, the lender may have no practical choice but to sue. A lender with security over property worth (auction value in its as is where is condition) at least $5,500.00 will most likely seize it.
There are two ways the lender can come into possession of a secured consumer good and be deemed to have “seized” it. One is if they hire a bailiff to take possession of it (a “seizure” as identified in section 67(1)(a) PPSA above) or if the debtor voluntarily delivered the property to the lender or the lender’s agent (bailiff) and the lender accepts and takes possession of the property to sell it (a “surrender” as identified in section 67(1)(c) PPSA above). It can also be called a “voluntary surrender”, but that term is used in the PPSA where the lender initiates the idea of accepting the property instead of the surrender being initiated by the debtor hoping the lender will “accept” and take the property, thereby being deemed to have “seized” it. When “voluntary surrender” or surrendering property, you must be careful that you do not sign any document which negates your right to claim that the lender is precluded from suing you for any deficiency or the amount of your loan that remains unpaid after they complete the process of selling the property.
Sometimes the enquiry to determine if a lender will accept a surrender of property can be initiated through a bailiff like Exodus Bailiffs Inc. If you have a loan with a payment burden that is overwhelming you and you know that the secured property is worth less than the amount you owe or realize that regardless the amount left owing you still can't afford to make payments, a surrender may provide you with relief from that financial burden.
What if you have missed payment?
If you're behind your payments and the lender accepts the surrender, then lender is prohibited from going after the debtor for any outstanding payments.
You should know that if the lender seizes an item your credit rating will be noted with an R8 that will damage it; however, there are ways to remediate such damage if you manage credit properly moving forward by paying with credit cards (at least the minimum payment but preferably more), utility bills, house mortgage payments and so on time.
If you are behind on your loan payment or know you’re going to start having problems paying your loan payment. You may want to be thinking about whether a surrender might be a good solution for you, please call Exodus Bailiffs Recovery Department at (250) 220-0197 or email at [email protected].
Exodus Bailiffs Inc. operates as a comprehensive, licensed, and bonded bailiff company headquartered in Penticton, serving the entire province of British Columbia. We specialize in assisting individuals with vehicle surrendering, ensuring they have a clear understanding of their rights under B.C’s PPSA. For more information, please visit our website at www.exodusbailiffs.com
The information presented in this article is intended to help simplify complex concepts and is not legal advice. Exodus Bailiffs Inc. disclaims any responsibility or liability for applications that go beyond the intended use of this information. As legal norms are subject to constant change and evolution, it is advisable for individuals to consult with a professional legal expert for advice tailored to their unique situations.
