Can You Keep Your Car in Liquidation or Bankruptcy? OBP Liam Bailey

Описание: One of the first questions people ask when they are facing insolvency is: what happens to my car?

It is a fair question! For many people, a vehicle is essential for work, family commitments, and day-to-day life. That is why it is one of the most common issues Liam Bailey is asked about before someone enters into liquidation or bankruptcy.

The good news is that there is not one blanket answer. The outcome depends on who owns the vehicle, how it was financed, and whether there is any equity in it.

If the vehicle is owned by a company

In a company liquidation, if the car is an asset of the company, it may be available for sale by the liquidator, with the proceeds going to creditors.
But it is rarely as simple as just selling the car.

Many company vehicles are purchased under finance, which means a lender may also have security over the asset. That is why one of the first things a liquidator will do is review the PPSR, check registration details, and confirm how much is still owing against the vehicle.

What if there is finance on the car?

This is where the equity position becomes important. If the amount owing on the car is more than or close to its value, a liquidator may choose to disclaim the vehicle. In practical terms, that means the company in liquidation gives up its interest in the car and the secured lender can deal with it directly.
This can sometimes allow a director to approach the lender and try to take over the finance personally if they want to keep the vehicle.
If the car is worth more than the amount owing, then there is equity in the vehicle. That equity is an asset of the company and cannot simply be ignored.

In those situations, a director who wants to keep the car may need to pay the equity value into the liquidation before seeking to take over the finance arrangement.

A common misunderstanding directors make

One of the biggest misconceptions Liam sees is people assuming that a vehicle is protected just because it is registered in their personal name.
That is not always correct.

If the company obtained the finance, made the repayments, and effectively paid for the vehicle, the company may still have the true legal or beneficial interest in it. So even if the registration is in a director’s own name, the vehicle may still need to be dealt with in the liquidation.

This is why assumptions can be dangerous. What matters is not just the registration paper… it is the full history of who funded the vehicle and how it has been treated financially.

What happens in bankruptcy?

In bankruptcy, the position is similar, but there is an important difference.
A bankrupt person may be allowed to keep a vehicle up to a certain net equity threshold. That threshold changes from time to time, but the key issue is the same: equity matters.

That means the value of the car is considered after taking into account any finance still owing.

If the net equity is within the allowable amount, and the finance is kept up, the person may be able to retain the vehicle.

If the equity is too high, the trustee may require the vehicle to be surrendered for sale, or require payment to the estate for the value above the allowable threshold.

Why this matters before any appointment

Liam’s key message is simple: get advice before taking formal insolvency steps.

Too often, people wait until after a liquidation or bankruptcy begins and then find out the position is not what they expected. Vehicles are one of the biggest areas of concern, and also one of the biggest areas of misunderstanding.

Therefore, it is critical that you do not guess, and you do not hide the issue.
Vehicles are often one of the first things people worry about, and one of the most common assets people are not fully upfront about. But the true position always has to be worked through.

If you are worried about what will happen to your vehicle in liquidation or bankruptcy, speak to the team at O’Brien Palmer before any appointment is made. Early advice can make all the difference. We are here to help you.

Liam Bailey, Managing Partner at O’Brien Palmer
📞 (61) 2 9232 3322
📧 [email protected]
🌐 obp.com.au