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February 19, 2013
When I start a DMP, can I keep my car? Yes.
In order to qualify for our special Debt Management Program (DMP) there is no obligation to sell your car. Unlike bankruptcy, you are not required to forfeit your non-exempt assets in order to consolidate your debts.
Can I put my car loan on the program? Maybe.
If you have an auto loan and you still own that vehicle, it is considered a secured debt and cannot be added to a DMP. Only unsecured debts qualify for debt consolidation. However, if you no longer possess the vehicle, or the value of the vehicle is so low compared to the amount owing on the loan, then the auto loan may be actually unsecured and it is possible to be added to your debt repayment program.
In addition to the above, if you are not able to make your vehicle payments, you could sell the vehicle in order to pay off the debt. Or, depending on the Province that you live in you could surrender or allow the vehicle to be repossessed by the creditor to finalize the debt. This will have an affect on your credit rating – please note there is no difference in credit rating if the vehicle is surrendered or repossessed. Before taking either one of these steps you should consider how you will acquire a more affordable vehicle or mode of transportation.
Could I get a new auto loan while on the program? Yes – if you need to and you can afford to.
In general, you agree not to apply for new credit while you are on the DMP, however, circumstances may lead you to require new vehicle financing during this time. In such cases, Solutions will recommend lenders who will be more accommodating in approving a loan, as well as we will be pleased to provide you with a letter of financial reference if you are a client in good standing.
Will I be able to rent a car while on the program? That may be an issue.
If you have a credit card that you are joint with someone else and it is not on the DMP, or a secured credit card, you should be able to use that card to rent a car.
What happens if my car breaks down and I can’t afford the repairs?
Part of our work with clients includes personal budget design. Provision for car repairs is something we include in your budget and our hope is that you are working within those limits. Our goal is to get you back on your feet financially.
However, should the need arise Solutions will work with you to reschedule your debt payments. Keep in mind successful completion of Debt Management programs require consistent, regular payments, therefore we may recommend trying to find additional income in order to cover emergencies while maintaining your debt repayment schedule.