Although Canadian laws for repossession differ in certain ways from U.S. repossession laws, many similarities also exist. For example, in the United States, state laws govern repossession. Many similarities exist across state lines with regard to repossession but each U.S. state has its own separate and distinct repossession laws. Because Canada has a similar governing structure, Canadian repossession laws vary from province to province. And because Canadian repossession laws vary from province to province, it is important to consult a qualified attorney familiar with the repossession laws of your province if facing an impending repossession.
One type of repossession that occurs in Canada is a voluntary repossession. In a voluntary repossession, a consumer may recognize that he cannot afford to continue making car payments. The consumer may decide it makes the most financial sense to simply return the car to the creditor to avoid any prolonged collection efforts. It also makes sense because, under an involuntary repossession, the consumer may be liable for expenses the creditor incurred in repossessing (i.e., storage and towing fees as well as reasonable attorney's fees). A voluntary repossession, however, still has a negative effect on your credit.
The other type of repossession is an involuntary repossession. This occurs when a consumer stops making payments or violates some important clause in the sales contract between the consumer and creditor. Under involuntary repossession, the creditor typically sends a tow truck driver to pick the car up. Canadian laws differ from province to province with regard to what specific requirements the creditor must meet to conduct an involuntary repossession.
Seize or Sue
Some provinces, such as British Columbia, have seize or sue laws. Pursuant to the Personal Property Security Act, a creditor can either seize the goods or sue the consumer for reimbursement for the cost of the goods. In seize or sue jurisdictions, the creditor must choose between one or the other and cannot both repossess and sue for the money owed. In other jurisdictions, the creditor can both seize and sue.
Local leaders in Canadian aboriginal reserves have the right, under Canadian law, to refuse entry to their land to any person they choose. Accordingly, repossession of a vehicle on an aboriginal reserve is very difficult.
Please contact a qualified attorney licensed to practice in the province in which you reside to find out how the facts of your situation apply to Canadian repossession laws, which differ from province to province and are subject to change.