Seize or Sue?

What is Seize or Sue? How Does Seize or Sue Work in British Columbia?

British Columbia’s provincial laws that govern security interests in personal property are set out in the Personal Property Security Act, and “seize or sue” describes a unique set of rules in BC (not all provinces will have seize or sue equivalents in place).

Seize or Sue law in BC is governed by the Provincial Property Security Act. Part of this act sets out that a secured creditor cannot both seize a consumer good (such as a vehicle) and then pursue the debtor for any shortfall on the debt (once the vehicle or other goods are sold). This part of the PPSA serves as a very important part of the overall consumer protection laws in British Columbia.

This means that a creditor can seize a vehicle covered by their security, or opt to sue the debtor for the full amount of the debt, but cannot do both. This means that if you stop making the payments for the vehicle, and if the secured creditors seize it for non-payment, they cannot come after you for any outstanding balance.

A creditor can either:

  • Seize the vehicle per the lending agreement terms, ending any further payment obligations; or
  • Sue you for the remaining balance, and you retain possession of the vehicle.

The lender must decide if they will seize the vehicle and sell it to try to recover the money they are owed, or if they will allow you to keep the vehicle and pursue you for the loan balance.

  • If your vehicle is repossessed under the loan agreement’s terms your creditor may not ask you for further payments, or ask you to pay the difference on any shortfall (the difference between the loan’s balance and how much they are able to recover from the eventual sale of the vehicle).
    • Where the vehicle’s value remains high compared to the loan’s balance – this may be the more likely option the secured creditor will take.
    • If you have paid for 2/3 or more of the total amount owing, then the lender will be prohibited from seizing your vehicle, unless otherwise permitted by a court order.
  • If your creditor decides to allow you to keep the vehicle and obtain a judgment against you (i.e., sue you) for the balance of the loan, the creditor must discharge their lien/registered charge on the vehicle. This scenario is more common where the value of a vehicle is low or deteriorated.
    • A creditor who has successfully obtained a judgment against you may proceed with extreme collection actions such as wage garnishments, or seizure and sale of assets by a bailiff.

BANK COLLECTOR vs. EXODUS BAILIFFS:

If the bank collectors call you and they are simply asking for a payment, talk to them and advise that your intent is to not pay the debt, and that you will give the unit up if they send someone to repossess it. After a few weeks or a few months of nonpayment, the bank may send in a bailiff company like Exodus Bailiffs Inc. to seize the unit. Please cooperate with Exodus Bailiffs in returning our phone calls. Our Bailiffs need to determine the worth of the unit before seizing your unit. In some cases, a unit has deteriorated in value and is not worth seizing. In these cases, legal action can be commenced and the asset seized under a Writ of Seizure and Sale. 

BC Seize or Sue Laws gives your lender 21 days to return the unit to you in case it does not hold value. You also have 21 days to change your mind once the unit has been seized, that is, if you can come up with the full arrears and any fees that are applicable. Once the 21 days are over, or the seizure has been accepted by Lender and the debtor before the 21 days are up, the creditor cannot pursue the debtor for any deficiency balance after 21 days over or agreement of the seizure. If you have agreed with the seizure before the 21 days expires you can not get your unit back. Your financial Institution will send you a letter after the unit has been repossessed regarding if they are going to keep the unit, or return it to take legal action against you

Scheduling
a Repossess:

We are simply working on behalf of the bank to pick up the unit, so please help us out by calling us back and making arrangements to meet us and allow us to repossess the unit. Be sure to remove all your personal belongings and garbage out of the unit before Exodus Bailiffs arrives to Seize the unit.

Exodus Bailiffs will schedule a hassle-free pick up of your unit at a time and place of your choosing. Our Bailiffs will arrive in plain clothes and will drive your vehicle to our storage compounds to begin the assessment and reporting process to your finance company. No tow trucks (unless a tow truck is required), no uniforms, no embarrassment. 

Insurance and License Plates:

It is important to maintain your active insurance on your vehicle or trailer until Exodus Bailiffs arrives to repossess the unit.

The bailiff is required to collect the vehicle registration, which is the lower part of the document. The registration document is required to transfer the vehicle back to the lender, while the upper section of the page is the vehicle license which is required to cancel your license plates.

You may provide the plates and vehicle license document to any ICBC insurance broker in the province to cancel your insurance.

Exodus Bailiffs will give you a copy of the repossession notice, and there are no signature requirements.

Credit Rating:

Repossession does affect your credit rating. When the lender seizes an item they generally will mark an R8 on your credit. This is very hard on your credit and it will remain on record for 6-7 years.

*IMPORTANT: The banks we work with are generally based in Eastern Canada, where seize or sue laws do not apply. Therefore, on occasion, a bank may still send a bill for the loan shortfall. In these cases the debtor may simply advise that the repossession rules in British Columbia are ‘seize or sue’.

Legal Disclaimer – This is NOT legal advice. Exodus Bailiffs are not lawyers. This is simply our summary of how these rules affect people in general. Laws should only be interpreted by a lawyer, and Exodus Bailiffs recommend that you seek the advice of a lawyer before deciding to have an item surrendered to a creditor, or for any other questions regarding or understanding the laws. Exodus Bailiffs also advise that you seek the help of professionals in the Debt Service industry. Read more about the rules here.