The Official Receiver's approach to vehicles
The Official Receiver applies a practical test: is the vehicle a reasonable domestic necessity, and is its value modest?
Guidelines vary but a car worth under £2,000-£3,000 that is used for work, school run, medical needs or general family transport is normally left with you.
A car worth significantly more may be sold — with a modest replacement funded from the sale proceeds. For example, a car worth £8,000 might be sold and £2,000 given back for a replacement.
Vehicles on finance
If your vehicle is on hire purchase or PCP, the finance company owns it. Your equity is only the difference between the vehicle's value and the outstanding finance.
If equity is nil or negative, the Trustee has no interest in the vehicle. The finance company can decide whether to continue the agreement or terminate — most terminate on bankruptcy, meaning the vehicle is repossessed.
You can sometimes negotiate continuation with the finance company if you can afford ongoing payments, but this is not automatic.
Motability vehicles
Motability vehicles are leased through the Motability Scheme (funded by qualifying disability benefits). You do not own them — Motability does. They do not form part of your bankruptcy estate.
The lease continues as normal during bankruptcy and after. Ongoing Motability payments (which come directly from benefits) are not affected.
Company vehicles
A vehicle owned by an employer and provided to you as a benefit is not yours and does not enter your bankruptcy estate.
A vehicle owned by a company where you are a director may be treated differently — depending on whether the company is a limited liability entity separate from you, or effectively a sole trader arrangement.