However, hometown businessmen and the New Zealand motorsport community gave him money to start again and Paddon bought a Mitsubishi Evo 8 which allowed him to enter championship races.
"I've always been a firm believer that everything happens for a reason and while it was soul-destroying at the time, if we didn't have that accident we would not have stepped up and been where we are today," he recalled.
"If you join the dots, everything happens for a reason."
Battling a slight throat infection, Paddon admitted things had been "pretty crazy" since he returned from Argentina.
He won all six stages on the final day of the International Rally of Whangarei last weekend on his way to an overall second placing.
As he arrived in Hastings yesterday, memories of his four Hawke's Bay Rallys flooded back. Paddon won his last in 2009.
Hawke's Bay is also the home of his fiance Katie Lane. The couple became engaged earlier this year after eight years together, and the marketing manager has a huge role organising and promoting Paddon's career from their base in Frankfurt.
"We met when Katie was studying in Dunedin and she was also involved in motorsport," Paddon said.
He is using his increasing international fame to assist the push for New Zealand to host a round in the World Rally Championship.
"Obviously the decision will be made by the big bosses in Europe. But New Zealand boasts the best rally roads in the world and we'll be doing everything possible to get a round here for 2018.
"There is a lot of support, not just from motorsport fans and the sporting community. Obviously it's going to come down to funding," the only Southern Hemisphere driver in the world championship said.
While his racing commitments will probably prevent it, he would make an ideal frontman in the hunt for the appropriate funding.
Paddon had the gift of the gab when it came to promoting the Hyundai Special Edition Santa Fe, which carries his name.
"There are only 50 of them and from what I hear they are selling pretty well, so you will have to be in pretty quick if you want one."