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Are titles loans part of bankruptcy? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make smarter financial decisions by providing you with interactive tools and financial calculators as well as publishing original and impartial content, by enabling you to conduct research and evaluate information for free to help you make sound financial decisions. Bankrate has agreements with issuers such as, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The deals that are advertised on this website are provided by companies that pay us. This compensation may impact how and when products are featured on this website, for example for instance, the order in which they may appear in the listing categories in the event that they are not permitted by law. This applies to our mortgage, home equity, and other products for home loans. But this compensation does not influence the information we provide, or the reviews you see on this site. We do not cover the universe of companies or financial offers that may be open to you.



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3 min read Read Published March 07, 2023
Writen by Mia Taylor Written by Contributing Writer

Mia Taylor is a contributor to Bankrate and an award-winning journalist who has two decades of experience and worked as a staff reporter or contributor for some of the nation's leading newspapers and websites including The Atlanta Journal-Constitution, the San Diego Union-Tribune, TheStreet, MSN and Credit.com.







Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate since the end of 2021. They are dedicated to helping readers gain confidence to control their finances through providing precise, well-researched and well-researched content that breaks down otherwise complex topics into manageable bites.









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When you're in financial trouble or require money to pay for bills, bankruptcy may appear like a great way to gain access to cash fast. But suppose your money troubles become unmanageable, and you decide to file bankruptcy to pay off your mounting obligations. Which happens to your vehicle you signed over as collateral in exchange for the car title loan? If you decide to take action, it might be possible to include your title loan in a bankruptcy filing and then have the loan discharged or restructured to make payments more manageable. However, you could lose your vehicle if you are unable to meet loan repayment terms. Title loans and Chapter 7 bankruptcy Chapter 7 bankruptcy is often called liquidation. As part of Chapter 7 filing, unsecured debts can be discharged. This includes credit card debt, medical debt as well as personal loans and even promissory notes. In the course of this process, the property you are not exempt from will be sold, and the proceeds used to pay back lenders. A title loan however, isn't an unsecure loan; it's an unsecured debt . If you take out a car title loan you transfer the vehicle to the lender to secure the loan. In plain language, you signed over the pink slip to your vehicle in exchange for some money. Because it's a secured loan the title loan cannot be removed as part of Chapter 7 bankruptcy. "Although states have different laws, typically every secured loans remain in force," says Michael Sullivan who was a former personal financial consultant with Take Charge America, a nonprofit credit and financial counseling firm. Because the loan is still in force, you will require to repay it in its totality or negotiate an affordable payment arrangement in conjunction with the lender who holds the title loan. If neither of these options is feasible, you may opt to . There are also instances where courts will allow title loans to be dealt with in Chapter 7 proceedings, says Lamar Hawkins, a bankruptcy attorney at Guidant Law and member of the Arizona Board of Legal Specialization's Bankruptcy Law Advisory Commission. "The bankruptcy court does not like predatory lending, and title loans tend to be precarious," says Hawkins, noting that in certain cases the court may "rewrite the loan to market rates dependent on the worth of the vehicle and also have the lender receive regular payments, so that the borrower can retain the car and use it as a means of transportation." The Bankrate tip
Be sure to keep making your payments prior to the time the bankruptcy case has ended to avoid repossession.


title loans as well as Chapter 13 bankruptcy Chapter 13 bankruptcy is restructuring your debts. The procedure includes secured debts like car title loans as well as mortgages. The process of Chapter 13, some unsecured debts may even be cancelled. Those that are not forgiven are reorganized, and are repaid over time. "Chapter 13 lets you set up a repayment plan in which you pay each month to a trustee. So that at the end your repayment program,, you have either paid an amount equal to the market price of your car as of the date that when the bankruptcy case was initiated ... or the total owed in the case of lower," says New Jersey bankruptcy lawyer Edward Hanratty. As part of a Chapter 13 filing, you may also be able to lower the amount of the monthly installment payment you're required to make to make them more affordable. In addition, if the interest rate on the title loan is excessive, you may also be able to reduce the rate as part of the Chapter 13 process, says Dai Rosenblum, a Pennsylvania bankruptcy lawyer. Though there is still the possibility of losing your car as in Chapter 13 bankruptcy filings, there are many options available for restructuring your debt in order to stop this from occurring. Tell your lawyer about your title loan prior to filing bankruptcy through the assistance of an attorney, you need to make clear all of your assets, as well as all of your current debts and obligations, which includes your title loan. Doing not disclose your title loan will only cause more difficulties. "When you file for bankruptcy, you state (subject to the criminal penalty of perjury that you've included every asset, including the car, and every credit, which includes that of the credit card loan," says Rosenblum. "Also the lawyer cannot solve a problem if they don't be aware of the issue." Additionally, hiding financial obligations during bankruptcy could result in its dismissal. "Or in extreme cases, it could result in the prison sentence as a result of bankruptcy fraud" Hanratty says. Hanratty. "It's more secure instead of regretting it." The final word: Car title loans can be addressed through bankruptcy, but the method by which this kind of debt is handled will be contingent on whether you're pursuing Chapter 7 or Chapter 13 bankruptcy. The options include having the debt restructured, paying entire amount back or even surrendering your vehicle back to lender. Before taking any action, consult with an attorney for bankruptcy who can assist you in navigating the options and decide on the best course of action.


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Written by a Contributing Writer

Mia Taylor is a contributor to Bankrate and an award-winning journalist who has two decades of experience and worked as a staff reporter or contributor for some of the nation's leading newspapers and websites including The Atlanta Journal-Constitution, the San Diego Union-Tribune, TheStreet, MSN and Credit.com.



The edit was done by Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate since the end of 2021. They are passionate about helping readers gain confidence to take control of their finances through providing precise, well-studied data that is broken down otherwise complex topics into manageable bites.






Auto loans editor




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