QUESTION
Will chapter 7 discharge the debts including the title loan and allow us to keep our vehicle as it's our primary vehicle?
Asked on Aug 05th, 2016 on Bankruptcy - Colorado
More details to this question:
We became a single income family after my husband was injured on the job and can no longer work. We don't get any income from that. We lost our house and got into a cycle of installment and payday loans to cover unexpected expenses. We finally paid off our primary vehicle and obtained a title loan to pay off all the smaller loans so we'd only have one loan payment. The payments are huge due to the finance charges and combined with medical bills and household expenses, we are drowning. What are our options?
8 ANSWERS
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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Maybe. It depends on the value of the vehicle. If the vehicle is worth less than the exemption for motor vehicles, you can have the court remove the title loan. This is a complex area and you should consult a bankruptcy lawyer. However, it's never a good idea to take out a secured loan (car title loan or second mortgage) to pay off unsecured loans (credit cards, payday loans, medical bills, etc.).
Answered on Sep 08th, 2016 at 6:09 PM
Bankruptcy Attorney serving Madison, WI
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Richard B. Jacobson & Associates, LLC
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I expect that a title loan will not be discharged in the BR. My reasoning is that a title loan, in which the lender has physical possession of the vehicle title, is likely to be treated as a SECURED loan-so that you will have to work out with the creditor terms of repayment. It is possible that in your federal district the courts have ruled differently. Which is why retaining a skilled bankruptcy lawyer in your locality is almost always a good idea, and generally worth the investment.
Answered on Sep 07th, 2016 at 6:34 PM
Bankruptcy Attorney serving Myrtle Beach, SC
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Law Office of Margaret L. Evans, PC
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Chapter 7 will NOT discharge a SECURED loan like a title loan. A chapter 13 filing, however, MAY have the added benefit of reducing the loan value down to what the car is valued at if the loan is over 310 days old. You should seek the benefit of a bankruptcy consultation to see what your options are.
Answered on Sep 07th, 2016 at 6:34 PM
A chapter 7 will discharge a title loan, but the vehicle will continue to owe the debt. As a result, if you don?t pay the title loan, the lender will be able to repo the vehicle once the bankruptcy stay comes to an end. Chapter 7 generally does not change the nature of liens, and a title loan is a lien. Unless a redemption will provide you with a better deal by refinancing the vehicle at FMV, it sounds like Chapter 7 will not achieve your objective. Other options might also be available to help you, but more information would be needed, along with competent representation.
Answered on Sep 06th, 2016 at 5:47 PM
Landlord & Tenant Attorney serving Thibodaux, LA
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The Louque Law Firm, L.L.C.
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If you used the title to a vehicle as collateral for a loan the "title loan" lender is actually a secured creditor and is entitled to the vehicle if you cannot pay them, even if you discharge your personal responsibility in a Chapter 7 bankruptcy. If you file a Chapter 7 and you cannot pay the title loan back you lose the vehicle unless the lender is feeling generous.
Answered on Sep 06th, 2016 at 12:21 PM
You cannot get rid of the title loan without surrendering the car. It is a secured loan. All the other debts can be discharged.
Answered on Sep 06th, 2016 at 12:20 PM
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You each have a $15,000 vehicle exemption related to equity in your car should you file Bankruptcy.
Answered on Sep 06th, 2016 at 12:20 PM
722 Redemption is an option. I don't like giving long winded explanations here. Google 722 Redemption, then call them about your options in filing a Chapter 7 and keeping the vehicle. I would recommend that you meet with a lawyer face to face. I have a very small fee for these meetings. Good luck!
Answered on Sep 06th, 2016 at 12:19 PM