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Are titles loans included in bankruptcy? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make better financial choices by offering interactive financial calculators and tools, publishing original and objective content. This allows users to conduct studies and compare information for free to help you make sound financial decisions. Bankrate has agreements with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Profit The offers that appear on this site come from companies who pay us. This compensation could affect how and when products are featured on this site, including, for example, the order in which they appear within the listing categories in the event that they are not permitted by law. Our mortgage, home equity and other home loan products. But this compensation does not influence the information we provide, or the reviews you read on this site. We do not include the vast array of companies or financial deals that could be open to you.



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3 min read Read Published 7 March 2023.
Authored 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 from late 2021. They are passionate about helping readers gain confidence to manage their finances with concise, well-studied information that breaks down complicated topics into manageable bites.









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If you're in debt or have to pay your bills, it can seem like a good way to gain access to cash fast. However, what if your financial problems get out of hand and you resort to filing bankruptcy to pay off your mounting obligations. Which happens to your vehicle that you pledged as collateral for the car title loan? Based on the option you choose to pursue , it may become possible to incorporate your title loan in a bankruptcy filing and then have the loan be discharged or restructured in order to allow for more manageable monthly payments. However, you could lose your car if you cannot maintain loan repayment conditions. Title loans as well as Chapter 7 bankruptcy Chapter 7 bankruptcy is often referred to as liquidation. In Chapter 7 filing, unsecured debts are discharged. This includes credit card debt, medical debt, personal loans as well as promissory notes. As part of the process, your nonexempt property is sold and the proceeds used to pay back the creditors. A title loan, however, isn't an unsecure debt, but it's an unsecured debt . If you are able to borrow money with an auto title loan you transfer your vehicle to the lender as security for the loan. In plain English you signed that pink slip the car in exchange for a sum of money. Since it is a secured loan, a title loan can't be removed in a Chapter 7 bankruptcy. "Although state laws vary, typically the majority of secured loans remain in the same position," says Michael Sullivan, a former personal financial consultant for Take Charge America, a nonprofit credit and financial counseling agency. Because the loan is still in force, you will require to repay it in its entirety or work out an affordable payment plan in conjunction with the lender who holds the title loan. If neither of these options is feasible, you may also choose to . There are also instances where courts can allow titles loans to be dealt with in Chapter 7 proceedings, says Lamar Hawkins, a bankruptcy lawyer with Guidant Law and member of the Arizona Board of Legal Specialization's Bankruptcy Law Advisory Commission. "The bankruptcy court disfavors predatory lending and title loans are commonly predatory," says Hawkins, saying that in some instances the court may "rewrite the loan to market rates based upon the value of the vehicle and have the lender receive regular payments in order that the borrower will be able to keep the vehicle and keep a means of transportation." The Bankrate tip
Make sure to continue making your payments prior to the time the bankruptcy case is closed to prevent repossession.


Title loans as well as Chapter 13 bankruptcy Chapter 13 bankruptcy is a restructuring of your debts, and this process includes secured debts like car title loans as well as mortgages. In Chapter 13, some unsecured debts could be cancelled. Those that are not forgiven are reorganized and must be paid back over time. "Chapter 13 permits you to create a repayment plan where you pay money every month to the trustee. So that at the end period of repayment, you have paid either what you think is the fair value the vehicle in accordance with the date on which the case was filed ... or the amount owed or lower," says New Jersey bankruptcy lawyer Edward Hanratty. In the Chapter 13 filing, you may also be able to reduce the amount of monthly installment payments you're required to make in order to lower the cost of these payments. In addition, if the interest rate for the title loan is excessive it is possible that you will be able reduce the amount of interest you pay as part of the Chapter 13 process, says Dai Rosenblum, a Pennsylvania bankruptcy lawyer. While there is the possibility of losing your vehicle an element of Chapter 13 bankruptcy filings, you'll have a lot more options for restructuring your debt in order to prevent that from happening. Inform your lawyer of the title loan upfront When pursuing bankruptcy with the help from an attorney you need to disclose all your assets along with all of your remaining debts and liabilities, such as your Title loan. In the absence of revealing the title loan can lead to further difficulties. "When you file bankruptcy in bankruptcy, you declare (subject to the criminal penalty of perjury that you've declared every asset, which includes the vehicle, and each debt even your loan on your title loan," says Rosenblum. "Also lawyers can't fix a problem if they don't even know that it exists." Moreover, concealing debts during a bankruptcy case can result in the case being dismissed. "Or in the most extreme scenario this could lead to jail time in bankruptcy for fraud" states Hanratty. "It's better to be safe rather than regretting this." The final word: Car title loans can be resolved through bankruptcy, but how the debt is handled will depend on whether you're pursuing Chapter 7 or Chapter 13 bankruptcy. There are options to have the debt restructured, paying the entire amount back or even surrendering the vehicle to the lender. Before you take any action, consult with an attorney for bankruptcy who can help you sort through the options and decide on the most effective course of action.


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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.



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

Rhys has been editing and writing for Bankrate from late 2021. They are committed to helping readers gain the confidence to control their finances by providing concise, well-researched and well-read information that breaks down otherwise complicated subjects into digestible pieces.






Auto loans editor




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