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Can you file for bankruptcy on car title loans?
I have two car title loans. Unfortunately, I can’t pay for both of them and I’m looking to file for bankruptcy. But I’m not sure what will happen to the title loans. Can you file for bankruptcy on car title loans?
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Filing for bankruptcy is never a pleasant experience, but you may be able to file for bankruptcy on car title loans. However, because car title loans are secured debts and use the car as collateral, the process depends on how you file for bankruptcy.
Under Chapter 7 bankruptcy, you can redeem a secured debt, your car, but you have to pay the car’s current market price in one payment. For example, if you owe $7,000, but the car is valued at $3,000, if you pay $3,000, the remaining debt will be discharged.
You can also keep the vehicle under Chapter 13 bankruptcy and pay the loan balance over a three- to five-year period as determined by the court-appointed bankruptcy trustee. Another advantage under Chapter 13 is that the contractual interest rate is overridden and replaced by a much lower statutory rate.
Now that you know your vehicle is safe from repossession, don’t forget to keep an active
car insurance
policy!And to ensure you always have the lowest rate, Jerry will send you new quotes every time your policy comes up for renewal so you’re always getting the coverage you want at the best price.
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