Title loans in bankruptcy are a common connection. And for good reason. Title loans, commonly called pink slip loans, cost. They cost a lot! Title loan interest rates can reach nearly 400%.
Title loans use the equity in your vehicle as collateral for a loan. You do not have to own your car outright. But you have to have more equity in it than the loan you take. Repaying the loan is tougher than taking it out. With high interest rates come high repayments. As with payday loans, repaying title loans often involves taking out other loans to make the payments. This is a common cause why title loans in bankruptcy are common. And it is the cause why the government is now reconsidering the regulation of auto title loans and payday loans.
This USA Today story reflects the government’s potential coming crackdown on these loans. Title loans in bankruptcy are a sign that these debts can be bad news. Payday loans certainly are, and are even more prevalent in bankruptcy filings. There is, though, still an argument in favor of title and payday loans. And it stems from the same groups that most commonly discharge these debts in bankruptcy. Namely, the poor. Without them, the argument goes, many would be left without credit. Lenders claim the high interest and costs of these loans are necessary in light of the risk. The government will have to weigh these options in arguments in potentially regulating anew these industries.
If you have such debts, title loans in bankruptcy may work out for you financially. It depends on the type of bankruptcy you file. It also depends on the value of your vehicle, and how long you have had the loan. You can always eliminate title loans in bankruptcy if you give up your car. But there are also bankruptcy tricks of the trade that allow you to keep your car and reduce the amount you owe on your title loan.
Consultations are always free, which is the best way to determine your best financial options to deal with your debt. If you have title (pink slip) or payday loans, considering bankruptcy is good start to ending the amounts you are paying on these loans.