Do you have a title loan with huge payments that never pay down the debt? You can pay off a title loan in Chapter 13 bankruptcy and pay significantly less on interest and payments. To find out how, read on.
Pay Off A Title Loan In Bankruptcy
A Title Loan is touted as a short term but high interest rate loan meant to bridge the gap between paychecks – similar to a payday loan. The difference between the two is a title loan is secured against your vehicles, so if you get behind on payments they can repossess your vehicle. Just like payday loans – the sole purpose of a Title Loan is to trap you in a vicious cycle of debt.
Why Title Loans Are Dangerous:
The interest rate on a title loan is unbelievably high. They top out around 300% – 400%. Most credit cards range between 18% – 24%.
Your Car Is At Risk:
The title loan company holds the title to your car and will repossess it if you get behind on payments.
Difficult To Pay Off
Title loans are notoriously difficult to pay off. Most people will eventually need the help from friends or family to get free.
As a bankruptcy lawyer, I have had clients who paid on a title loan for a couple years without paying it off. The payments they made went straight to interest on the loan. The vehicle wasn’t even worth the payments they had made. A $1,500 title loan can have a minimum monthly payment in the $300 range – and that’s just the cost of interest.
How Does Chapter 13 Bankruptcy help?
Low Interest Rate:
A title loan gets paid back at 5% interest. Suddenly your title loan is manageable.
You Get Time To Pay:
A title loan gets paid back over 3 – 5 years in a Chapter 13 Bankruptcy. A $1,500 title loan will cost about $45/month in a 3 year Chapter 13 Bankruptcy. You’ll save about $250/month and actually make progress with each payment, as opposed to paying only interest.
You Are In Control:
A Chapter 13 Bankruptcy puts you in control and helps you break free from the pay and borrow trap. You are no longer subject to the ridiculous interest rates or threats of repossession.
If you have questions about How To Pay Off A Title Loan In Bankruptcy, please give us a call at email us now. Chris W. Steffens is a Kansas Licensed Bankruptcy Lawyer for a FREE Consultation over the phone, in person or you can