Title pawns or title loans are secured loans that use your vehicle’s title as collateral. These loans are typically short-term and have high-interest rates. If you default on the loan, the lender can repossess your vehicle.
People use title pawns to borrow money without having to endure an invasive credit check or meet certain other financial requirements. They can be a helpful way to get quick cash when you need it, but they also come with a high risk of default and repossession.
This is why it’s so important to make sure you understand the terms of your loan before signing on the dotted line.
Risks of Title Pawns
It’s no secret that title pawns can be a risky way to borrow money. If you can’t repay the loan, you could lose your car. And even if you can repay the loan, you may end up paying much more in interest and fees than you would with other types of loans.
Risks of title pawns include:
Loss of Your Vehicle
If you can’t repay the loan, the lender can seize your car and sell it to recoup the money you borrowed.
High Interest
Title pawns typically have high-interest rates and fees, so you could end up paying back much more than you borrowed.
Damage to Your Credit
Taking out a title pawn can negatively impact your credit score, making it harder to get approved for loans in the future.
What Happens to a Title Pawn If You File for Bankruptcy in Georgia?
Unfortunately, in Georgia, filing for Chapter 13 bankruptcy isn’t likely to help you retain ownership of your vehicle. This is because the law allows title pawn lenders to opt out of inclusion in your bankruptcy. Most won’t want to be included, which means they’ll have the legal means to collect on your debt if you fail to meet your payment obligations.
You have two options if you file for bankruptcy and have a title pawn:
- Continue to pay as you have been
- Lose your vehicle to the title pawn company
Unless the title pawn company agrees to its inclusion in the bankruptcy, these are your only options.
If you’re filing for Chapter 7 with a title pawn, your best bet is to file before the pawn loan goes into default. Once it is default, the title passes and you’re no longer the owner. In Georgia, you do have an additional 30 days to cure any default.
The best thing you can do is speak to an experienced bankruptcy attorney about your situation. No two bankruptcies are alike, so it’s best to have a lawyer assess your situation and determine the best possible options for you.
To learn more about how bankruptcy affects a title pawn or to speak to someone about bankruptcy, contact R. Flay Cabiness, II, P.C. at (912) 417-5041 (Brunswick, GA); (912) 809-2141 (Hazlehurst, GA) or; (912) 324-3176 (Jesup, GA) to schedule a consultation.
