Can I include the title loan on a chapter 7 and what would happen? 15 Answers as of February 18, 2014

I got a title loan on my 1999 Expedition on December 20th, 2013. I did not anticipate a need for a bankruptcy but have some medical bills that I cannot pay from a few years ago. They're wanting to come after me, and I am considering a chapter 7. The car is worth $2,052 in good condition, but the transmission went out last week in it. I've taken it to a shop and the estimate to fix it is $2,500. I would want to keep it and fix it if I can in the future, there's no way I can now.

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Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
Sorry for the delay in answering. If you filed you could get rid of it and there would be no additional cost to you.
Answer Applies to: California
Replied: 2/18/2014
Indianapolis Bankruptcy Law Office of Eric C. Lewis
Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
Most liens, including title loans, survive the Chapter 7 bankruptcy discharge so you can surrender the vehicle, keep the vehicle and pay the lien, redeem the vehicle by paying the fair market value or in the alternative, informal way, you can try to work out an agreement directly with the bank lien holder.
Answer Applies to: Indiana
Replied: 2/14/2014
A Fresh Start
A Fresh Start | Dorothy G Bunce
A title loan means the lender has the title to the vehicle & in order to sell the title in the future, you must pay the loan. Also, the lender can repo the vehicle if not paid, even after a bankruptcy. Although you must include the title loan in your bankruptcy, it doesn't sound like paying the loan to keep the vehicle would be a bright move considering the amount needed to get the car back on the road.
Answer Applies to: Nevada
Replied: 2/11/2014
Meister & McCracken Law Firm, PLLC | Joanne M. McCracken
Yes, you can include that loan. Discuss this issue with your attorney and perhaps the title lender will allow you to redeem the vehicle if your financial situation allows.
Answer Applies to: Arkansas
Replied: 2/11/2014
Law Office of Mark B. French
Law Office of Mark B. French | Mark B. French
If you file for Chapter 7 Relief then the title loan will pass through the bankruptcy. Your personal liability to repay the loan will be discharged, but that will not prevent the lender from repossessing your Expedition if you do not pay the loan. Be careful about leaving it at the shop, the mechanic can get a lien for storage if you just leave the vehicle there. As a practical matter, the lender might not repossess the vehicle since it would have little value due to its age and condition. Even if this happens though, you will not have the title so you could not sell the vehicle in the future.
Answer Applies to: Texas
Replied: 2/11/2014
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    Your Chapter 7 bankruptcy would get rid of your personal liability for the debt but they are the lien-holder and owner of the car.
    Answer Applies to: New York
    Replied: 2/11/2014
    Law Offices of Linda Rose Fessler | Linda Fessler
    I would not repair it. Even if you file bankruptcy and your debts are discharged they will still have a lien so they can take it.
    Answer Applies to: California
    Replied: 2/11/2014
    Deborah F Bowinski, Attorney & Counselor at Law | Debby Bowinski
    The title loan is secured by your vehicle. You will have to either pay it off according to the terms of the loan or surrender the vehicle to the lender. A Chapter 7 bankruptcy will not change that.
    Answer Applies to: Colorado
    Replied: 2/11/2014
    The Orantes Law Firm
    The Orantes Law Firm | Giovanni Orantes
    You must list all of your debts in a bankruptcy case, assuming that you qualify. The effect of the bankruptcy discharge then depends on the law. A title loan is usually secured by the title of the vehicle. In general, secured debts survive bankruptcy and entitle the creditor to repossess or foreclose on its collateral post-discharge and after closing of the chapter 7 case if the debtor falls behind on the payments. So, in a Chapter 7 case, you can discharge the debt if you turn in the vehicle to the title loan company. If the transmission went out, it is possible that the title lender won't want anything to do with the car, but it won't usually remove the lien from the car voluntarily. That leaves you in a terrible situation because the car is still under your name. It is possible that you could file a motion to *redeem* the vehicle for a small amount of money, even $1, attaching the quote from the mechanic, and an opinion of value of the vehicle from you (attaching a Kelly Blue Book report for that car) and saying that the car is worth nothing because the transmission is gone, but also asking the Court to state that if you lose, you are surrendering the vehicle through the order related to the motion and all State authorities must obey it. In light of the quote, it is possible that the title company will not oppose the motion and armed with the order allowing the redemption, the vehicle will be yours to do what you wish.
    Answer Applies to: California
    Replied: 2/11/2014
    Moore Taylor Law Firm, P.A.
    Moore Taylor Law Firm, P.A. | Jane Downey
    You can pay the value lump sum most likely.
    Answer Applies to: South Carolina
    Replied: 2/11/2014
    Garner Law Office
    Garner Law Office | Daniel Garner
    If you file Chapter 7, you have to list all your debts regardless of your intentions. Since you pledged the title as collateral for the loan, your car can be taken if you default on it. You have to state in your bankruptcy papers whether you intend to reaffirm the loan and keep making the payments, or surrender the car. It does not make sense to spend more on a repair than the car is worth. Now is the time to let it go since the transmission is shot. You can surrender the car either before or after the bankruptcy is filed, but if it's not reliable, you might as well get it off your hands so you don't have to keep it insured.
    Answer Applies to: Oregon
    Replied: 2/11/2014
    Law Offices of Eric W. I. Anglin
    Law Offices of Eric W. I. Anglin | Eric W. I. Anglin
    You have the option of reaffirming, redeeming, or surrendering the vehicle and loan. Since a title loan is secured by the collateral, then those are your only options. You may look at redeeming the collateral for its value in its current condition. You will likely need an appraisal and then you must make a lump sum payment to the lender for its value.
    Answer Applies to: Indiana
    Replied: 2/11/2014
    Goldsmith & Guymon
    Goldsmith & Guymon | Marjorie Guymon
    You can surrender the car in the bk and avoid the title loan.
    Answer Applies to: Nevada
    Replied: 2/11/2014
    Diefer Law Group, P.C.
    Diefer Law Group, P.C. | Abel Fernandez
    If the loan is secured against the vehicle, you need to pay the loan to keep it. If you do not pay, the finance company car repossess the car.
    Answer Applies to: California
    Replied: 2/11/2014
    Law Offices of Marc Weinberg | Marc Weinberg
    If you have a title loan on the car then it is secured, and the debt owed to the title company will not be discharged. You will either have to reaffirm the debt if you want to keep the car, or surrender the car to the title company. I realize you want to keep the car but you have to ask yourself: It will cost $2,500 to fix the car and it is going to cost me "X" dollars to pay off on lien on the car, is it really worth it?
    Answer Applies to: California
    Replied: 2/11/2014
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