Title Loans in Bankruptcy

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

Title (Pink Slip) Loans and Bankruptcy

A title, or pink slip, loan is a loan taken on your vehicle after it is already paid for (or close to it). Typically these loans are secured, meaning they have to be repaid even if you file for bankruptcy. But since such loans are taken out after you bought your car, the loan amount may be reduced through some forms of bankruptcy filings. Whether you want to keep your car is another question that might influence your bankruptcy options.