Title loan and check-into-cash loan companies make my blood boil, and I feel they are a plague on the working class. The first time I ran up on pay-day loans and auto title loans was about twenty years ago, and it was shocking then and has only become worse. Most bankruptcy attorneys rely on a handheld HP Financial Calculator that will do loan amortizations. I was convinced mine had malfunctioned when I ran the interest rate on a client’s loan three times and it kept coming up at 240%! Could that possibly be right? Unfortunately, it was, and I have since reviewed loan documents with interest rates as high as 360% (and sometimes up into the 1000% range). Today there are eight pay day loan, auto title loan, and check-into-cash loan companies within five miles of our office, so there seems to be no shortage of customers. But does the average consumer have any idea of what they’re in for on the repayment?
Most of the pay day loans and check-into-cash loans start innocently enough with a $250 cash advance. The auto title loans may be several thousand dollars, depending on the value of the client’s automobile, and the interest rates are usually as high as a pay day loan. The loan will often start when the client has a medical emergency or automobile breakdown, but it may be triggered by high, unplanned utility bills. It isn’t unusual for a client to have several of these loans, and they pay and pay, but the loans simply never go away with the extraordinarily high interest rates. But that is where a chapter 7 or chapter 13 bankruptcy can provide immediate relief.
Check-into-cash and pay day loans are generally unsecured debt, and no matter what kind of intimidation and dire threats debt collectors use, the debts are dischargeable in a bankruptcy. And contrary to the bad information debt collectors are putting on the Internet, you can file a bankruptcy on an automobile title loan and keep your car. Auto title loans can be dealt with in a chapter 13 bankruptcy where the client can pay the loan within a reasonable time and without the crushing interest rate in the original loan. The maximum interest rate permitted in our court district in a chapter 13 plan on an automobile title loan is usually less than 5%, and compared to the contract interest rate, the relief granted to our client is huge.
Call us today for a no cost, no obligation opportunity to discuss your situation and learn how bankruptcy may be able to help.
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