Can I Wipe Out My Vehicle Title Loan After Being Declared Bankrupt?Fast Action Finance SEO
Getting a car title loan is easier compared to other traditional loans. One, anyone can get a car title loan as long as you own a car with the right paperwork. Second, having a bad credit score does not mean you cannot qualify for collateral loans in Toronto. Your car title serves as a security since the lender retains your title until you repay your loan. Third, the processing time for a car title loan is shorter and no much paperwork is needed. All you need to have is a legit lien-free car title and a national ID. You need to approach a well-known trusted lender to get the best interest rate for your loan.
Some people get stuck with car title loans that they are unable to pay, some due to unavoidable circumstances and others due to negligence on their part. It is always wise to sit down with your lender before signing off on a loan and get to understand all their terms on the loan. You should ask all the hard questions like what happens if you are unable to repay a loan and if there are other ways to settle your debt.
Most lenders will not willingly divulge this information so it is important to do research on your part and find out more on car title loans before you apply for one. This article will help you understand what happens in the event you are not able to pay back your car title loan. It will shed more light on what happens when you file for bankruptcy if you have a car title loan.
Chapter 7 bankruptcy
To answer the question whether you can wipe out a car title loan after you file a bankruptcy, a short answer would be yes. Filing for bankruptcy will clear you from making further payments but the lender still gets to repossess your car. When you sign on loan application forms, you give a lender the right to keep your car title and in the event you are unable to pay off your debt they have a legal right to repossess your car and sell it to recover their money.
This is called a lien. Filing a bankruptcy does not help you avoid a bad credit on your financial report either. As you can see, filing for bankruptcy does more damage than good so it’s best to avoid going down that road unless it is necessary. There are other ways you can approach to help settle your debt and some of them include:
Car redeeming is included in Chapter 7 bankruptcy, which states that you can redeem your car from the lender for its current market value. For example, if you owe a lending company $6,000 and the market value of your car is $2,000 you can redeem your car from the lender for $2,000. That means the remaining $4,000 becomes unsecured debt. After filing a bankruptcy case, you don’t pay the remaining amount. Most people are unable to redeem their cars since they do not have the amount needed. You need to make a onetime pay off as no installments are allowed.
Chapter 13 bankruptcy
Chapter 13 bankruptcy allows you to redeem your car the same way Chapter 7 bankruptcy does. Only Chapter 13 comes with an exception that you cannot redeem your car if you used the loan money to buy a car within 910 days before filing for bankruptcy. If this does not apply to you, then you can redeem your car by paying the market value of the car. However in this case, the court approves that you can pay the amount in installments that can be extended up to 5 years maximum.
Try to negotiate with the lender after filing for bankruptcy
Some lenders are willing to negotiate on loan term repayments after a bankruptcy is filed. You can meet your lender to agree to new terms and the lender can work out on new terms. He can choose to reduce your interest rate or the monthly payments. You can also agree to negotiate on the loan balance. However, a lender can only agree to meet you for negotiations if the value of the loan balance is more that the current value of the car.
When you approach a lender for a car title loan, they make sure that you are able to repay off your loan and it becomes easy when you have a car title in place. They understand that some borrowers come in genuinely seeking for cash with all the intent of repaying back but, sometimes things do not go as planned. It is therefore, advisable to always sit down with your lender and be honest about what is happening with your finances and if you feel you need a new repayment plan then you can work that out with your lender. Never rush to file for bankruptcy before trying out other repayment options.