We had a title loan at TitleMax on a 2005 Olds Alero. We filed bankruptcy & it was discharged. We need the title so we can get rid of the car.
First, let me be 100 percent clear, I am not an attorney. I can’t give you legal advice. You need to speak with a licensed attorney in your state for specific legal advice in your state. The best person to speak with is probably your bankruptcy attorney who is already familiar with your case.
What I can do is share the extent of my knowledge on this very interesting topic.
The problem with a title loan is you are handing over a security interest in an item of value to guarantee a loan. With a title loan, you are giving the lender the title (ownership) to a vehicle as collateral.
And that ownership, or pledging the vehicle as collateral is a problem if you have a title loan and file bankruptcy. I’m assuming you filed for Chapter 7 bankruptcy.
A Chapter 7 bankruptcy option is to redeem the car before the bankruptcy. Essentially you pay the lender back the current fair market value, in one payment, of the car and the balance of the loan may be eliminated in the bankruptcy. One place to get the market value of your car is at Kelley Blue Book. In Chapter 13 bankruptcy you can do the same thing but spread the value over the bankruptcy payments.
If you signed the title over to the lender, the lender has the ability to repossess the car if you fail to make the payments.
Disposing of the vehicle at this point would be unwise unless the title loan company is onboard with your plan or you can confirm the title loan company did not properly record their security interest in your vehicle. You can check on this by getting a duplicate title on the vehicle from your motor vehicle department to confirm their listing on the title.
Since the car is pledged as collateral for the loan and you signed the title over to the title loan company, they are not required to hand you the title back.
The Chapter 7 bankruptcy discharge eliminated the loan you had to pay but does not shift ownership of property back to someone else.
One option here would be to negotiate with the title loan company for some percentage of the loan balance to get the title to your car back. If they did everything right when they made the loan they can say no, repossess the car, or leave you in continued limbo with a car you don’t own.
One more option would be to negotiate with the title loan company to resume your regular payments and repay the loan to get the title back.
Be sure you don’t leave anything personal or of value in the car. It could vanish one day from repossession if this matter isn’t resolved.