Can I File Bankruptcy Because of Title Loans?


Dear Steve,

Can I file a bankruptcy with multiple title loans?

I have a 2014 Chevy Spark that is being financed through a private lender. Through some unfortunate employment situations, I was forced to take out 3 title loans to help support myself and my fiance.

The monthly amount that I pay to each of these loans is killing me and the vehicle is no longer running. The car has been sitting for about a year and the loan company has made no effort to repossess the vehicle after not making the monthly payments.

I don’t have a problem losing the vehicle as it isn’t running and I cannot afford what it would cost for the repairs.

I am drowning in debt, have a non-running vehicle, and barely able to cover my basic expenses. Can I get any relief out of bankruptcy or will this just make a bigger mess?



Dear Charles,

The quick answer is, yes you can absolutely do that.

So many people look at bankruptcy as a financial death sentence. Even I did at one time when I was living through my own bankruptcy. But I learned I was wrong.

The Federal Reserve put out an article studying people who file bankruptcy and found those that file bankruptcy do better financially than those that don’t.

Like so many other things in life, like politics, if you just look at the facts and take the emotion out of the decision, you will get a clearer picture.

The facts appear to be:

  • You are drowning in debt.
  • You have been drowning for some time.
  • You’ve attempted to borrow your way out of the hole but it is only getting deeper.
  • Your employment situation and income changed beyond your control.
  • You can’t afford to repair the vehicle.
  • You can’t afford to repay the title loans.
  • You are struggling just to cover your basic living expenses.

I strongly recommend that you find a good local bankruptcy attorney and have a free discussion about what bankruptcy would mean for you. Bankruptcy is the fastest way to get a fresh start for the least amount of money.

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I’d talk to an attorney now but discuss when the best time to file for you will be. I would think it would be better to stop payments, let collections move along with a smile on your face, and when you become employed again, then file. It would be a shame to file now but only accumulate new unmanageable debts before your income returns.

This is a stressful time for you. I always feel there is no sense wasting a perfectly good mistake. You can learn from this and do better moving forward. In the future, you will be more aware that when you have to borrow to make ends meet, that’s a warning sign you are in trouble.

My prognosis is that you will wind up fine. While you will be someone that filed for bankruptcy, you’ll rebuild your credit even better, you will also be in a much better and safer position to build your emergency savings, live within your income, and plan for a better financial future.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

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Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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