Question:
Dear Steve,
I took a loan from Title Max, and I’ve been paying the interest with $308 every month for almost six months. My vehicle is now messed up, and I’ve had it fixed, but the mechanic informed me about all the multiple problems aside from my main problem & how I do need a new vehicle.
After a couple of weeks, my car completely shut down. I’ve made three payments to Title Max since my vehicle has stopped working, and I’m in a significant bind with even being able to get a new car.
I’m only 22, in school, work full time, and have a 1-year-old daughter. I tried speaking to the general manager, and he said that I still need to pay and they can’t repossess a car that is not running.
How am I able to get out of my loan? First, I need to ensure I can continue getting around, especially being a mom and getting to work. I am stagnant and unable to make significant moves because title max is on my neck. I want to get out of this bind.
Miranda
Answer:
Dear Miranda,
A title loan requires people to pledge their vehicle as collateral to secure the loan.
There is no requirement I’m aware of for Title Max to repossess your car. However, given the clouded title situation, the logical approach would be to consider bankruptcy to eliminate your debt and hope for a reasonable resolution on the title loan.
You can file a Chapter 7 bankruptcy and eliminate all your debt in about 120 days. However, while the bankruptcy will kill the need to repay the title loan, you will still be left with a lien on the title you would have to satisfy to sell the car.
However, your bankruptcy attorney can advise you on how your district typically handles title loans in bankruptcy.
If the bankruptcy eliminates the obligation to repay the title loan and the car is a pile of junk and Title Max does not want it, consider donating it to a local fire department to tear it apart and use for rescue training.
The debt will be gone, and so will the car.
Ultimately, the best way to deal with title loans is never to get one.
Regarding getting a new car, you’ll have to do the same thing we have all done with a bad financial situation and needing wheels, buy a cheap car just to get you back and forth. This might be from a Buy Here, Pay Here lot or something exceedingly beat for cash.
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This situation is not as difficult as it may seem to you. I would not recommend you even consider bankruptcy at this point. That would cost $1500-$2500 that you clearly cant afford. If they ever sue you, bankruptcy might make sense depending on the debt collection laws in your state. You could probably make a settlement arrangement to resolve the suit if you are in a stronger position financially by then. In the mean time tell them where the car is and encourage them to repo it. Also, tell them NOT to call you or your friends and family about this again. Put that in writing to them if necessary. Eric Olsen can absolutely make sure they don’t harass you about this anymore. Once that is done focus all of your efforts and money towards finding another vehicle. If they never sue, you will have a negative account on your credit reports for no longer than 7.5 years since you stopped paying. You may be able to get the negative account removed and your credit rebuilt much faster than that.
You have come to the right place to get help from professionals who want to see you succeed. I will be praying for you.
Kyle Frasier
President & Founder
Cut Up Debt, LLC.
Kyle, thanks for pitching in. The big gotcha in all of this seems to not be the debt but the vehicle with the clouded title. I’ve seen this so many times, the title loan company places a lien on the title and then never removes it, leaving the owner trapped with a car they can’t get a clear title to sell without paying the loan off first or having the buyer approved to take over the title loan payments.
Steve, I see your point. We have no idea what the car is worth or what it would sell for, even with a clear title. I am guessing not a lot, considering the extent of its mechanical problems.
I see it kind of like this: If they were to repo it and sell it at an auction, she would not benefit much. Maybe it reduces her balance by $500-$1000? (Just using a hypothetical number.) If they don’t repo it, she gets stuck with it. If she can get it driveable, she has use of it until the wheels fall off. She could also possibly sell it to a salvage yard or somewhere that doesn’t require a title. Maybe they will give her the same $500-$1000? Either way, I think she is better off than she would be breaking her back to pay off this loan on a car in such bad shape. I tell people daily that there is no perfect way to get out of debt. Every option will have some challenges that must be dealt with.
Blessings, Kyle
Title Max is notorious for not repoing broken vehicles like this one. They told the reader they would not take it back. They don’t want them, so it leaves people in limbo.
The cleanest way to dispose of a low-value car you can’t clear the title is to donate it to the fire department to chop and burn and take the tax deduction. The salvage yard angle can be a problem since you may be required to produce a clear title or proof you own the vehicle clear of any liens. However, with a bit of hunting around, someone is always willing to skirt the rules.
Thank you for this , I’m just trying to get some understanding on my options. Now for the negative impact on my credit, how bad will this affect me? 🙁
Well, that’s kind of relative. It will negatively impact your score unless you take action to rebuild your score. You can listen to this podcast https://getoutofdebt.org/168486/credit-repair-101-how-to-make-your-credit-score-shiny-and-new or read https://getoutofdebt.org/32410/how-to-easily-rebuild-your-credit-and-have-good-credit-again
You can recover from this.
Thank you soo much! I honestly wish I knew then what I know now to tell myself not to sign that agreement. Titlemax definitely shows no remorse… and ive paid them more money than I owe them and that still goes for nothing. In the meantime I’m weighing out my options and learning to budget correctly while I’m in college and balancing my job at the same time. My main concern now is getting around without having to rely on others. But to answer your questions my car is a 2005 Honda CR-V , I’m in the state of Georgia and my car is worth now…probably around $1200-$1800 . I’m going to try my hardest to get it back running so that way they CAN repo it since they cannot while it is not running.
You’ve got a bunch of good people here that care about you and are here to help. This recent podcast on budgets might help as well. https://spotifyanchor-web.app.link/e/TETuTRyBzsb
Just a quick comment. Title Max may never even bother to file a lawsuit. Depends on how much you borrowed, your income, what state you live in, etc. Wouldn’t be surprised if you didn’t pay them they will do enough things that they may be subject to being sued themselves. HELPS has had success with Arguss Law Firm link below going after aggressive creditors. This link has a lot of details on Arguss
https://www.agrusslawfirm.com/blog/titlemax/#:~:text=Yes%2C%20TitleMax%20can%20sue%20you,debt%2C%20fees%2C%20and%20costs.
Thank you so much for this, I definitely want to pay them back asap but they made it so impossible. I didn’t understand the contract when I was signing. I didn’t know renewing it was a separate payment that didn’t even go towards my loan. If I knew this prior I’d never have done that too myself. My question to you is if I don’t pay them the renewal that is coming up because I can’t afford it, will this be something they will put on my credit? Or will they report it to debtors? Id rather pay the debtors then paying title max because I’ll never get my loan down.
If they do or don’t report it to the credit bureaus is not the big issue I’ve seen people face here. The bigger problem is being able to dispose of the vehicle with the lien. If Title Max has a lien on the car, you won’t be able to clear the title without their participation.
Bad credit is very easy to rebuild.
As far as the renewal goes, I think that question has answered itself. You can’t afford it, and the car is not driveable. I think you’ll have to skip it out of necessity, and then we can deal with what comes next.
Eric and I can offer you advice.
I’m about to pay off Title Max after years of them bleeding me dry. When I was establishing credit 6 mos ago I asked TM to report my (great) payment record to the 3 credit bureaus. I was told that they don’t report – at all. They did give me a printout they said I could “take to the credit bureau” to be manually added. What a joke that was. There are no local bureau offices these days.
One potential danger I foresee though: If the matter goes “into collection” it’s possible that either their in-house or outside collectors may indeed report.
Ronda, as you probably figured out, there is no way for a consumer to add accounts like this to their own credit reports. A lender must pay the bureaus to add something to a person’s credit report (good or bad payment history). Banks, debt collectors, etc., all pay for that ability. Title Max was just telling you that to appease you.
Sometimes third-party companies will set themselves up with the ability to report to the bureaus and then charge a consumer a fee to report something submitted to them by that consumer. It is a way to game the system for a significant profit. The credit bureaus hate these services and will often shut them down if they find out what they are doing. They remove the accounts and the consumer is out the money they paid the company to report it.
The bottom line is the positive payment history will not be added to your reports unless Title Max decides to start paying to become a data furnisher. Even then, they probably wouldn’t report an old account that is no longer active with them. Sorry to break the bad news, but you will need to find other ways to establish your credit history.
Since they are not set up to report good payment history, they probably don’t report bad payment history either. You were spot on when you assumed they will either assign the debt or sell it to a debt collector who would start reporting it. That is standard procedure for everyone these days.
Asked Title Max question.
Just answered.