Filing bankruptcy to deal with only one creditor might seem extreme, but title lenders are often a “wolf in sheep’s clothing.” Sometimes you need to take extreme measures like filing bankruptcy to deal with the threat.
Several years ago I represented a single mother who made the mistake of taking out a car “title loan.” She didn’t think about the terms–her family was in trouble and needed money fast. She didn’t have any savings, but her car was paid for so she went to the one place she could get money quick–the nearest title lender.
My client needed $1,000, but only earned $1,200 per month. No problem! The title lender gladly loaned the money because her car was worth over $3,000. She didn’t even need a credit check. Wow!
Problem was that the loan was made at the rate of 300% per year and was due, in full, just 30 days from when she came to see me about it. After she was allowed to pay on the loan for a year, she owed a lot more than she had borrowed. The title lender didn’t care that she had paid back more than the car was worth. After all, if she missed a payment, then the car would belong to the title company.
Fortunately, I filed a Chapter 13 for her and got her car back. I also sued the title lender in Bankruptcy Court because the terms of the loan were so unfair. We ended up with the car returned, the loan forgiven, her title back and her attorney’s fees paid. Unfortunately, thousands of people are preyed upon by these wolves, who don’t know how to get help. Filing bankruptcy is sometimes an option to be considered.
After asking the creditors lawyer why a company would make a loan at such a predatory interest rate, he told me: “if companies like [his client] didn’t exist, some people couldn’t get credit.”
A wolf in sheep’s clothing indeed.