As a Georgia bankruptcy attorney, I hate title pawn loans. Title pawn loans and Chapter 13 bankruptcy can be a little bit tricky because some potential clients will lose all of their ownership interest in their vehicle before a case can be filed to protect them.
For example, let’s say you have a Georgia consumer who borrows $1,000.00 for XYZ Title Pawn Company. Let’s say that this Georgia consumer has to miss work for two months because of cancer treatments. In this example, let’s say that it has been 61 days since his title pawn contract has expired. He is really worried that he may lose his car.
He desperately needs this car to get to work and to future cancer treatments. This Georgia consumer then tells his neighbor about his plight. His neighbor then advises Georgia consumer to get meet with an experienced, happy and energetic bankruptcy attorney named Jeff Kelly. Can Chapter 13 save this Georgia consumer? Unfortunately, the answer is no because the title pawn contract has expired and the 30 day grace period is over.
Section 44-12-131(b)(1) of the Georgia Code states that “There shall be a grace period on all pawn transactions. On pawn transactions involving motor vehicles or motor vehicle certificates of title, the grace period shall be 30 calendar days.”
Title Pawn loans are extremely different from regular car loans. Once a title pawn loan has expired and the 30 day grace period has expired, the ownership interest in the car automatically transfers to the title pawn company. In contrast, if you have a regular car loan, your ownership interest in the vehicle does not transfer until the car has been repossessed and sold at auction.
“But wait! What If I am still in possession of the vehicle? Am I protected from the title pawn company?”
Unlike regular car loans, your ownership interest in a car that is subject to a title pawn loan transfers after the expiration of the contract and the 30 day grace period even if you are in possession of the car in question. A title pawn company does not have to repossess your car to own your car.
What should a person do who has title pawn contract that has expired and gone past the grace period? A person in this situation has two choices (1) surrender the car to the title pawn company or (2) try to work out some type of deal with the title pawn company so that you can keep it.
I wish I had something better and more hopeful to say about title pawn loans but the truth is that these are a really tough loans. In a Chapter 13, the interest rate on a title pawn loan can be lowered to as little as five percent but if the ownership interest has already transferred, bankruptcy won’t save it.