With the economy still struggling to recover, many Alabamans have found themselves facing financial challenges. A change in income or unemployment can leave these individuals in a bind for money, and may lead them to take drastic measures. While some of these measures are viable options to help these individuals get back on their feet, others are more likely to drive the individual deeper into financial trouble.
One of these questionable opportunities is the car-title loan. Under these loans, borrowers agree to lend car owners money in exchange for repayment of the loan, loan fees, loan interest, and an interest in the title of the car. This means if the loan is not repaid, the car can be repossessed and sold. According to the Center for Responsible Lending, the car-title loan industry makes $4.3 billion in fees on loans totaling only $1.9 billion. The average loan is $1,042, but after fees and interest accrue, most individuals look at having to pay over $3,000. These loans can leave an individual trapped, and many find themselves in a worse position by being more in debt and without a car.
When an individual faces tough financial circumstances and is unable to pay on a loan, the consequences may leave the individual unable to visit family, find or keep a job, or hold other major obligations. Luckily, these individuals can get legal help so that they can get back on the road to financial stability.
Perhaps the best way for these individuals to find debt relief is to file for bankruptcy. Under a Chapter 7 bankruptcy, debt is eliminated after the individual's assets are sold to pay off creditors. Though this may still leave an individual without a car and in a bind, the bankruptcy filing may temporarily prevent the Repossession, buying the individual time to figure out a new plan. Once the debt is eliminated, then the individual can focus and moving forward with life. An experienced Alabama bankruptcy attorney can walk an individual through the bankruptcy process and help them see the light at the end of the tunnel.
Source: South Florida Times, "Downside of Car-Title Loans: Repossessions Likely in 21 States," Charlene Crowell, Jul. 19, 2013