Florida residents who are experiencing financial problems or just need some extra money often apply for a secured loan. This is a loan that is backed by an asset such as a car or a property title. If a debtor doesn’t make payments, the creditor has the right to seize the asset that was put up as collateral.
A creditor who issues a secured loan may not be able to collect on the loan if the debtor files for bankruptcy. In October, a federal district court judge in Georgia decided that a debtor who filed for Chapter 13 bankruptcy did not have to surrender his vehicle to Title Max. The man had previously pawned his 2006 Toyota Avalon to Title Max in exchange for a cash advance.
The Georgia debtor had filed his Chapter 13 bankruptcy petition after his loan term expired but before the 30-day grace period for collection on the loan had ended. Although the man’s bankruptcy petition was approved after the 30-day grace period was over, the court still found that the man was entitled to relief from collection by Title Max. According to the court, the man’s vehicle was part of his bankruptcy estate.
A debtor who files for bankruptcy may experience many immediate benefits from the automatic stay. Collections agencies are not allowed to contact a debtor who has filed for bankruptcy, and utility companies cannot shut off a bankrupt debtor’s power. If a person owns property that is in foreclosure, filing for bankruptcy may help the debtor to stop the foreclosure from proceeding.