What is a money emergency? It can be a short-term crisis, like not having enough money to pay the electric bill until your next payday over a week from now when the temperature is forecast to be in the single digits for the next five days. Or your child needs unexpected medical treatment for an allergic reaction, and the urgent care center requires upfront payment or insurance coverage, and you do not have either.
Whatever your crisis, chances are you have seen an ad for a car title loan. Since you just need to borrow cash until your next payday, it sounds like a perfect solution, right? Not necessarily.
The Federal Trade Commission has recently begun to target the advertising and lending practices of these companies. The Ohio Attorney Generalâs office has even dedicated a page on its website to the potentially disastrous results of car-title loans.Â
Car title lenders appeal to the crisis mindset of targeted consumers with a tempting deal that seems like the light at the end of the tunnel. Apparently such tempting ads are working: according to the Federal Deposit Insurance Corporation, over 1.1 million American households used an auto title loan in 2013. But in many situations, the light at the end of the tunnel is the allegorical oncoming train that will rumble over any prospect of financial recovery, even if the short-term crisis is averted.
Ironically, taking out a payday loan may be an effort to avoid bankruptcy. But the default on the payday loan may actually expedite your need to file bankruptcy, and you may end up losing your car to repossession by the lender when it might have otherwise been protected by filing for bankruptcy.
Before resorting to a payday loan, investigate other options that may make more sense in the long-term, rather than turning to a short-term solution.
Consult a bankruptcy attorney who is familiar with bankruptcy, debt collection and payday lending laws to determine the best way to meet your immediate obligations without risking your financial future.