Virginia residents who have pawned their vehicles and who then file for Chapter 13 bankruptcy may wonder whether the vehicle will still be considered part of their estate. According to a decision made in a Georgia district court, if the vehicle is still in the 30-day grace period, it is counted as part of the bankruptcy estate. However, this may differ from one jurisdiction to another.
In this case, a man pawned his 2006 Toyota Avalon and then filed for Chapter 13 bankruptcy without redeeming his car. However, the filing occurred within the 30-day grace period for the title loan. Title Max, the company holding a secured claim, argued that since the bankruptcy was confirmed after the end of the grace period, it was not part of the bankruptcy estate. Both the bankruptcy court and the district court disagreed.
In a Chapter 13 bankruptcy filing, a person is able to keep some assets. A payment plan is arranged that pays back creditors in three to five years. In this case, the court argued that Title Max would either be paid under the pawn agreement or could seize the vehicle if the plan payments were not received.
A person might struggle with debt for a number of reasons including unemployment. Some people may hesitate to consider bankruptcy because they believe a number of myths about it. For example, they might believe that filing for bankruptcy is irresponsible, that they will lose all their property, or that they will never be able to rebuild their credit. However, none of these are true. Filing for bankruptcy can allow people to get back on their feet financially and begin improving their credit. It puts an immediate stop to creditor harassment. With Chapter 13, a person has the opportunity to reorganize debt into an affordable payment plan.