A recent report has indicated that residents of McLennan County, Texas, are having their vehicles repossessed by payday loan companies at a faster rate than any other county in Texas. Many residents are looking for ways to stop the repossession of their vehicles after defaulting on their loans.
County residents have been using the titles to their cars to get auto title loans from the payday companies. The title is used as collateral for the loan. However, according to data from the state, in the first half of 2012 cars were being repossessed at a rate of two per day. The average loan is for less than $1,000. The interest rates on the loans are high and a borrower can end up paying thousands of dollars. Losing a car over a small loan can be particularly devastating, because in could mean that the borrower loses his way to get to work. People can end up losing their jobs over these loans. However, payday loans are easy to get. They usually do not require a credit check. Often people get them to meet a minor need, like paying a doctor bill or rent. However, by having a car repossessed the small loan ends up costing a huge asset.
Texas residents may feel trapped by the inability to pay their debts. Many may be facing the possibility of losing their car or even their home. But, there are ways to prevent the loss of these important assets. Some lenders will negotiate with the borrower to refinance a loan or grant extensions. The borrower can attend credit counseling as part of the refinancing agreement to learn about how to better manage their debts. Another option is filing a petition for a Chapter 7 bankruptcy. Bankruptcy protection will halt any repossession, foreclosures or other debt collection methods.
Texas residents should remember that bankruptcy was created to help people get fresh starts. Bankruptcy is a form of debt relief and can help with credit card debt, car loans and even mortgages and avoiding foreclosure. In some situations, filing for bankruptcy can be the best option for stressful financial problems.
Source: wacotrib.com, "Payday lending has strong foothold in McLennan County, which leads state in car repos," Cindy V. Culp, Dec. 30, 2012