Can I change the interest rate on my car title loan in bankruptcy?

In a chapter 7, no.

In a chapter 13, yes.

In a chapter 7 case, we can list the title loan, check a box that says that we will reaffirm or keep the loan, and you can keep the vehicle.  But, you keep the exact same payment terms:  same interest rate, balance, monthly payment amount, etc.  So in a chapter 7, no, you cannot change the interest rate.  You can always try to negotiate, but it seems hit and miss with my clients when they try to negotiate a different amount with someone who already holds the title to their vehicle.

In a chapter 13, yes, we can change the interest rate to something called the Till rate, which currently is 5.5%.**  So, in a chapter 13, you can change the interest rate on your title loan, usually about 250%, down to 5.5%.  This doesn’t change the outstanding balance, but it sure cuts down those future interest payments.  

 

**The Till rate is based on a Supreme Court case called TILL V. SCS CREDIT CORP. (02-1016) 541 U.S. 465 (2004).  I have linked it if you would like some light reading.  I would warn you that the Supreme Court does not generally use cute little pictures made from Microsoft Paint (unlike this blog).