Can You Get a Title Loan During Chapter 13 Bankruptcy?

If you’re in Chapter 13, money is tight and surprises happen. A blown transmission, a medical bill, or an overdue utility can make you wonder: Can I get a title loan while I’m in bankruptcy? 

The short answer: sometimes, but it’s complicated and risky, and you’ll almost always need court permission first.

This guide explains how Chapter 13 works, why new loans are restricted, what courts require, safer alternatives, and how Titlelo can help you explore options without judgment.

Quick Takeaways

• New debt during Chapter 13 usually requires court or trustee approval. Taking a title loan without permission can put your case at risk.
• Title loans are secured debt (your car is collateral). Courts are wary because these loans are high-cost and can derail your plan.
• Chapter 7 is different: there’s no repayment plan, but lenders rarely approve new credit until after discharge.
• Alternatives exist: credit union emergency loans, family help, hardship programs, and sometimes a plan modification.
• Lenders that will consider you look for a clear title/equity, proof of income, insurance, and (if you’re in Chapter 13) a court order.
• Talk to your attorney first. A quick legal check can prevent case dismissal, repossession, or long-term credit damage.

Understanding Chapter 13 Bankruptcy Basics

Chapter 13 = repayment plan. 

You make monthly payments to a trustee for 3–5 years, who distributes funds to creditors. In exchange, you keep your property and get protection from collections.

Why new debt is restricted: Your plan commits your “disposable income” to creditors. Adding a new payment—especially a costly title loan—can make your plan unworkable. That’s why most courts require approval before you borrow.

Chapter 13 vs. Chapter 7 (liquidation):

• Chapter 13: Ongoing court oversight, strict budget, approval needed for most new credit.
• Chapter 7: Faster case (usually a few months), assets may be sold if not exempt, no ongoing plan. New credit is still hard to get until after discharge.

Typical Chapter 13 timeline:

File → Plan proposed/confirmed → 36–60 months of payments → Discharge (if you complete the plan).

Can I Get a Title Loan While in Chapter 13?

Short answer: Possibly, but only with court/trustee approval—and approvals for high-interest loans like title loans are uncommon.

Secured vs. unsecured debt:

• Secured debt uses property as collateral. A title loan is secured by your vehicle; miss payments, and you can lose the car.
• Unsecured debt (credit cards, medical bills) has no collateral.

Because a title loan is secured and expensive, courts worry it will jeopardize your plan. If your car already has a pre-bankruptcy title loan, Chapter 13 can often restructure it (lower rate, longer term, sometimes reduce the balance to the car’s value). But starting a new title loan mid-plan is a much tougher sell.

Can I Get a Title Loan While in Chapter 7?

Generally harder than Chapter 13, but for different reasons.

• During a Chapter 7 case: Lenders rarely issue new credit because your case is open and your credit is in flux.
• After discharge: You’re free to apply, and some lenders will consider you if you have equity and income. Expect high rates and strict terms.

If you already had a title loan before filing Chapter 7, you typically must reaffirm (keep paying), redeem (pay the car’s value in a lump sum), or surrender the vehicle.

Court Approval Requirements for New Debt

In Chapter 13, expect to file a Motion to Incur Debt with details like:

• Why you need the loan (essential car repair, medical need, housing safety).
• Loan terms (amount, interest rate, monthly payment, length).
• Proof you can afford it without missing plan payments (updated budget, pay stubs).
• Documents (repair estimates, insurance, draft loan agreement).

The trustee reviews and may support or oppose. A judge makes the final call. Emergencies (e.g., urgent medical care, unsafe housing repairs) may be viewed more favorably, but payday or title loans are often denied because of cost and risk.

Alternative Options During Bankruptcy

Before pursuing a title loan, consider:

• Credit union emergency loans / Payday Alternative Loans (PALs): Smaller amounts with rate caps and clearer terms.
• Family or employer assistance: Often low or no interest; still tell your attorney if it’s a significant amount.
• Plan modification: Your attorney may adjust your Chapter 13 payments to free cash for a necessary expense.
• Hardship and community programs: Hospital charity care, utility assistance, local grants for essential home or auto repairs.
• Wait and rebuild: If the need isn’t critical, delaying until after discharge can keep your plan on track.

Want to understand how title loans work overall? 🤔Check out Titlelo’s guide to the basics and eligibility.

What Lenders Look for in Bankruptcy Cases

Whether you’re post-discharge or seeking court-approved financing, lenders typically require:

• Vehicle equity: Clear (or mostly clear) title in your name; loans are usually a fraction of market value.
• Proof of income: Pay stubs, benefits award letters, or bank statements showing you can repay.
• Insurance and documentation: Valid ID, registration, proof of insurance; lender listed as lienholder.
• Court order (if in Chapter 13): Most lenders won’t proceed without it.

If you’re thinking about an online title loan during or after bankruptcy, the most important step is to slow down and vet the lender. Start by making sure they’re licensed in your state. Unlicensed or out-of-state “tribal” lenders often sidestep consumer protections and leave you with little recourse. 

If you’re in Chapter 13, expect any reputable lender to ask for a court order before funding, and be wary of anyone who claims you don’t need one.

The really good news is that you don’t have to look for a trustworthy lender alone.

How Titlelo Helps Bankruptcy Borrowers

Titlelo is a connection service—we help you compare lenders who consider unique situations, including recent or completed bankruptcy.

We take a personalized approach, listening to your story and matching you with the right lender from our network of over 50 partners nationwide. No matter your financial history, vehicle condition, or employment status, we work to find an option that fits your circumstances.

• No judgment: We understand the pressure you’re under and keep the process straightforward.
• Options-focused: We help you explore lenders’ requirements up front so you don’t waste time.
• Guidance: We’ll walk you through documents, timelines, and questions to ask—especially about court approval if you’re still in Chapter 13.

Ready to explore options? Start a quick application to see what you may qualify for.

Risks and Considerations

• Case impact: Borrowing without approval in Chapter 13 can lead to case dismissal or other penalties.
• Vehicle loss: Title loans put your car at risk if you default. Even one missed payment can trigger repossession in some states.
• Budget strain: A new monthly payment can tip a tight plan into delinquency.
• Credit damage: Defaulting after bankruptcy can set your credit rebuilding back years.
• State law limits: Some states ban title loans or cap rates, which changes availability and costs.

Steps to Take Before Applying

1. Talk to your attorney. Ask if a plan modification, hardship motion, or alternative funding makes more sense.
2. Review your plan and budget. Can you truly afford the payment without missing trustee payments?
3. Gather documents. Income proof, repair estimates, insurance, title, and any draft loan terms.
4. Consider alternatives first. A lower-rate credit union loan or plan adjustment often beats a high-cost title loan.
5. If proceeding, get approval. In Chapter 13, file the motion and wait for the court’s order before signing anything.

🗒️Need help figuring out what documents you’ll need, how court approval works, or which lenders will even consider your situation? The Titlelo team is here to walk you through every step. 

We’ll answer your questions, explain lender requirements in plain English, and connect you with trusted partners who understand bankruptcy borrowers. Contact Titlelo.

Conclusion: Proceed with Caution and Legal Guidance

Title loans during Chapter 13 bankruptcy are possible in rare cases, but they come with strict rules, court oversight, and significant risks. The safest path is always to speak with your bankruptcy attorney first, explore all alternatives, and make sure any decision supports your long-term financial recovery. 

At Titlelo, we’re here to help you understand your options, connect with trustworthy lenders, and guide you through the process with clarity and compassion.

Contact Titlelo today to get personalized support.

This information is for educational purposes only and is not legal advice. Bankruptcy laws vary by state and individual circumstances. Taking on new debt during bankruptcy without proper court approval can have serious legal consequences. Always consult with a qualified bankruptcy attorney before applying for any loan during bankruptcy proceedings.

FAQs

Do I need court approval for any amount of title loan during Chapter 13?

Usually yes. Most courts require approval for any significant new debt during Chapter 13, and many trustees set low thresholds (often a few hundred to a thousand dollars). Always check with your attorney before applying. Even “small” loans can violate your plan.

What happens if I get a title loan without approval?

You risk case dismissal, conversion to Chapter 7, or other sanctions. The lender may also move to repossess your car. Unauthorized borrowing is a serious violation of Chapter 13 rules.

Can I use a title loan to pay bankruptcy payments?

Courts generally frown on borrowing to fund your plan payments. If you’re struggling, ask your attorney about modifying the plan, seeking temporary relief, or exploring lower-cost alternatives rather than adding a high-interest debt.

How long after bankruptcy discharge can I get a title loan?

After discharge (Chapter 7 or Chapter 13), you’re free to apply. Some lenders will consider you immediately if you have a clear title, income, and insurance. Expect high rates at first; many people rebuild credit for a few months to access better options.

Will a title loan affect my bankruptcy case outcome?

If you’re still in Chapter 13 and borrow without permission, yes—your case could be derailed. If you obtain court-approved financing and make payments on time, you may be fine, but the extra obligation still increases your risk of plan failure. Post-discharge loans won’t affect the discharge of your old debts, but can affect your financial recovery if you default.