The pawn business is thriving. But pawn shops are not simply doing business with the working poor. Rather, middle and upper income borrowers are taking their valuables to pawn outlets to generate the cash needed for mortgage repayments, vehicle loans, school tuition and even essentials like food and clothing. Pawn industry trade magazines took notice of this trend and even more and more pawn broker agents are opening locations in top quality shopping centers. Specialized pawn stores now look more like earrings stores than merchandise filled pawn shops and they freely solicit wealthy customers. In Atlanta, there is a pawn store called “The Happy Hocker” that has specialized in earrings and looks after advertises itself as the “pawn shop for the rich and famous. very well atlanta title loans
Bankruptcy legal representatives are also viewing these well heeled debtors. As the 2005 changes to the nation’s bankruptcy laws and regulations generally require wealthy borrowers to file Chapter 13, there has been a steady upward climb in the number of personal bankruptcy filings by families who have household earnings of $100, 000 or more. Not surprisingly, many of these high income personal bankruptcy filers have pledged into pawn collectibles, jewelry, consumer electronics, watches and family heirlooms in an effort to raise cash. Scared, ashamed and unsure about exactly how pawn stores work, these pawn borrowers needlessly risk their home if they are not sound the alarm to time deadlines and default provisions.
In most cases, the biggest risk to a pawn lender comes from the standard provisions of the pawn loan. Generally, after arrears, title to the pawned collateral transfers to the pawn broker. Therefore, in general, if a customer is thinking about submitting for bankruptcy, he should file his case before the pawn loan moves into default and/or before title actually passes.
Though bankruptcy laws are national laws and applicable in every state, pawn shop laws will vary from state to state. On the whole a bankruptcy court will look to local regulations to determine every time a pawn loan is in arrears. Local laws will also set out the guidelines about what a debtor needs to do so that his pawn loan away of default – usually this mean tendering any payment.
In most says, a Chapter 13 processing as the pawn transaction is still current will maintain the debtor’s ownership in the property. The programmed stay in bankruptcy prevents the pawn broker from selling the property and the Chapter 13 plan gives the borrower an possibility to pay back the pawn loan as a secured debt. The lender might not exactly get possession of his property straight away, but at least he is aware of that the property is safe.
In comparison Chapter 13 might not exactly be as much help after title has passed. In this situation, the pawned merchandise will not become part of the debtor’s bankruptcy property and therefore the loan is not supplied in the plan. There are some arguments that a clever legal professional might use to bring the pawned property back into the individual bankruptcy estate, but this process is an uphill struggle.
As a rule, as a result, pawn borrowers should try arranging their Chapter 13 cases before their pawn transactions go into standard. At a minimum the pawn borrower should seek legal counsel prior to default to find out more on the applicable state law and the neighborhood bankruptcy procedures that deal with pawn lending options.
Jonathan Ginsberg has utilized consumer bankruptcy law in Atlanta, Georgia for over 20 years. In addition to representing debtors in Chapter 7 and Section 13 bankruptcy cases, Jonathan is a continuing education instructor, assisting other legal representatives learn about new individual bankruptcy law developments and practice management skills.