Christina Cooper remembers it was a muggy summer night when she came to terms with a painful reality.

Bill collectors were after her for medical bills, and she owed several thousand dollars on her furniture. Weighing most heavily, though, was the $2,700 debt to Savannah, Georgia-based TitleMax, the nation’s largest title lender, which lends money at triple-digit annual interest rates in exchange for a customer’s car title. In Georgia, these “title pawns,” as they are known, are allowed to carry much higher interest rates than traditional loans, and defaulting on them means the company can repossess the car, a vital lifeline for rural families like Cooper’s.

The working mother of three didn’t know how to make the math work to pay what she owed. She couldn’t earn any more each month, and she was already relying on food stamps. Last July, she swallowed her pride and filed for Chapter 13 bankruptcy, a legal process that enables debtors to keep their assets while they work on regaining their financial footing. Normally, Chapter 13 bankruptcy clears some debts and reduces payments on others through a court-approved repayment plan that the debtor can afford.

But Cooper’s lawyer advised her to not include TitleMax, one of her largest creditors, as part of that repayment plan, which has her paying other creditors at an annual interest rate of about 5%. Instead, she would keep paying TitleMax directly at the original terms of the pawn — around 119% per year.

That’s because, in 2017, TitleMax won a key legal battle: A federal appeals court ruled that because the title lending industry in Georgia operates under state pawn shop statutes, companies could sidestep the protections available to debtors in a Chapter 13 bankruptcy.

Before filing for bankruptcy, “it was really hard to get by and feed my kids,” said Cooper, who earns about $2,000 a month working in sales for a regional furniture company based in Blackshear, Georgia. “Now, it’s still really hard.”

Every year, hundreds of Georgians file bankruptcy while owing money to title lenders. An investigation by The Current and ProPublica found that even though the pawn shop loophole applies to all title lenders in Georgia, TitleMax’s customers feel its impact the most.

To get a window into this issue, The Current and ProPublica obtained data on cases involving title lenders that were filed in 14 southern Georgia counties. We identified 142 title pawn cases filed from 2020 to 2022 that had court-approved repayment plans.

An analysis of these cases shows that in more than 70% of bankruptcies filed by its customers, TitleMax had its debt excluded from their repayment plans, allowing the company to seize the car that served as collateral or recoup the full amount owed.

By contrast, debts owed to TitleMax’s competitors in Georgia were excluded from about 30% of their customers’ repayment plans, the analysis shows. (The news organizations sought bankruptcy case data from all eight of Georgia’s Chapter 13 bankruptcy trustees, but only one of them provided the data. For more, see our methodology.)

This difference reflects how proactive TitleMax is in going to court or invoking the legal loophole when the company is included in repayment plans, according to the analysis, as well as interviews with bankruptcy filers, attorneys and trustees.

The company’s aggressive legal stance has also led some Georgia bankruptcy attorneys, like Cooper’s, to preemptively exclude the company’s debt from their clients’ repayment plans to avoid fighting what they see as a losing battle.

“You hate to see it happen. If you have a TitleMax title loan, you are screwed,” said Elaina Massey, who oversaw the cases analyzed by The Current and ProPublica. As a bankruptcy trustee, she works with bankruptcy filers, verifies financial information and oversees repayments to creditors.

TMX Finance, the parent company of TitleMax, did not respond to requests for comment.

Bankruptcy experts say the legal loophole wouldn’t exist if it weren’t for a Georgia law that regulates title lenders as pawn shops — particularly a clause stipulating that the pawned property is “automatically” forfeited once the customer defaults.

Georgia and Alabama are the only states that regulate title lenders this way, making them the only places where the appeals court’s ruling is applicable.

Liz Coyle, the executive director of Georgia Watch, the state’s leading consumer advocacy group, said she hadn’t known about the legal loophole and its impact on debtors until The Current and ProPublica contacted her about it.

“You’re joking. TitleMax can do that?” said Coyle, referring to the company’s ability to sidestep Chapter 13 protections. “We already knew how abusive these title lenders are, but this takes it to a whole new level.”

Coyle said the legal loophole is yet another reason to pass regulatory reforms for title lenders. Some Georgia lawmakers have been trying and failing for more than two decades to put title lenders under state banking regulation and usury laws.

In their push for reform, lawmakers’ primary goal has been to reduce sky-high interest rates that no other financial institution is allowed to charge. But the fact that reform could also have a positive effect for Georgians filing for bankruptcy could help rally more legislators to this cause, said state Rep. Josh Bonner, a Republican from Fayetteville who sponsored the most recent reform bill in March.

“Many of us want to help hardworking Georgians, and this law, as it stands, does not do that,” Bonner said of the state’s current title lending regulation.

Chapter 13 is particularly prevalent in Georgia, according to federal court data. For the past decade, Georgia has had the most Chapter 13 cases — an average of 23,000 per year — in the nation, despite having a fraction of the population of states like California or Texas. Per capita, Georgia’s rate of Chapter 13 filings is nearly triple that of the country as a whole.

Part of Chapter 13’s appeal to consumers is that some attorneys will file a Chapter 13 case for little or no money up front, a practice that is particularly common in Southern states like Georgia. Instead, attorneys, like creditors, get paid over the course of a court-approved repayment plan. By contrast, in Chapter 7 bankruptcy — the more common form of bankruptcy in most other states — the attorney fees are typically due before filing.

People who file Chapter 13 cases in Georgia are generally in the same demographic groups that title lenders target for their high-cost, short-term financial product, according to Coyle of Georgia Watch.

As The Current and ProPublica have reported, the nearly 500 title pawn storefronts in Georgia are disproportionately located in low-income areas and communities of color. Those same areas are home to a disproportionate share of Chapter 13 filers, ProPublica has reported.

Bankruptcy attorneys say that while title pawns may not be the only cause of their clients’ bankruptcy, that debt is often a precipitating factor. Clients “are struggling — and they are often struggling due to title loans,” said Lorena Saedi, a bankruptcy attorney who runs her own firm in Atlanta. The industry, she said, preys on them, and “by the time I meet them, they have little to no protection.”

Title lenders advertise their products as a quick way for people with bad credit to get desperately needed cash. But confusing sales practices and the high interest rates allowed by Georgia law can trap customers in a cycle of debt. Title pawns have a 30-day term, but they can be renewed indefinitely as long as borrowers make the monthly interest payment.

Most title pawns in Georgia take far longer than a month to pay off, including those issued by TitleMax and TMX Finance’s other brand, TitleBucks. Our analysis of vehicle liens placed by the two brands from July 2019 through the end of 2021 shows that at least 60% of their title pawns lasted six months or more.

If these recurring payments lead debtors to default, their vehicles could be repossessed, a particularly damaging outcome for the many Georgians who need their car to get to work.

To try to avoid repossession, some debtors turn to Chapter 13 bankruptcy. But that avenue of relief has been severely constrained since TitleMax won its 2017 appeals court case.

The company launched its legal case in response to the financial difficulties of a customer in Columbus, Georgia, who had fallen behind on his title pawn and filed for bankruptcy. As was typical in Chapter 13, while the case proceeded, an automatic stay went into effect that prevented creditors like TitleMax from repossessing the debtor’s property. The proposed repayment plan had TitleMax being paid back at a 5% annual interest rate.

TitleMax went to court, arguing that when the debtor defaulted, state pawn shop statutes automatically transferred ownership of the car to the company. The bankruptcy judge initially denied TitleMax’s motion, ruling that a title pawn was like any other debt that was secured by property, and a federal district court judge affirmed that ruling.

TitleMax appealed to the 11th U.S. Circuit Court of Appeals, which ruled in the company’s favor in December 2017. Two of the three judges on the panel agreed with TitleMax’s rationale that Georgia law exempted the car from bankruptcy proceedings and made it TitleMax property: “The pawnbroker didn’t have a mere ‘claim’ on the debtor’s car — it had the car itself,” they wrote.

The third judge dissented, writing that the ruling enabled “Georgia title pawn lenders to invent loopholes in order to evade the jurisdiction of the bankruptcy courts.”

Bankruptcy attorneys in the state were taken aback by the ruling, which gave title pawns a unique status. “You know that saying? ‘If it looks like a duck and quacks like a duck and walks like a duck, it’s a duck.’ The 11th Circuit says, ‘It looks like a loan, it acts like a loan, but it’s not a loan,’” said R. Flay Cabiness, a bankruptcy attorney based in Brunswick, in southern Georgia.

The decision may have ramifications for hundreds of debtors in Georgia each year. By analyzing a random sample of Chapter 13 cases across the state, The Current and ProPublica estimated that about 2,500 people with title pawn debt filed for bankruptcy between 2020 and 2022. (This covers data for the state, not just Massey’s jurisdiction.)

Bankruptcy attorneys across Georgia have various strategies to help their clients discharge title pawn debt.

Smaller title lenders, which make up more than a half of the nearly 500 title pawn stores in the state, generally agree to be included in the court-approved repayment plan, as they don’t have the resources to wage protracted legal battles with their customers, said Marc Metts, a Douglas-based attorney who represents debtors in southern Georgia. “Those lenders are local, and these customers are local,” he said. “Generally, we can find a way to work together.”

TitleMax, however, has a more maximalist standard of operation, bankruptcy attorneys around the state said.

Brandon Honsalek, who practices in the greater Atlanta area, said he puts title pawn debt into repayment plans and then holds his breath waiting to see if TitleMax objects. Recouping every dollar is “a key part of their business strategy” even if it costs them billable hours to do it, he said. “They are the 800-pound gorilla.”

TMX Finance is by far the largest title lender in the state, with more than 200 store locations between TitleMax and TitleBucks. Its brands issue new title pawns for about 47,000 vehicles per year, more than half of all such new pawns issued in the state.

Cabiness, the lawyer in Brunswick, said that in his experience, TitleMax will intervene proactively to protect its rights. He counsels his clients with TitleMax debts to keep paying the company directly throughout their bankruptcy case.

That’s the same advice that Jamal McRae got from his attorney when he filed for bankruptcy last year.

Jamal McRae and his wife, Shaketha, describe themselves as hardworking Georgians, proud landowners in Coffee County, in an area about 130 miles southwest of Savannah near the state’s vibrant Black Belt.

Jamal McRae works for a transportation company that chauffeurs Medicaid patients for doctors’ appointments in larger Valdosta or Savannah. Shaketha McRae works as a tax preparation specialist. But the COVID-19 pandemic was tough on them, as it was on many rural Georgians. They worked fewer hours than they used to, as they had to help care for extended family members in two counties. “We couldn’t keep our heads above water, no matter how hard we worked,” Shaketha McRae said.

In the fall of 2021, expenses started to overwhelm them. Jamal McRae, because of his checkered financial past — he had filed for bankruptcy before — had few options for getting a loan. In November, he went to the TitleMax store in Douglas without telling his wife, whose strong views against the company were well known to him, thanks to her own past experience with it.

McRae took out two title pawn contracts, one for a GMC Yukon, which he used for work, and the other for a motorcycle, which their teenagers rode. The total amount of the title pawns — $8,100 — was more than twice his monthly income. The monthly interest payments alone totaled about $1,100, or nearly a third of his income.

In January 2022, McRae said, the bills — living expenses plus payments for a third family vehicle, on top of the TitleMax debt — became too much. He filed for bankruptcy, hoping to keep his vehicles from being repossessed, a strategy that had worked in his previous bankruptcy.

But McRae’s bankruptcy attorney told him that might not be possible. A court-approved repayment plan was created for McRae, but the TitleMax debt wasn’t part of it. McRae’s attorney told him to keep up with the payments under the original terms — or he would lose the two vehicles to TitleMax, despite the bankruptcy proceedings.

By contrast, McRae got relief on payments for the family’s third vehicle, a Toyota sedan, which was financed through a local car dealer. Under the bankruptcy plan, he is now making payments to the dealer at a 5% annual interest rate.

Jamal McRae didn’t pay TitleMax for four months while the bankruptcy case was being processed. That prompted the company to file for a motion in May to repossess the two pawned vehicles.

The following month, tragedy rocked the McRae family. Their 19-year-old son, Savion, was shot and killed. Their grief blurred out everything else — including their money problems. In close-knit Douglas, most people knew of their son’s death. TitleMax’s local store manager offered condolences but not any debt relief, Shaketha McRae said.

The parties struck a deal in August that compelled Jamal McRae to discharge his debt to TitleMax via six monthly payments of $1,677 — far larger payments than creditors in the repayment plan were receiving. But roiling with grief and barely able to get through daily routines, McRae did not make the payments. Later that fall, he told TitleMax’s store manager to go ahead and repossess the two vehicles because he didn’t have the cash to pay the company.

“It’s a horrible feeling. Here we are, still grieving our loss, and all this company cares for is its money,” Shaketha McRae said. “I don’t know how anyone is supposed to deal with all these pressures.”

TitleMax did not respond to requests for comment.

Down the road in Alma, Cooper was facing her own struggles.

Cooper had been taught, both by her parents and at church, that God helps those who help themselves. So she felt ashamed that she had fallen so far into debt, despite living frugally. “I was never someone who prayed for wealth,” Cooper said. Last summer, as bill collectors kept calling, “I was just praying for strength, so I wouldn’t get sick and miss a paycheck,” she said.

Cooper’s family helped her find a bankruptcy attorney. He didn’t try to put her title pawn debt into her repayment plan. He advised her that if she wanted to keep the family’s only car, she should pay off TitleMax at the terms the company demanded. “He said it takes a real wheeler-dealer to win against TitleMax,” she recalled.

Cooper’s court-approved repayment plan will last for three to five years. During that time, she will pay off her other creditors at either a 5% or 4% annual interest rate. Her bankruptcy plan set out $150 monthly payments for those debts and her attorney fees, compared to $337 per month to TitleMax, even though the title pawn debt was less than what she initially owed to the other creditors.

Cooper’s current employer is one of her creditors. She picks up as many shifts as she can to pay for gas and her children’s clothes and school supplies, after deductions made to satisfy her Chapter 13 obligations. Food stamps help offset rising costs and give her hope that she can get rid of the title pawn debt by the end of the year. Her biggest worry is that her aging Ford Escape will break down, leaving her without a way to drive to work.

“We live out in the country. It’s quiet and peaceful. But if my car stops working, then I stop working. I don’t know what would happen to us next if that happened,” Cooper said.

Cooper wants to stay in Alma, a town of about 3,000 that is known as the blueberry capital of Georgia. The quiet, the safety and the sense of community she has in her hometown makes her want to raise her kids there.

Staying in the country, though, comes with limitations, Cooper says. There are few high-paying jobs for people with young families like hers, and few opportunities for economic mobility. For now, her planning remains focused on the short term: working through her debt and managing the uncertainties of raising her rambunctious kids.

“I was scared when I filed for bankruptcy. But I knew that if I was going to make it in this world, it was my only option,” Cooper said. “One thing is for sure, for people like us, we have a lot of chips stacked against us.”