When financial problems occur, many consumers turn to the ease of a payday loan. This solution, though, can sometimes cause people more problems. When things get worse, what can and cannot be included with bankruptcy becomes an issue. Read on and find out more about payday loans and how they are treated by bankruptcy.
Payday Loans: Convenient but Unscrupulous
If you have a job, you can be approved for a payday loan in minutes. People everywhere have nowhere else to turn when an emergency financial need arises. Not everyone has relatives or friends they can ask for a loan for a car repair or food. Payday loans, however, are also bad for consumers who cannot pay them in full by the due date.
When the consumer is unable to pay the balance, the payday loan business creates a new loan for the consumer with a new due date. The interest is rolled into the loan, and it continues to accrue until it balloons into a huge loan balance that cannot be paid. These loans use predated checks already signed by the consumer. This is not illegal if the consumer plans to make good on the check.
Payday lenders charge extremely high-interest rates and attempt to scare consumers by threatening to turn them into law enforcement. The post-dated checks are the issue, and many consumers are so intimidated and frightened about the check that they agree to another loan to avoid getting in trouble. However, as long as you intended to honor the check when you wrote it, you are not likely to be in trouble.
Payday Loans and Chapter 7 Bankruptcy
Another problem with these loans is that they ask consumers to sign an agreement saying that they understand that payday loans cannot be discharged with a bankruptcy filing. Consumers that believe this may leave it off when they file for bankruptcy. However, payday loans are unsecured loans and can be discharged with a chapter 7 filing. The document the consumer signed has no legal power at all.
Stop leaving checks at the payday lending store immediately. Inform them that you are filing for bankruptcy. As soon as you file and have a case number, call them and give them the case number. After that, they cannot contact you for any reason. If the payday lender contacts you, let your bankruptcy lawyer know about it right away. Payday loans are just one of many kinds of debt you can say goodbye to forever. Speak to a bankruptcy lawyer and find out more.
For more information, contact a firm like Alleyne Law Firm, PLLC.
Share
