Payday Loans Bankruptcy
Can I Get A Payday Loan After Filing Chapter 7
Payday loans or cash advances, check advances, or paycheck advances are short-term loans that are due on the borrower’s next payday. Despite being very high-interest loans, they are appealing because they are instant cash that people borrow when facing an emergency. But for people struggling with other monthly payments, payday loans may lead to a financial crisis.
People having to file for bankruptcy after relying on payday loans for an extended period of time is not uncommon.
What Happens To Payday Loans In Bankruptcy?
Can You Get A Payday Loan While In Chapter 13
Since payday loans are unsecured debt, they can be discharged just like other unsecured debt. When you file Chapter 7 bankruptcy, all the unsecured debt is wiped out meaning you do not have to repay them. But for this to happen, you must list the payday loan in the bankruptcy petition.
Can Payday Loans Be Discharged in Chapter 13 Bankruptcy?
Installment Loans While In Chapter 13
When you file a Chapter 13 bankruptcy, you are required to repay your debts using a court-approved repayment plan. The payday loans will be included in the repayment plan, which means you will repay your creditors within the period of time specified in the repayment plan.
The court may discharge part of the payday loan if you are under hardship and are unable to complete the repayment plan.
What Are Your Rights As A Debtor?
Can Personal Loans Be Included In Bankruptcy
Many payday loan lenders are known to take advantage of borrowers that do not know their rights. One thing they do is include a disclaimer in the paperwork that indicates that the loan is not dischargeable in bankruptcy. But this has no basis in law because the law clearly defines unsecured loans and payday loans fall under the category of unsecured loans.
That means the loan can still be wiped out under bankruptcy regardless of what the disclaimer indicates.
Not All Loans Can Be Discharged
Loans For People With Bankruptcy Discharge
Debtors can file for bankruptcy to get a fresh start. But you cannot use bankruptcy to deceive debtors. You cannot file for bankruptcy 60-90 days after acquiring debt. In fact, the debts you acquire 60-90 days before filing for bankruptcy are non-dischargeable.
This is because it is assumed that any loan taken shortly before filing for bankruptcy was taken because the borrower had no intention of repaying the loan. But people borrowing in the period immediately before filing for bankruptcy is not unusual as far as payday loans are concerned. This is because people turn to payday loans to avoid getting into bankruptcy.
This is why payday loan lenders often object to payday loans being discharged in bankruptcy proceedings. Their argument is often that the borrower acquired the loans in the last 60-90 days with an anticipation that the borrower was going to file for bankruptcy and avoid repaying their debt.
Can Bankruptcy Protect You From Dangers Of Payday Loans?
Can The Cash Store Take You To Court
Since you have to provide a post-dated check, the creditor still remains with your personal check even if you file for bankruptcy, which means they can recover some amount before your bankruptcy hearings.
The lender is entitled to cash post-dated checks but the bankruptcy trustee may still be able to require the lender to return the money. Another danger is that the debtor will be responsible for the overdraft fees of the creditor.