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Can You Include Payday Loans in Bankruptcy?

Many potential bankruptcy filers are trapped in a cycle of payday loans, and wonder if they might be able to wipe them out in bankruptcy. The answer is yes, you can include payday loans in a bankruptcy filing. Payday loans are usually an unsecured debt, which is a type of debt that bankruptcy specifically targets.

In fact, many bankruptcy filers have struggled to repay their payday loans, which often come with ridiculously high fees. Once you fall behind on a payday loan, the fees and interest start to rapidly build up, often to the point where it is impossible to pay the loan back.

Fortunately, bankruptcy may help eliminate your payday loan debt. For a free consultation, simply fill out the form below and to connect with a bankruptcy attorney near you.

The Harsh Effects of Payday Loans

Payday loans are developing a bad reputation, and for good reason. The interest rates charged on a single advance payment may reach absurd annual levels of up to 400 percent.

After filing for bankruptcy, you should be wary of taking out more payday loans in the future. In order to avoid the harsh effects of these loans, consider the following alternative loan sources:

  • Local credit unions
  • A cash advance on a credit card
  • Small loans from family or friends
  • A small loan company
  • Payroll advances from your employer

While these options may protect you in the future, bankruptcy may help relieve the troubles caused by your old payday loans.

Because of the increasingly abusive nature of many payday loans, bankruptcy courts frequently have little patience for the demands of payday lenders. As a result, bankruptcy may be able to eliminate your payday loans.

One caveat, though, is that bankruptcy courts will typically not eliminate debts incurred immediately before the proceedings. So, you may have to wait a few months before filing if your payday loan debt just occurred.

Chapter 7 Bankruptcy May Eliminate Payday Loans

Chapter 7 bankruptcy is designed to eliminate unsecured debts, which are debts that your creditor cannot reclaim by taking over some of your property. These unsecured debts include payday loans.

To file for Chapter 7 bankruptcy, there are a few requirements you must meet. These include:

The bankruptcy process may sound like a huge task, but it's relatively pain free and is usually over in just a few months. In addition, you will receive debt counseling that may help prevent future financial woes.

To learn more about including your payday loans, connect with a local bankruptcy lawyer today.

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