Cash loans from websites and companies, similar to payday loans, can come with high rates and lots of payments.
In fact, a small loan of only a few thousand dollars could end up turning into serious debt. Fortunately, these types of loans can be cleared in Chapter 7 bankruptcy.
Bankruptcy is often a choice for people who find themselves unable to keep pace with the terms of these loans, credit card payments and medical bills.
Chapter 7 bankruptcy is typically the fastest form of bankruptcy, and doesn't require you to make regular payments to clear your debt. Once debts are discharged, debt collectors are legally prohibited from harassing borrowers with phone calls or letters about those debts.
If you would like to learn more about Chapter 7 bankruptcy and how it may help, speak with a local bankruptcy lawyer. You can get a free case evaluation with a bankruptcy lawyer near you when you complete the form on this page. We'll connect you right away!
Payday loans, like high-interest loans, can seem like one way to make up for a short term shortfall financially.
A payday loan is billed as a short-term solution for consumers who are short on cash. However, the terms of many payday loans are structured in a way that can put borrowers in a hole quickly. Typically, a payday loan is a loan offered in exchange for the borrower writing a check with a future date on it, with the original amount plus a fee. On the borrower's next payday, the borrower returns to pay off the loan, in theory, with their paycheck, as well as the additional fee.
The problem occurs when a borrower can't pay off the original loan. When they can't pay the loan off, the lender will roll over the balance for another week or two, for a fee. So the same initial loan balance is still on the books, but the borrower has now paid two fees, with the threat of more fees that can add up quickly.
In essence, what should have been a quick loan for a fee has become a burdensome and fast-growing financial problem for the borrower, who is likely already strapped for cash.
Because you don't put down any collateral for these loans, like a house or car, this type of debt is considered "unsecured." This means that creditors of this debt may not threaten to take away your home or car or other property. They may, in some circumstances, try to garnish your wages or personal savings accounts. They may even file a lawsuit.
Fortunately, these type of debts may be cleared in both Chapter 7 and Chapter 13 bankruptcy. Also, bankruptcy's automatic stay is designed to stop wage garnishment, lawsuits and other types of collection during the bankruptcy process.
So if you're feeling the heat from these types of loans or other bills, you may want to take action. Remember: Chapter 7 bankruptcy is designed for people with little regular income. So even if you can't make regular payments you may be able to clear your debt.
Bankruptcy is typically the result of loans and debts that got out of control for the individual. Avoiding payday loans may be a good way to stay out of certain kinds of debt, and a good way to recover more quickly and more solidly after bankruptcy.
If you would like to talk about your bankruptcy options, then you may want to contact one of our sponsoring bankruptcy attorneys. Just fill out our free case evaluation form, and we will connect you right away with a local bankruptcy attorney.