Payday Loans and Avoiding Them!!!!

Online Payday Loans

Regulators both state and federal are cracking down on internet lending. The first step is The Justice Department asking banks to ends all ties with banks that the regulators suspect of suspicious practices. Regulators have gone as far as issuing subpoenas to banks and other companies who handle payments for these lenders. Justice Department investigations continue and are filing suits against such lenders that are charging above what state laws allow. Payday loans have transformed themselves into many different things in order to avoid state law. Payday loan companies attempt to transform into title loan companies and installment lenders.

I have them. Now what?

Did you have an unexpected expense come up that could not wait until next payday? Got stuck in a cycle of robbing Peter to pay Paul? Depending on when the loans were taken out, filing a bankruptcy may help relieve the ongoing stress of the payday loan cycle. Filing a Chapter 7 discharges most unsecured debts including unsecured debt such as payday loans. Some payday loan companies will threaten you that payday loan debts are not discharged through a bankruptcy. This is simply not true. Payday loans and other unsecured debts cannot simply opt out of following the bankruptcy code. However this does not mean that you can go take out a payday loan, file bankruptcy the next day and discharge the debt. Even worse, some debtors have attempted to even take out payday loans in order to pay for their bankruptcy. This is not okay! The payday loan company can object to the discharge of their debt. You are not allow to incur debt knowing that you do not intend to pay the day. The practical side of this is that once you decide you are filing bankruptcy stop using the credit cards and do not take out any more unsecured loans. If you do, you may end up paying those creditors back until the normal contract interest rate which for payday loans can be upwards of 300% or more!

Caveat: Clients sometimes come in wanting to discharge payday loans but then they add that they need to list the Prosecutors office as a creditor. If you write bad checks the obligation to the person you wrote the check to goes away but any criminal liability for check fraud is not discharged through the bankruptcy and therefore would need to be handled separately.