People often have a problem with filing bankruptcy, and that is how to pay for it. Payday loan companies will lend about 500 dollars to anyone with a checking account. There are often no credit checks, and payday lenders quickly hand out these short-term loans.
People become tempted to pay the bankruptcy attorney the 1538.00 for the attorney fees and court costs from getting two or three of these loans and then filing bankruptcy on the payday loan.
We would never suggest doing this, but I understand how this can happen under pressure. The bankruptcy code has a section where if you obtain a debt over 600 dollars just before filing bankruptcy, it will be assumed that you did it with fraudulent intent.
However, these loans are under 600 dollars. And if you obtained payday loans with the intention of repayment and then had unfortunate circumstances, they are not fraudulent debts.
Payday And Check Cashing Loans Are No Different From Unsecured Loans
In filing for Chapter 7 bankruptcy, most payday loans rarely file an objection to the discharge. I have never seen a complaint filed in my career by a payday loan company. Payday loans are no different than any other debts, and payday loans are just unsecured debt like credit card balances. Paycheck advances are governed as a negotiable instrument under the uniform commercial code.
Threats of Prosecution
A payday loan company often takes a post-dated personal check to ensure the loan is paid. Your post-dated check is only a promise to pay the payday loan debt someday from future income. When you issue the post-dated check, it differs from publishing a regular check from your bank account.
A regular check is your statement the funds are presently available. If the party promptly negotiates the check, the funds are there. There is no such promise to payday advances. A payday loan company is gambling that the money will be there. That difference makes payday loans civil and not criminal if the loan is not paid.
A bankruptcy attorney should know this exception, and a payday lender. Payday loans collect using emotional arguments based on fear and uncertainty. Your decisions about your finances should not be someone manipulating your emotions of shame, blame, guilt, and anxiety.
Once you give this matter over to your bankruptcy lawyer, these emotions should end. If you can document threats of criminal prosecution to collect a debt, you may be able to collect from payday lenders for these collection tactics.
Threats of Fraud and Non-Dischargeability
No, you cannot discharge fraudulent debts. If you stand up and admit you intentionally stole from the bank, the debt will not be discharged. But most people don’t do that. Most trustees will ask about home and car loans, not payday loans.
When you are filing for bankruptcy, questions about payday loans are rarely, if ever, asked. A payday lender rarely appears at a 341 or confirmation hearing. I have never seen it done in thousands of cases. When you file for bankruptcy, payday loans are discharged like medical bills.
Payday lenders will use threats, but they are not bankruptcy lawyers. They don’t know how to advise you on the law. They have never worked in a law firm and have little or no knowledge of bankruptcy law. Often they just got out of prison.
Financing Your Bankruptcy with Payday Loans
Again I do not and cannot recommend someone paying their Chapter 7 bankruptcy filing with payday loans. Intentionally doing it is wrong. But I believe both judges and a bankruptcy law firm understand that clients will do what it takes to obtain debt relief in desperation. Since 2005 filing bankruptcy has become more expensive.
The bankruptcy courthouse has made it much more expensive and difficult to file. This prevents the poor from problems clients with higher total monthly income do not have. If you need debt relief, find a way to obtain debt relief by one method or another. It seems that borrowing from a payday loan is no worse than borrowing from family when you know you cannot pay it back.
Damage to Your Checking Account
A Payday loan company will often continue to charge your checking account causing overdraft fees. If you are filing for bankruptcy, it may be best to get a new checking account and close the old one to prevent these overdraft fees.
Payday lenders use these tactics to intimidate you and intentionally cause you harm. They are no different from a wife-beating husband who deliberately harms a wife or children to enforce obedience. The only choice you have to escape the abuse is to leave the relationship and have nothing to do with them.
Filing For Chapter 7 Bankruptcy
The average answer to unsecured debts is a Chapter 7 bankruptcy. You do not need to file a Chapter 13 bankruptcy unless you have non-exempt assets or so much income that you can afford repaying in a Chapter 13 bankruptcy.
Payday lenders are just unsecured debt collectors, and payday loans are discharged no differently than any other debt in Chapter 7. Chapter 13 does pay a higher fee, but you shouldn’t let yourself be talked into a Chapter 13 repayment plan when Chapter 7 is proper. Relieve your financial burden
When attorneys evaluate your case, they should be able to place you into Chapter 7 if you qualify, and you do not need the tools of Chapter 13 to handle tax, foreclosure, or student loan debt. Chapter 7 allows you to discharge what is often 20,000 to 100,000 dollars of unsecured debt for what costs most people 1538 dollars. I cannot understand how this is a hard decision for most people. It would not take a bank or payday loan employee a minute to make that decision.
The Bankruptcy Hearing
Our office is with you at the 341 or Chapter 13 confirmation hearing. The bankruptcy court has to hold these hearings because the bankruptcy code requires it. Your bankruptcy attorney will be with you. Chapter 7 has no repayment plan or monthly payments; your next paycheck belongs to you, not the payday lender. If you owe money for a payday loan, you don’t owe it anymore after discharge.
If the payday loan harasses you after filing the bankruptcy, courts allow you to sue for violating the stay. They cannot ask you for payment after filing your bankruptcy case. Our law office will help you, and you can have a free bankruptcy evaluation. Should you be contacted by any payday lender after filing, be sure to record the call to support any case you have against them.
In filing for bankruptcy, you will need to gather sensitive or confidential information, allowing the judge, trustee, and attorney to evaluate your budget in the bankruptcy proceeding. The attorney-client relationship requires we keep information secure.
Get In Touch To File Bankruptcy On Payday Loans!
We offer a free consultation where we evaluate your total debt and bankruptcy case. I spend two hours with most clients in this free consultation, explaining how to discharge debts in their bankruptcy case. The attorney-client relationship guarantees your conversations remain confidential relationship and necessarily secure. Our free evaluation will discuss how bankruptcy will affect your life for the good. So, contact us now.
Resources for Bankruptcy
If you are considering bankruptcy, don’t delay because timing is crucial. I am here to help you. So, contact my office immediately to start the conversation—Nick C. Thompson, Bankruptcy Lawyer: 502-625-0905.