Payday Loans

In bankruptcy, payday loans are usually treated like any other “non-priority unsecured debt” such as credit cards and medical debt. They are different because they are loans based on a post-dated check that the creditor can cash on your payday. There is a chance that you could be accused of writing a bad check, but if you intended to pay the loan back when you wrote the check, you should be OK.

Sometimes payday loan companies tell their customers that the debt cannot be discharged in bankruptcy. This may be because the loan is backed up by a post dated check and intentionally writing a bad check is fraud. However, when the debtor writes a check to the payday loan company, they usually intend to pay the loan back. It is true that any loan taken out in anticipation of bankruptcy without the intent to repay is fraud and can be declared non-discharged by a bankruptcy judge (after a case called an adversarial proceeding). The truth is, payday loans are almost always discharged.

Any contract that says the debt cannot be discharged in bankruptcy is not valid. You cannot waive your right to discharge a debt in bankruptcy.

Like a credit card company, a payday loan company can accuse you of fraud, which would be easier to prove if you took the loan out right before filing. Of course, if you have been forced to continually roll over your payday loan or enter into a monthly payment plan, it would be harder for them to claim fraud.

If you have checks written to a payday loan company and you have decided that you are going to file bankruptcy, you should look into closing the bank accounts the checks are written on and opening a new bank account. If you put a stop payment on the payday loan checks, the bank may not process the stop payment in time and the check will be charged against your account. You may incur some overdraft fees but these can be discharged in bankruptcy as well. It is a good idea to have your new checking account all set up before you file bankruptcy.

If you are relying on payday loans to make ends meet or are trapped in a cycle of renewing payday loans because you can’t make ends meet if you pay your current payday loan, this is a sign that you should seriously look at bankruptcy. Payday loans carry a high interest rate and eat up disposable income that could be used for other things. Bankruptcy could give you a fresh start and put your cash flow back on track.

Good preparation for bankruptcy makes the process much easier. Talking to an attorney well before you file bankruptcy relieves a lot of stress and avoids having to scramble to get things ready before you actually file your case. You may find that just talking to a bankruptcy attorney will improve your cash flow as you learn what debts you can safely ignore while you get ready for bankruptcy. If you are trapped in the payday loan cycle that shows you are not planning your finances out well for the future and have reached a point where it is almost impossible to do so. Bankruptcy will give you a fresh start, get your cash flow straightened out and let you go forward in life without the stress of wondering whether you must pay your overwhelming debts or take care of yourself and your family.

Before you make any major decisions about your payday loan and bankruptcy, it is a good idea to speak with an experienced bankruptcy attorney about your situation. If you qualify, our Washington state bankruptcy attorneys can help you wipe out or “discharge” all of your payday loans. Call us today to see if you qualify. We offer a free case evaluation and a free initial consultation. In most cases, our Washington bankruptcy lawyers can help you eliminate or “discharge” 100% of your payday loans.

Contact one of our bankruptcy lawyers today!