Payday Loans Debt Consolidation

Is It Possible To File Bankruptcy For Payday Loan Debt?

It is very much possible to file bankruptcy for payday loan debt, but it is not advisable. If you owe an overwhelming amount of payday debt, there are better alternatives to pay them off. Bankruptcy is a legal remedy that can help you get relief from your debts, but when you go for this, you are put on a financial road that is scary and full of thorns. The financial recovery process after getting bankrupt is a very tough one. Bankruptcy stays on your record for 7-10 years. However, as long as the question whether bankruptcy can be used as an option to get rid of your payday debt problems, the answer is yes. Even though the structure of cash advances debts is different from conventional loan programs, they are still considered as just any other type of unsecured loans. It is however, important to note that states do not have separate laws for bankruptcy cases. If you want to file a bankruptcy petition, you will have to follow the federal laws and file your petition in a federal court. There are several bankruptcy courts that run within the ninety four judicial districts in every state. A single state can have more than one judicial district and a single judicial district can have more than one bankruptcy court.

Different Types Of Bankruptcy

Before you file bankruptcy for payday loan debt, first you must learn about the different types of personal bankruptcies that the US laws have provisions for. In general, you can file either under chapter 7 or chapter 13. When you get bankrupt under chapter 7, all your assets and properties are liquidated and then the bankruptcy trustee appointed by the court pays off your creditors from the proceeds thus received. The process may even cause you to lose your home, car, and other assets. However, there are also provisions for certain bankruptcy exemptions. On the other hand, when you go bankrupt under chapter 13, the court interferes and orders the lenders to work out an affordable repayment plan so that you can pay off your debts and start your financial life afresh. Though the second options sounds better and attractive, it is important fro you to understand even this type of bankruptcy is going to damage your credit score. Therefore, you must study all your options thoroughly before deciding to go for bankruptcy.

Bankruptcy And Payday Loans

You are not the only one who is planning to file bankruptcy for payday loan debt. Thousands of people have already gone bankrupt because of these predatory lending programs that often trap borrowers into a dangerous cycle of debt, coming out of which often turns out to be an impossible task. Short-term cash advances are not just unconventional lending programs; they are also worst ones available in the market.

Discharge Of Debts

The most important thing that you must be aware of is that the state laws may play an important role in determining whether payday loan debts can be discharged in bankruptcy or not. When you file bankruptcy for payday loan debt, whether the debts will be discharged or not depend on how the states define payday loans. The payday loan laws applicable in your state are also taken into account.

Overall, it is not at all an easy thing to decide whether you should file bankruptcy for payday loan debt or not. You are recommended to discuss your situation with an expert bankruptcy attorney first, as they will help you make an informed decision in this regard.

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