Three Things You must Know about Filing Bankruptcy to Get Rid of Payday Loan Debt
If you are considering filing bankruptcy in an attempt to get rid of your mounting payday loan debt, there are several things that you need to keep in mind. The US laws have certain legal provisions associated with bankruptcy payday loan cases. It is important for you to be well aware of the various legal aspects associated with the same. Following is a brief rundown on it.
Since payday loans work differently as compared to the traditional lending programs, there are no specific guidelines on whether the amount of money you owe to such lenders should be discharged as part of the bankruptcy process or not.
In most cases, it is entirely up to the judge to make a final decision in this regard. If you are lucky, you may be able to get rid of the debts resulting from such cash advances, but there’s no guarantee.
When you are filing bankruptcy, you should usually wait for the final judgment from the court before you make repayments to your creditors. In usual circumstances, the laws impose a restriction on the creditors, prohibiting them from giving collection calls to the debtor (the applicant) or ask him/her to make the repayment. But, the problem here is that the creditors you owe the payday loan debt are usually backed by personal checks. So, they may try to cash those checks as soon as possible, particularly before the actual court proceedings start for your bankruptcy case. It is again up to the court to decide whether they will allow those creditors to retain the money thus received or will ask them to make a refund. In most cases, the court goes with the latter. After all, it is quite unfair that one creditor receives the payment even before the final judgment comes in while others get nothing even though they are entitled to get repayment in certain proportion. However, in some cases, even you may be held responsible for the automatic payment to the lenders of short-term cash advances.
Automatic Renewal of the Loan
Though the payday loan debt that you owe is actually a part of an unsecured loan, but the very fact that these loans are automatically renewed with certain amount of penalty charges every next month in case of non-payment, the lenders often try to use this fact in their advantage by making claim that the debtor (you, the applicant) is engaged in a fraudulent activity where he/she is filing bankruptcy just in order to get rid of the loans while the debts are less than 30 days old. Worse, some courts get convinced with this claim while others blame payday loan lenders for their predatory nature.
Things also depend very much on how different states look at payday loan debt. Many states these are days have started imposing certain legal restrictions on the financial instructions that offer these types of loans. For a clear picture on how filing bankruptcy will help you deal with this continuously growing debt problem, you are advised to get some legal help from a genuine and reputable lawyer who have experience in handling such cases.