Many potential bankruptcy filers are trapped in a
cycle of payday loans. Payday loans, also known as cash advances or paycheck advances, are short
term loans that are offered at a high interest rate. These types of loans
are often appealing to those who aren’t able to make their monthly
bills. It's understandable; this is a good way to get cash until your
next payday. However, if you're already unable to make your monthly
payments these types of loans can start a cycle that is hard to break,
and due to the fact that they are high interest loans, you may find yourself
in more debt that you began with.
Many filers want to know, can you discharge a pay day loan in a bankruptcy?
First you should know, yes it is possible to have a pay day loan discharged.
A pay day loan is usually an unsecured debt, and in general, these are
treated as any other unsecured debt in bankruptcy.
Chapter 7 Bankruptcy - a debtor is allowed to discharge debts without repayment in a chapter
7 bankruptcy. Almost all unsecured debts are discharged in this type of
bankruptcy, including pay day loans.
- During a Chapter 13 Bankruptcy - a debtor is required to repay their debts
using a structured repayment plan. Pay day loans, in this case, will be
treated like any other debt. Though, the filer may be permitted to discharge
this debt under a hardship provision if they are unable to complete the
It's crucial that when receiving a payday loan that you read the entire
agreement with your lender. It could be included in this agreement that
you are not able to include your pay day loan in a bankruptcy. This is
a scare tactic, and is not upheld by any laws. It is also good to remember
that you cannot discharge debts that were incurred 60-90 days within filing
If you're still not sure about your specific situation
calling an experienced bankruptcy attorney can help. They will be able to assist you through your unique case and
be able to answer all of the questions that you may have. Don't file
alone, call today to find out how a great attorney can help you get the
most from your bankruptcy.