Discharging Payday Loans In Bankruptcy: The Payday Lender Is Not Your Friend!

01 Aug Discharging Payday Loans In Bankruptcy: The Payday Lender Is Not Your Friend!

When you file aChapter 7 bankruptcy you must list all of your assets and debts.Unsecured debts are dischargedgiving youwhat is often called aFresh Start.

Payday Loans are a form of unsecured debt, although many people believe that these debts are secured.

In fact, since the borrower is required to turn over a post-dated check to the Payday lender, most believe that they can go to jail if they do not make good on the check or if the check bounces. I have had potential clients that have been told that they will go to jail for failing to honor a Payday loan.

Telling someone that they will be prosecuted or go to jailis not true. To be guilty of writing a worthless check the person writing the check must have written the check with the intention of defrauding the party receiving the check. Since the Payday lender knowingly accepts a post dated check, the lender knows that the check is not good at the time it receive the check.

Occasionally I will have clients that want to pay back these loans. The “logic” of wanting to pay them back is that the client feels that the Payday lender has done them a favor by lending them the money.

However Payday loans, while marketed as a loans to be used on a one-time basis, are inreality taken out by people when they are their most vulnerable and their mostdesperate.

The facts are as follows:

  • The high interest rates (usually shown as a fee for borrowing the money)make it difficult for borrowers to repay these loans. I personally have seen potential clients come in with fees that equate to interest rates of 425% to 600%. To read a detailed example of how much can end up being paid, consider reading: “Payday Loans: How To Borrow $300.00 And Owe $3,000.00”
  • Because they are difficult to repay, many consumers end up paying additional “fees” in order to roll the loan over. These fees can often end up being paid several times for one loan.
  • Because of this, many consumers end up paying more in fees thanthe than the amount they originallyborrowed, putting theminto worse financial shape then when they started.

Be sure to tell your attorney about your Payday loans so they can be included in your bankruptcy.

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I've been a consumer bankruptcy lawyer for nearly 25 years. Since that time I have helped many people resolve their financial problems. I have been practicing law since 1986 and I am licensed to practice in all state and federal courts in the State of Louisiana. Because I am a sole practitioner, you know that your debt matters are being handled by me personally. In addition to my work with consumers, I am also frequently asked to speak at local seminars on bankruptcy law. I am member of the following organizations: • Louisiana Bar Association • National Association of Consumer Bankruptcy Attorneys • Bankruptcy Law Network My office is located at: 3920 General DeGaulle Drive, New Orleans, LA 70114 Telephone: (504) 368-4101

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