Repairing Your Financial Situation

Posted on: 22 February 2022

It's safe to say that many people choose to use a payday lender out of desperation. Payday loans can seem like an easy way to get your car back on the road, buy some groceries, or pay a utility bill. These loans are considered predatory but that is not the only problem. Read on and find out why payday loans can be deceptive for a vulnerable population.

The Domino Effect of Bad Financial Decisions

No one intends to get behind on their bills. It can often sneak up on those with the best of intentions. When things go well, it's easy to set money aside for a rainy day. When things don't go well, it can feel like trying to swim through Jell-O. Very few people make the bankruptcy decision lightly and some may only do so once things have gotten out of control. Those who put off filing for chapter 7 for too long, for instance, may be facing foreclosure, repossessions, court judgments, wage garnishment, and more. Things might get worse, however, if those filers don't do a good job of listing their debts on the bankruptcy forms.

Don't Fall for the Scare Tactics

When you take out a payday loan, the stack of documents you must sign is considerable. Many fail to do more than glance at them as they sign away. One of those documents, common in the payday lending industry, is a disclaimer. The document warns signers that you cannot list the payday loan on bankruptcy paperwork because it cannot be discharged. Or the applicants may be asked to promise not to list the loan if they file bankruptcy. Unfortunately, many loan clients believe what they are told by these unscrupulous lenders.

List that Payday Loan

Payday loans, unlike vehicle title loans, are not secured to property. That means you cannot lose property when you list it on your bankruptcy. Other debts in this category include medical bills, personal loans, and the big one, credit card debt. All of those can be completely discharged with the filing of a chapter 7 bankruptcy and so can a payday loan. Payday lenders have no recourse if you lawfully list the loan. However, they can appear at your creditor's meeting to object to the loan's inclusion in the filing. Likely, the objection will be overruled as payday loans are seen as the worst type of predatory lending and greatly disliked by bankruptcy trustees far and wide.  

Let your bankruptcy attorney know about the payday loan before you file. In most cases, it will have no effect on your case, and you will have the financial fresh start you need.