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Can I Discharge Payday Loans in Chapter 7 Bankruptcy?

Can I Discharge Payday Loans in Chapter 7 Bankruptcy?

A payday loan is a high-interest loan, or “cash advance,” that is often considered a last resort option for debtors. If an individual falls into debt and is unable to manage past-due payments along with their daily living expenses, they may use a payday loan to temporarily bridge the gap. Unfortunately, these loans serve to further restrict an individual’s ability to stay afloat financially. After taking out a payday loan, some realize they need to file a Chapter 7 bankruptcy to rid themselves of their debts and get a fresh start.

What Is a Payday Loan?

Payday loans are short-term loans wherein the provider has access to the debtor’s bank account or possession of postdated checks that can serve as a means of repayment. As an unsecured loan, payday loans are dischargeable in Chapter 7 bankruptcy. However, it is important to note that there are risks associated with taking out a payday loan close to a Chapter 7 bankruptcy filing.

The Risks Associated with Payday Loans

During the bankruptcy process, a debtor is not permitted to incur additional debts with the knowledge that they will not be able to repay the new loans. If a creditor objects to the discharge of a debt and can prove it was incurred with full knowledge that it was never going to be repaid, the debt may be allowed to remain. This can present a problem as payday loans are sometimes taken out before a debtor files for Chapter 7 bankruptcy.

Schedule a Consultation with Our Bankruptcy Attorneys Today

If you’re planning to file Chapter 7, its important that you remain aware of certain issues – including payday loans – that can lead to unfortunate disruptions in your bankruptcy case. At Powell, Jackman, Stevens & Ricciardi, P.A., our skilled bankruptcy attorneys can help you navigate each phase of this complex legal process. We can also develop plans to manage and mitigate any contingencies that need to be addressed or avoided altogether.

Contact Powell, Jackman, Stevens & Ricciardi, P.A.at (239) 970-6844 if you’re ready to file for Chapter 7 bankruptcy. Our law firm offers free and confidential consultations.

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We do not represent tenants.

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