Payday loans may be discharged through filing bankruptcy
Because payday loans are an unsecured debt, they can often be discharged in Chapter 7 bankruptcy. (“Unsecured debt” refers to debt that’s not tied to any collateral property and therefore there is nothing to be repossessed and sold to satisfy the debt.)
Once a person’s debt is discharged, that means they are never responsible to pay on that debt again.
Payday Troubles? Find a Bankruptcy Lawyer Today
Meeting with a local bankruptcy lawyer may be a great way to put your finances in perspective and find out what options could be available to you.
We make it easy to find a Chapter 7 bankruptcy lawyer. Just fill out our free bankruptcy case evaluation form and we’ll do the rest.…
Alternatives to payday loans
Many consumers take out payday loans out of desperation because they feel that there’s no other way to pay bills, buy groceries or take care of other financial obligations. However, there are alternatives to payday loans.
Check these alternatives to payday loans:
• Use savings set aside for emergencies to pay for necessities can prevent consumers from accumulating large payday loan debts.
• Credit unions are sometimes able to help low-income or distressed consumers by offering short-term low-interest loans.
• Traditional banks may offer lines of credit or overdraft protection on checking accounts at a much lower rate.
• Credit card cash advances – they’re expensive but still not as costly as payday loans.
• Borrowing from friends and family members can prevent you owing an overwhelming debt to a payday lender.…
Payday loans – an expensive option
In states that don’t regulate payday lending interest rates and fees, these supposedly short-term loans often have annual interest rates of more than 391 percent.
Additional fees associated with payday loans hike the costs up even more and weekly payments must be made or penalties are added.
If a consumer is unable to make a payment on a payday loan, they have the option of renewing the loan in order to postpone the payment. This starts the process over with a higher original loan amount, which means more interest on the debt.
Some consumers who are caught in the payday lending cycle take out payday loans to make payments on other payday loans, creating an endless cycle of debt that can quickly get out of control.…
The dangers of payday loans
With the U.S. economy in a tailspin, more Americans are turning to payday loans to make ends meet. This is unfortunate because these predatory loans often spiral into an endless loop of debt that cannot be easily managed or resolved.
Instead of a consumer taking advantage of a loan offer, payday loans are quite the opposite. Payday lenders often take advantage of the desperation of their customers.
Fortunately, lawmakers have already recognized the financial dangers of payday loans.
Congress has imposed a 36 percent interest cap on post-dated check type loans to military personnel and payday lending has been completely banned in Georgia and North Carolina.…