If you find yourself in a truly desperate financial predicament, you may consider taking out a payday loan. This is a small cash loan (i.e., like $500 or less) in which lenders charge extremely high fees (i.e., like $15 per $100 borrowed). Then, to repay, you may provide a post-dated check or bank authorization for the loan plus fees due on your next payday (i.e., like two to four weeks later). While this may appear like a quick fix, it may lead you into a debt trap, as you may have to take out new loans to repay the old ones repeatedly. Well, if you cannot seem to get out of this toxic cycle, please continue reading to learn whether filing for bankruptcy can eliminate your payday loan debt and how an experienced Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq., P.C., can help you.
What happens to payday loan collection efforts once I file for bankruptcy?
Many payday lenders rely on post-dated checks and electronic withdrawals from your bank account. Well, once you file for bankruptcy, the New York State Bankruptcy Court may enforce an automatic stay. This means that your payday lenders, along with all your other lenders, may be barred from withdrawing funds, along with other collection efforts such as harassing phone calls, wage garnishments, and, namely, filing lawsuits. If they continue such activities, the court may inflict them with serious penalties.
On the topic of lawsuits, your payday lenders may sue you in an attempt to obtain a court order that allows them to freeze your bank account, which prevents you from accessing funds until the issue they have with you is resolved. This is to say that we encourage you to submit your bankruptcy petition sooner rather than later, to halt ongoing payday loan lawsuits with approaching court dates, and to keep hold of your bank account during this critical time.
Can bankruptcy really get rid of my payday loan debt for good?
Now that you understand what happens to your payday loan debt once you file for bankruptcy, you must prepare for its possible fate once your case closes. Well, in most cases, payday loans are considered unsecured debts. This means that they usually can get discharged at the end of bankruptcy. This is, of course, so long as there are no claims or evidence of fraud or misuse involved. For example, your payday lender may accuse you of taking this loan out too close to your bankruptcy filing date, meaning that you never had the intent to repay it.
With all that being said, please do not hesitate to work together with a skilled Rockland County bankruptcy attorney. The team at The Law Offices of Allen A. Kolber, Esq., P.C., will have your best interests at heart always and will fight for justice to reign in your favor.
