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Kent Bankruptcy Attorneys

Serving all of South King County.

855-WA Debt Free
855-923-3283 

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Pay day loans

 

Pay day loan companies would like you to believe that you can not include this debt in bankruptcy.  Some even put a provision in their contracts that you cannot discharge the pay day loan.  Many people who work for payday loan companies truly believe they can not be discharged in bankruptcy.

 

Nothing could be further from the truth.  Even though you take out a pay day loan by writing a check to cover the loan on pay day, this is not the same as illegally writing a bad check.  If you purchase something with a check that you know is not any good, you are writing a bad check.  When you write a check for a pay day loan, of course you do not have the money in the bank to cover it.  That’s why you are taking out the pay day loan.  As long as you did not fill out a fraudulent application or have the intent to not pay the loan from the beginning, you are not doing anything wrong by including a pay day loan in bankruptcy.

 

If you have an outstanding check to a pay day loan company and have decided to file bankruptcy, you may want to change bank accounts.  You could put a stop payment on the check but that takes time and incurs fees.  You should do this before you file your case and before you incur overdraft fees.  It could be harder to open a new bank account at a different bank if you have overdrawn a bank account somewhere else.

 

You should not take out a pay day loan in anticipation of bankruptcy.  If you do so, you are committing fraud.  If a creditor can prove fraud in bankruptcy, they can have that debt excepted from the discharge.

 

All things being equal, pay day loans are classified as general unsecured debt just like medical bills and credit cards.  They are easy to discharge.  If creditors do get paid anything in bankruptcy, they are among the last to get paid.

 

Just like any creditor, they can sue you if you do not pay the debt.  Pay day loan companies are some of the more aggressive collectors.  However, it takes weeks or months to get so far that they garnish wages.  If you are trapped in a cycle of pay day loans, that is a sign that you may want to talk to a bankruptcy attorney about your situation.  It’s better to learn your rights to a bankruptcy sooner rather than later.