Know About Payday Loans During Bankruptcy

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Know About Payday Loans During Bankruptcy

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If you are worried about the inclusion of your payday loans in bankruptcy, you need to consult experienced bankruptcy lawyers at 888-297-6023 as there is no specific rule regarding their inclusion and discharge. A payday loan is when an individual ask for a loan from an institution which is repaid through a portion of their next paycheque. To avail this kind of loan, a paycheque stub is required to show that you can pay back the loan. As and when you receive your pay, you are required to pay the loan company. Generally, these companies take PDC (Post-dated cheques) or opt for an automatic debit from your account.

One of the most important question that is asked from lawyers of Dallas based bankruptcy law firm Recovery Law Group is whether payday loan can be discharged in bankruptcy or not. This depends on several factors including when was the loan taken. If the loan was taken just a few days prior to filing for bankruptcy, it can be assumed that the debtor was trying to defraud the creditor. In such case, the loan is not discharged unless the intention of the debtor could be proved. The best situation in this case would be to show good faith and try to repay the said loan before filing bankruptcy papers. If the payday loan included in bankruptcy is found to be obtained for defrauding the creditor, the loan is not dischargeable, and the debtor will have to pay the loan.

Sometimes, payday loans are considered illegal. This happens when they are charging too much interest over a specified period (generally, 1 year). Many times, companies charge 20% interest rate for a loan offered for 2 months and calculate the interest percent for the 2-month duration. When calculated for an entire year, the loan amount repaid over 1-year period would be in the range of more than 200%! Such high interest might be the reason for bankruptcy. In such cases, there is possibility of the court siding with you if you can prove the situation has been unfair. Thus, if your intentions are clear and there is no way that fraud has been proved, you might be able to get your payday loan discharged in bankruptcy.