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Can You Discharge Payday Loans In Bankruptcy?



By:Mike Cibik

Payday Loans are a form of unsecured debt, although many people believe that these debts are secured.

In fact, since the borrower is required to turn over a post-dated check to the Payday lender, most believe that they can go to jail if they do not make good on the check or if the check bounces. Telling someone that they will be prosecuted or go to jail is not true. To be guilty of writing a worthless check the person writing the check must have written the check with the intention of defrauding the party receiving the check. Since the Payday lender knowingly accepts a post dated check, the lender knows that the check is not good at the time it receive the check.

However Payday loans, while marketed as a loans to be used on a one-time basis, are in reality taken out by people when they are their most vulnerable and their most desperate.

The facts are as follows:

The high interest rates (usually shown as a fee for borrowing the money) make it difficult for borrowers to repay these loans. I personally have seen potential clients come in with fees that equate to interest rates of 425% to 600%. To read a detailed example of how much can end up being paid, consider reading: “Payday Loans: How To Borrow $300.00 And Owe $3,000.00″

Because they are difficult to repay, many consumers end up paying additional “fees” in order to roll the loan over. These fees can often end up being paid several times for one loan. Because of this, many consumers end up paying more in fees than the than the amount they originally borrowed, putting them into worse financial shape then when they started.


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