Discharging Payday Loans in Bankruptcy
Payday loans allow you to borrow against your next paycheck. When you apply you submit a post-dated check for the amount you borrow including interest fees. Upon getting your paycheck you either pay the loan off in cash or give the company permission to take the funds from your bank account by cashing the check that was previously written.
For many consumers, payday loans can be a useful option between pay days especially if it’s a financial emergency. The problem that many consumers face is having more than one loan and its gets difficult to pay back what is owed; on top of having other obligations to pay. In general, they can be discharged in bankruptcy since they are considered to be an unsecured debt much like credit cards.
While it is possible to have payday loans wiped out in bankruptcy, keep in mind, the company that issued the loan may look to collect from you if you borrowed and decided to file bankruptcy shortly after receiving the funds.
There are misconceptions about whether or not you can get in trouble or go to jail for a post-dated check that bounces. Since state laws may vary on this topic you should review concerns with a qualified bankruptcy attorney.