People who take out payday loans don't mean to get themselves into a vicious cycle, but unfortunately, that is often what happens. These loans, which typically offer instant cash without having to submit to a credit check, may come with interest rates that have the consumer paying back more than double the original amount of the loan.
Although payday loan companies are required to disclose interest rates and other loan terms under the federal Truth in Lending Act, two recent cases prove that doesn't always happen. In January 2015, two online payday loan companies were slapped by the FTC with fines totaling $21 million dollars. AMG Services, Inc. and MNE Services, Inc. had an additional $285 million in fines against them waived by agreeing to comply fully with the Truth in Lending Act and the Electronic Funds Transfer Act in the future.
Are Payday Loans Dischargeable in Bankruptcy?
If you have one or more payday loans and are considering Chapter 7 bankruptcy, you should be able to discharge these debts in most cases. For Chapter 13 cases, payday loan companies are considered equally with other creditors in terms of how much you must pay back. While this news is reassuring, you should also know that a payday loan company could challenge your bankruptcy petition if:
- You received a payday loan or cash advance in the last 90 days
- You wrote a post-dated check to cover your loan
Schedule a Bankruptcy Consultation Today
At the Law Offices of James C. Shields, we understand how stressful it is to owe multiple payday loans on top of other legitimate debt. There is no shame in admitting you're in over your head and need the protection offered by bankruptcy. We encourage you to contact us to discuss your situation and possible options to improve your financial future.