Payday loans are short-term, small amount loans that are perfect for a situation where you simply need a small amount of money to tie you over until a paycheck comes in. The payday loan seems like a practical invention. A person who needs to pay a pressing expense but has not been paid yet can ask for a sort of advance on his or her paycheck from the payday loan company. Naturally, this comes with interest. After the borrower’s paycheck comes in, he or she is expected to pay the money back plus the interest by a due date. Payday loans also go by the names check advances, cash advances, short-term loans, or paycheck advances. No matter what title you borrow your money under, if you are entering into a high-interest but short-term loan then you are more than likely working with a payday loan.

Payday loans are typically only active for two to four weeks. If the borrower does not pay the loan back within this time, then there is a chance that the payday lender will require a rollover. This means that the interest on the loan will escalate. In other cases, payday lenders will require borrowers to take out another payday loan in order to cover their previous payday loan. This can be extremely complicated and cost the borrower an extensive amount of money. In some circumstances, the borrowers may end up stuck in a difficult situation and be unable to dig themselves out of the pit of debt. As a result, some individuals may choose to file for bankruptcy, hoping that this will be the solution to their problem.

Thankfully, there are cases where debtors can obtain relief from a payday loan in bankruptcy. If you are struggling to pay your bills and are starting to receive calls or visits from creditors, then filing for bankruptcy can put a stop to these solicitations. Legally, creditors cannot harass you when you are in the midst of a bankruptcy procedure, so it is best to take this approach if you are worried that your creditors want to sue you or continue borrowing you until they receive their payment. It is very common for payday loan debtors to eventually dismiss their debt with a bankruptcy. In fact, statistics from the FDIC show that 10 million American households borrow on payday loans every single year and many of those borrowers end up filing for bankruptcy not long after. Borrowing a payday loan increases the possibility of filing for bankruptcy by a factor of 6.8 and causes many men and women to fall into financial difficulty every single year.

As a result, the courts have provided ways to discharge these loans in bankruptcy. In most cases, a payday loan is considered an unsecured debt, which means that you can discharge the expenses without being required to pay the costs in the future. Discharging debt is a benefit to the debtor, as it can help him or her to get a fresh start on life without having to find the money to cover expenses. When you file for a Chapter 7 bankruptcy, it means that you will have to liquidate all of your assets and will use that money to cover secured debts which cannot be discharged. Typically, priority debts will need to be repaid in full, but a payday loan can be listed on the unsecured debt list.

In a Chapter 13 bankruptcy, the court may require the borrower to repay a payday loan in the court-structured payment plan. The court can determine whether or not to discharge or include the debt in the repayment plan in these situations. You will want to discuss this with your attorney and determine whether or not you can negotiate with the court to get the debt dismissed. It is essential that you know your rights as a borrower before entering into a bankruptcy. Some payday lenders may have clauses in the contract which declare that you cannot discharge the loan if you are not able to pay it. Sometimes, this can be upheld but in most situations it is a baseless claim and the court will overrule it. Whenever you are dealing with payday lenders, you will want a dedicated and hardworking attorney beside you. Without the right lawyer there to advocate on your behalf, you may find that you will be taken advantage of. Make sure to hire a local lawyer who can assert your rights in the bankruptcy court in order to get your payday loan debts discharged and to start a new chapter in life debt-free.