Are Payday Loans Dischargeable in Bankruptcy?

A San Antonio, Texas, Bankruptcy Attorney Tells You What the Payday Lenders Won’t Tell You

The short answer: yes.

Payday loans, also known as cash advances, are considered to be unsecured debts which are dischargeable under the terms of your bankruptcy – regardless of what the payday loan collector says— even if you sign a contract that says the payday loan is not dischargeable, the rules surrounding bankruptcy will trump that contract.

Payday Loan Companies Are Bullies

While the very thought of bankruptcy can be scary at best, payday loan companies go to great lengths to frighten you out of even thinking about bankruptcy. They will threaten to arrest you at work, have you charged with check fraud, claim to call the prosecutor, or even impersonate police officers. However, they do have access to your bank account through the very documents you signed to obtain the payday loan and will not hesitate to over-draw your account. Filing bankruptcy will protect you from their aggressive collection tactics. And please know that none of our clients who have filed bankruptcy with us have been arrested for check fraud as a result of our clients discharging their Payday Loans.

Designed to Trap You

The payday loan “cycle” is designed so that the borrower is unable to pay them off or get out from under their grip. You borrow once thinking it will help you pay this month’s bills, but then need to borrow again to pay the previous payday loan, and again to pay that payday loan. The interest rates and fees alone on these loans can be as excessive as 300% or even 1,000%. Why are these loan terms legal? Payday lenders have lobbyists working on their behalf to prevent lawmakers from declaring their practices illegal…which they should. The game is rigged in their favor– it’s a trap.

Bankruptcy Breaks the Trap

Bankruptcy was not created as a way to deceive your creditors. But payday loan creditors like to scare you into thinking their debt is “too new” or is a special type of debt that is not dischargeable. Courts, however, tend to find payday creditors as abusive and will look at the original loan date rather than the monthly renewal date when allowing their discharge-ability.

Our firm helps and protects individuals with their payday loans everyday; we have helped discharge hundreds of thousands of dollars worth of these loans through bankruptcy. Even today, not one of our clients has been arrested by payday loan collectors when we file bankruptcy for them. It is important for borrowers to know their rights because many lenders are eager to take advantage of unsuspecting borrowers.

Call us today to help with your payday loans at 210-209-9088. Vanhemelrijck Law Offices offers free consultations with our attorney. Every bankruptcy case is unique; our law firm will provide a careful analysis of your situation and help you resolve your debt.