Payday loans in bankruptcy are a common connection. If you don’t make good on that $300 post-dated check you gave to the local payday loan place for $250 cash, you are in for it financially. Interest rates nearing 500% kick in when your check doesn’t clear. And the amounts you can wind up owing accumulate faster than you can say usury.
Once upon a time usury, or loaning money at unusually high interest rates, was illegal. But no more–at least when in comes to payday loans. The industry carved out an exception to usury, arguing the inflated interest rates were necessary in light of the credit risk. Maybe so, but the amount you can wind up owing from unpaid payday loans can be astronomical.
Google has banned payday loan advertisements altogether. Here’s a story reflecting Google’s rationale. This payday loan philosophy only fuels the flow of payday loans in bankruptcy. Often when payday loans are not repaid in time, other payday loans are taken out to repay the previous ones. Soon this can become a cycle. Eventually options to borrow new money to repay old money run out.
Fortunately, payday loans can be discharged in bankruptcy. This is why payday loans in bankruptcy are such a frequent pair. Particularly problematic for payday loan lenders are the collection practices they face when the debts are not repaid. Some of the most aggressive and improper debt collection strategies and schemes are perpetrated by these lenders. Collection horror stories by the plenty derive from payday loan debts. Threats to arrest, immediate wage garnishment and bank levies are some of the more common collection ruses by the payday loan industry. Granted there are legitimate payday lenders out there. But anyone loaning money at 475% interest can’t be all good.
Whatever the story or scenario that may have led to your payday loan debt, know that bankruptcy offers a fix. Find out your options by scheduling a free consultation by calling me at (916) 448-6923.