Can you file bankruptcy on payday loans?

Asked on July 18, 2014 under Bankruptcy Law, Oklahoma


M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

As a general rule, a payday loan can be discharged in Chapter 7 bankruptcy like any other unsecured debt. In a Chapter 13 bankruptcy a payday loan, as other unsecured debts, typically will be paid down but only a portion of the debt (often a very small portion).

However, you should note that a payday loan lender may challenge the discharge of its debt, if you've written a post-dated check. Additionally, if you last took out a payday loan within 70-90 days of filing bankruptcy, then that creditor may try to object to your discharge on the grounds that you took out the loan without any intention of paying it back, so you should not be allowed to discharge that debt. In other words, the payday lender could claim that you had "fraudulent intent' when taking out the loan.

Since you gave no details of your situation, you should consider consulting with a bankruptcy attorney in your area.



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