How do I file bankruptcy on a payday loan?

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How do I file bankruptcy on a payday loan?

Asked on January 25, 2015 under Bankruptcy Law, Connecticut

Answers:

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

Answered 6 years ago | Contributor

Payday loans can be discharged in Chapter 7 bankruptcy like any other unsecured debt (see note below). In a Chapter 13 bankruptcy filing, payday loans are treated the same as other unsecured debts, so they will be paid down but only a portion of the debt. You should note however, if you took out the loan within 70-90 days of your filing, then the payday lender may attempt to object to your discharge on the grounds that you had fraudulent intent when taking out the loan (i.e. you took out the loan without the intention of paying it back). Accordingly you should not be allowed a discharge as to that debt.

Note: Loans made within a short period (e.g.70-90 days) of bankruptcy generally aren't included in a filing since they are considered taken in anticipation of bankruptcy. And payday loans are written in such a way that they renew around every 30 days, so they become entirely new loans. Consequently, they technically can't be discharged. That having been said, due to the abusive nature of these loans, a number of courts look past this and allow them to be included in the filing based on the original date of the first loan.

Since you gave no specific details of your situation, you should consider consulting directly with a local bankruptcy attorney.


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