Say, for instance, that you had a monthly bill that you needed a small loan for, to ensure that it was paid on time. This is when you may have opted for a payday loan. But now you may be realizing that this quick solution has lingering consequences. Follow along to find out whether payday loans can be included in bankruptcy and how a proficient Louisville, Kentucky consumer bankruptcy lawyer at Schwartz Bankruptcy Law Center can help get you out of this financial challenge.
What are the characteristics of a payday loan?
A payday loan gets its name because an individual usually pays it back when their next paycheck arrives. Generally speaking, this is a type of low-dollar, short-term loan with elevated interest rates. More specifically, its characteristics are as follows:
- In the state of Kentucky, the maximum amount that payday loan providers may offer is $500.
- In the state of Kentucky, the amount of fees that payday loan providers may enforce is anywhere between $10 to $30 for every $100 borrowed.
- In the state of Kentucky, the maximum loan term an individual may utilize is 60 days.
Is it possible for payday loans to be included in bankruptcy?
Though a payday loan sounds ideal in theory, you may come to the unfortunate realization that it only put you in greater financial trouble. This is because you may struggle to pay off this loan so quickly on top of your other regular bills. All the while, a payday lender may take an automatic payment from your checking account, which may render insufficient funds that ultimately prompt a bank fee. Or, a payday lender may take the remaining balance of your loan and roll it over to a new loan, which may create additional interest and fees.
If you find yourself in this helpless cycle of debt, you may rest assured knowing that your payday loans may be included in your bankruptcy declaration. This is because a payday loan is considered to be a type of dischargeable debt.
So, you may be eligible to eliminate the entirety of your payday loans via a Chapter 7 bankruptcy filing in addition to your medical bills, credit card bills, etc. On the other hand, you may be eligible to eliminate a portion of your payday loans via a Chapter 13 bankruptcy filing and include the rest in your three- to five-year repayment plan. You may even file a hardship provision to reduce your obligation toward this loan even further.
If a bankruptcy petition is something that you wish to kickstart today, then you must retain the services of a talented Louisville, Kentucky consumer bankruptcy lawyer from Schwartz Bankruptcy Law Center. We await sitting down with you at your free initial consultation.