Taking out a payday loan may initially seem appealing to you because it is marketed as a short-term financial solution. However, it is very easy to get caught in a cycle of being unable to pay off the loan and high-interest fees by your next paycheck, and having to take out another loan to cover the repayment, and so on and so forth. What makes this all the more stressful is that your lenders may be relentless in their phone calls, wage garnishments, account freezes, and lawsuit filings. At this point, you may wonder whether filing for bankruptcy was the clean slate you required since the beginning. Well, please read on to discover whether bankruptcy can work to wipe out your remaining payday loan debt and how a seasoned Louisville, Kentucky consumer bankruptcy lawyer at Schwartz Bankruptcy Law Center can fight to ensure your lenders stop their collection efforts.
Can Chapter 7 or Chapter 13 bankruptcy wipe out my payday loan debt?
In a Chapter 7 bankruptcy case, unsecured debts are typically discharged within a few months. This means that these outstanding balances may be eliminated from your immediate financial responsibility. And so, you may feel relieved when learning that payday loans are generally considered unsecured debts. Secondly, even though a Chapter 13 bankruptcy case entails a three- to five-year repayment plan, you may only have to pay back a reduced, affordable amount. At the same time, thanks to the automatic stay, either bankruptcy type may stop interest, late fees, and collection actions.
This is to say that filing for bankruptcy may essentially help you break the payday loan cycle once and for all. Importantly, though, this may only effectively work if there is no speculation by the Kentucky Bankruptcy Court, your bankruptcy trustee, or your lenders that you committed fraud or misuse in the process. For example, if you applied for this loan too close to when you filed for bankruptcy, it may indicate that you never intended to pay it back with your next paycheck. Or, for instance, if this loan can be traced back to purchases of unnecessary, luxury items rather than essential, basic needs.
What about the payday loan lawsuits or judgments currently against me?
To reiterate, the bankruptcy’s automatic stay halts your payday lender’s collection efforts, including pursuing a lawsuit against you. Still, you may worry about the lawsuits that are already ongoing or the judgments that have already been ordered. Well, you may rest a little easier knowing that your bankruptcy filing may stop a case even though your court date is rapidly approaching. Plus, any judgment related to your payout loans may be included in your final bankruptcy discharge.
With all that being said, please do not hesitate to work together with a competent Louisville, Kentucky consumer bankruptcy lawyer. The team at Schwartz Bankruptcy Law Center will have your best interests at heart always and will fight for justice to reign in your favor.
