It’s not surprising that Pay Day loans are prevalent in Las Vegas, especially with high unemployment rates. With interest rates typically between 99% and 500%, they’re certainly no bargain but sometimes they’re a last resort that simply must be taken. If you have outstanding Pay Day loans and are considering contacting a bankruptcy lawyer, then there are three main things you need to know.
1. AUTOMATIC STAYS WON’T ALWAYS BE ENOUGH TO STOP COLLECTION ON PAY DAY LOANS
When a consumer files bankruptcy, an Automatic Stay is immediately effective. This means that creditors must cease all collection attempts while the bankruptcy is in process. However, Pay Day loans can be a little more complicated and require a few extra steps to ensure collection stops.
Many Pay Day loan companies require the borrower to submit a post-dated check for the full amount of the loan at the time they get the Pay Day loan. Typically payments are made on a weekly or monthly basis and as long as they continue to be made, the check will not be cashed. However, in the event that the borrower declares bankruptcy, Pay Day loan companies may have the legal right to attempt to cash any post-dated checks submitted to them.
2. A BANKRUPTCY ATTORNEY CAN PROVIDE SOLUTIONS TO THE CHECK-CASHING PROBLEM
Though the Pay Day loan company may have some rights to cash the check, there are also solutions. Your bankruptcy lawyer can carefully assess your case to decide which is the right move for you. Options may include closing the bank account from which the check was issued, or issuing a stop-payment on any outstanding post-dated checks. Keep in mind that requesting a stop-payment on a check won’t always be effective, especially when automatic transfer (ACH) payments have been set up. Your bankruptcy attorney can explain these and other options to you in full.
3. THE TIMING OF PAY DAY LOANS MAY POSE A PROBLEM WHEN FILING BANKRUPTCY
The purpose of bankruptcy is to help borrowers get a fresh start when they become unable to pay their debts. However, there are certain checks on the process to ensure it’s not taken advantage of. For example, you cannot run up a considerable amount of debt and then immediately declare bankruptcy.
In the case of Pay Day loans, the general rule of thumb is that any loans for more than $750.00 and that were taken out within 70 days before the bankruptcy are considered fraudulent. Any debts that are determined to be fraudulent by the bankruptcy court are generally non-dischargeable and cannot be included in a bankruptcy settlement.
It is up to the PayDay loan company to prove that these loans were incurred after the cut off date. Your bankruptcy lawyer can further review your particular situation to determine if there’s a better approach to your bankruptcy situation.
The decision to declare bankruptcy is never an easy one, but when Pay Day and other loans become too much to bear, it is a solution that can work for many.
Need debt relief in Las Vegas? Bankruptcy attorney Anthony DeLuca can help. Call (702) 252-4673 for a free consultation!