Alabama Bankruptcy Blog

I have been using a Payday Loan company or Check Cashing store and can no longer pay the fee and I know the check(s) will bounce. Can I file bankruptcy on payday loans or check cashing loans? Can I be charged with a crime or go to jail?

I continue to see more and more clients come in to see me about bankruptcy after being caught up in the payday loan or check cashing trap.  It’s an easy lure – quick easy money with no credit check.  It is easy for consumers to rationalize that they can pay the money back out of their next paycheck and be caught up.  However, far too often the next paycheck is “already spent” as well and you have to “renew” the loan and pay the fee.

 

The cycle of renewing these loans becomes extremely draining on a person’s finances which were assumedly already teetering on the edge.  All it takes is one look at the interest rate on these types of loans to see why.  The average “fees” paid on these loans amount to normally between 400% to 720% annual interest rate.  The cycle also often leads to obtaining these loans at multiple companies in an effort to “borrow from Peter to pay Paul.”  The FTC has issued a Consumer Alert regarding these loans Payday Loans Equal Very Costly Cash.

 

You can file bankruptcy on payday and check cashing loans and these loans are dischargeable.  Do not let these companies convince you otherwise.  I have had clients who have been told “You cannot file bankruptcy because you signed a form saying you wouldn’t.”  This is NOT true (wouldn’t every lender do this if it was). 

 

In addition I have had clients who have been told they would be charged with a crime for writing a bad check.  This again is NOT true.  The crime of writing a bad check is a form of fraud, i.e. saying you have enough money in the bank to cover the check at the time of writing it.  This fraud has to be relied on by the person receiving the check.  In the payday and check cashing loan situation, these companies know the check is not good at the time they accept it; therefore, there is no fraud and there is no crime.

 

Do not let these predatory loans continue to financially and mentally drain you.  Obtaining these types of loans is often a sign of other debt problems as well.  Make an appointment with an experienced and knowledgeable bankruptcy attorney and see about obtaining a fresh start.

 

Richard L. Collins - Attorney at Law practicing extensively in Bankruptcy Law in Alabama - 422 Third Ave SE, Cullman Alabama

These Hard Economic Times Inspire Unique Solutions

If you are having a difficult time with your financial situation, I know it can be extremely depressing, but remember you are not the only one and when of people come together and do not give up, they can do amazing things.  I found a very interesting and inspiring article about how one community has tried to deal with this economic crisis. 

Rev. Joseph Breen of St. Edward Catholic Church in Nashville, TN used his church's resources to create its own "stimulus package" to assist its members who had been hit hard by the economic downturn.  Here is the link to the article Priest Creates Stimulus Plan for His Parish.

While a bankruptcy can clear away debt, it may not be able to help with the day to day needs of your family, such as food and clothing.  This may require you to lean temporarily on friends, family, church or other support groups.

Richard L. Collins - Attorney at Law practicing extensively in Bankruptcy Law in Alabama - 422 Third Ave SE, Cullman Alabama