If you are considering filing for bankruptcy, it’s generally accepted that you should not be spending more on credit than is absolutely necessary. This includes purchasing anything from luxury items to car repairs that aren’t needed. Loans like payday loans from lending companies, paycheck advances, or other similar debts are handled in various ways in a bankruptcy case. The way they are treated depends entirely on the circumstances of the loan and your intentions. If you do file for bankruptcy in Marshall, MN and have payday loans, Behm Law Group, Ltd. can help you determine how they might affect your case, and our attorneys can guide you through a case to receive long-term debt relief.
If you have taken out a payday loan or received a paycheck advance, you will most likely receive a discharge of the debt if you file for Chapter 7. This discharge is ensured if you took out the loan for a necessity and you intended to repay it when the time came. Because it is an unsecured debt, it will be discharged in full in addition to other unsecured debts like credit card and medical bills. If you file for Chapter 13, your payday loan will be included in your repayment plan along with other unsecured debts.
If you did take out a payday loan and there are facts indicating that you did not plan to repay the debt, you may face some issues in your bankruptcy case. There are ways a creditor can prove that you fraudulently took out a payday loan or that you misrepresented your financial information when you requested an advance on your paycheck. To start proving you took out a loan without planning to repay it, a creditor can file an adversary proceeding. Presumption of fraud is particularly likely if you’ve taken a loan out 70 to 90 days prior to filing to bankruptcy. You may be asked to demonstrate that your actions were warranted and not fraudulent if you did take out a loan within that time.
In most cases, however, the court understands the conditions filers are in when they take out payday loans. Borrowers need money in advance to cover necessary expenses; indeed, this is something that is quite common. Because of this, most payday loans are taken out with good intentions to repay them in time. If you are worried that your payday loan might be considered fraudulent, filing for Chapter 13 bankruptcy and including it in your repayment plan might be a better option.
Overall, payday loans will be discharged or included in your repayment plan unless a creditor has grounds to file an adversary proceeding. To learn more about payday loans and filing for bankruptcy in Marshall, MN, please contact Behm Law Group, Ltd. today at (507) 387-7200 or via email at stephen@mankatobankruptcy.com.
