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What happens to my pay day loans when I file for bankruptcy?
When it comes to wiping out or discharging your Payday or Moneytree loans, our Auburn bankruptcy attorneys understand that there's a lot of confusion here. We're here to set the record straight.
Payday loans are easily discharged or wiped out in bankruptcy. Some pay day loan companies will tell you that you can not discharge pay day loans in bankruptcy. They may even try to put a provision in their contract stating you can not discharge it in bankruptcy. Such a provision is not enforceable because you can not waive your right to discharge a debt in bankruptcy. If the bankruptcy code does not specifically state that a kind of debt can not be discharged, then it can be discharged.
The bankruptcy code states that debt that is the result of fraud is not discharged. However, the creditor has to file a lawsuit in the bankruptcy court to prove fraud. This suit is called an adversary proceeding and payday loan companies usually will not spend time and money on a law suit for the amounts involved in a pay day loan. More importantly our Auburn bankruptcy and payday loan lawyers want you to understand that you have a 100% legal right to completely wipe these debts out forever by discharging them in bankruptcy.
Pay day loans companies collect the loan by cashing a check drawn on your bank account on you pay day. Of course, knowingly writing a bad check is fraud but if you intend to pay a loan back when you take it out, you did not commit fraud. Needless to say, you should not take out a pay day loan in anticipation of bankruptcy, knowing that you will never pay it back. In our experience, however, this almost never happens. These loans are taken out by good people with every intention of paying them back. But, unfortunately, some unforeseen event or life emergency comes up making it impossible to do so. This is NOT fraud. It's called life, and it happens.
If you are thinking about bankruptcy and have an outstanding pay day loan, you may want to close the bank account for the check the pay day loan company is holding. Putting a stop payment on the check takes time and the bank will charge a fee. If a bank account is overdrawn and closed by the bank, it may be difficult to open another account. If you close a bank account before bankruptcy, you should open another one before you file to avoid any problems.
Our Auburn payday loan lawyers have wiped out millions of dollars of unsecured loans just like these over the years. And, we want you to know that you should not feel guilty about doing so. If you are able to qualify for Washington State bankruptcy relief, discharging these kinds of debts is your legal right. No one should have to work hard at their jobs while struggling just to keep a roof over their head and put food on the table, which is what often happens when these kinds of predatory payday loans spiral out of control.
A good Auburn bankruptcy attorney knows how to protect their clients and maximize their relief when putting together and filing their bankruptcy paperwork. If you have questions regarding your short-term loans, such as those offered by companies like Moneytree, we invite you to call our offices and get straight answers and advice.