You've probably heard the old saying "when it rains, it pours", and this is often the case when it comes to dealing with a bad financial situation. When you need some fast cash, there are several options available, such as cash advances on your credit cards, title loans and payday loans. Payday loans are based on showing proof of your job, and usually need to be repaid by your next payday. Unfortunately, the rain may continue to pour down for those with poor finances, often to the point where filing for bankruptcy seems like the only option. Can you include that payday loan on your bankruptcy creditor matrix? Read on to find out more.
3 Types of Bankruptcy Debt
Before you file for chapter 7, you need to know how much debt you can have forgiven; this is a big decision and you want to ensure that you get everything you can out of this legal move. Some debt cannot be included on a bankruptcy, some can be included without any potential loss of property and some may include a loss of property.
1. Debts that cannot be discharged: In general, tax debts that are only a few years old, back child support payments and student loan debts cannot be discharged. There are some extenuating circumstances that could allow you to include some of these debts, so speak with your bankruptcy attorney for more information.
2. Secured debts are based on the property itself. For example, a mortgage loan uses the home itself as collateral, and vehicles are secured by the vehicle itself. You might lose some secured property by filing for chapter 7 bankruptcy, but there are exemptions and other exceptions that could help you keep some property.
3. Unsecured debts, which have no property to secure it. The most common type of unsecured debt is credit card debt. When you fail to pay these types of debt, the lender cannot take back any property that you purchased with the card. This category also include personal loans.
What type of debt is a payday loan? It's unsecured debt, meaning that it can be included in a chapter 7 bankruptcy. If you have entered into a contract for a payday loan, you likely signed a document stating that you agree to pay back the loan, regardless of a bankruptcy filing. You must understand that this document has no meaning when it comes to bankruptcy rules. It is considered an unsecured debt and may be included, regardless of what you may have signed or any threats by the payday loan lender.
Don't allow yourself to be intimidated by a payday loan store, speak to a bankruptcy attorney, like David S. Riehl, Attorney At Law, as soon as possible and make sure that your payday loan is included on the matrix. Failure to include it when you file could mean that you must continue to pay it.