Deciding Which Loan To Take Out

As soon as I realized that my personal financial picture was a little bleak, I started thinking about taking out a personal loan. I wasn't really looking forward to going into debt, but I knew that if I wanted to solve a few short-term problems, a loan would be the way to go. I talked with a few of my local financial institutions to get a good idea of what they could offer me, and then I sat down to go over the paperwork. It was incredible to see how much money I could save by securing a lower interest rate. Check out my blog for more information about loans.

Payday Loans And Bankruptcy -- Your Questions Answered


If you are struggling to pay your bills, you might be considering filing for bankruptcy. However, if you have an outstanding payday loan or two, you may be curious as to how that affects any bankruptcy proceedings or filings. Here are a few frequently asked questions you may have if you are considering filing bankruptcy with outstanding payday loans.

Can Payday Loans Be Discharged in Bankruptcy?

If you are filing bankruptcy and you have outstanding payday loans, you can discharge this type of debt in bankruptcy. However, in order to include this type of debt in bankruptcy, you must meet all of the criteria for bankruptcy. While there is no minimum amount of debt needed to file, you must be unable to pay the amount of money you have outstanding in debt based on your income and reasonable living expenses.

Are Payday Loans Secured or Unsecured Debt?

Many people are confused by whether payday loans are considered to be secured or unsecured. And unfortunately, many unsecured debts cannot be discharged in bankruptcy proceedings. While you may have left a post-dated check with the payday loan company, technically, this type of loan is considered to be an unsecured loan. And all unsecured loans, outside of student loans, can be discharged by filing bankruptcy. However, if you have a car title loan, that is considered a secured debt and is not handled in the same manner that an unsecured debt is. Since the debt is secured, your car can still be repossessed and auctioned off to pay this type of loan, even if you file bankruptcy. Many payday loan companies also offer car title loans, so be aware of what type of loan you are taking out.

Can a Payday Loan Company Challenge the Discharge?

Anytime you file bankruptcy, the people you owe money to have a right to challenge the discharging of the debt you owe. However, there are very few circumstances in which they are actually successful at discharging the debt.

One of the criteria that a payday loan company may use in trying to challenge the discharge is that you took out the payday loan knowing you were going to file for bankruptcy. Many states limit the type and amount of debt you can include if the charges or debt is obtained within 70 to 90 days of filing bankruptcy. This ensures that you don't simply rack up your debt knowing you will charge it off. However, when it comes to payday loans, unless a company can prove that you acted fraudulently and had no intention of paying back the loan, they will most likely be unsuccessful in challenging the discharge.

Is There a Way to Get Rid of the Debt Without Filing Bankruptcy?

If you do not have much debt, but are struggling to pay off your payday loan, you may wonder if you have other options outside of bankruptcy. In many states, payday loans are required by law to offer you an extended payment plan without any additional fees or interest for one month. This can help you get back on your feet. Additionally, credit counselors can also help you negotiate the rates and terms of your payday loans if you are struggling to get back on your feet. While payday loan companies are under no obligation to renegotiate the terms of the loan with you, many will, as they would rather get some money compared to no money.

If you in a bad financial spot and can't pay your bills, you may be considering bankruptcy. However, before filing, you always need to find out if it is the best option for you. Learning what types of debt can be discharged, such as a payday loans, will help you decide if that is the right option for your situation. For more information about working with a payday loan company, check out websites like


2 November 2015