to the bancruptsy? Will the bancruptsy be able to put a stop to the collection of that payday loan? The loan payments are taken directly from my bank account via electronic check.
First off, I advise people NEVER take out a title or payday loan or go to a rent to own center. Poverty lenders charge the highest possible interest rates and often you end up in a sea of debt over a tiny loan.
Second of all, if you just took out the payday loan, the lender, if they're aggressive, will allege that you took out the loan without any intent to repay it. They could allege fraud.
The bankruptcy will stop the collection efforts, but it may not stop any potential criminal allegations, or an adversary objecting to your discharge on the grounds that you borrowed the money and then filed for bankruptcy so there was no intent to repay.
Click on "Find a Lawyer" above and consult with a bankruptcy lawyer if you do not have one. If you have a bankruptcy lawyer, ask your lawyer.
If you file on your own, expect the worst.
This is a public forum. Any questions or answers published here should not be construed as the giving or receiving of legal advice or the formation of any attorney-client relationship. You should consult with a competent attorney in the jurisdiction where your legal issues are pending and get good, solid legal advice. This being a public forum, those answers you do read are merely given for informational purposes only.
I agree with Mr. Elie. There is a presumption that you are insolvent within 90 days prior to the date of your bankruptcy filing. If you file a Chapter 7 case, the lender will object to your discharge of this debt. If you file a Chapter 13 case, the lender can file a proof of claim to receive payment through your Chapter 13 plan. The automatic stay will not stop the direct draft out of bank account. Once you file the bankruptcy, contact your bank to stop the auto draft to the payday lender. You must go directly to your bank to put a stop order on the loan payments, because the bankruptcy authorities will not police this for you. You need to hire an attorney to help you with this case.
Attorney Ellle says it like it is. Proceed with caution and do get counsel.
I agree with the other answers, but offer a slightly different possibility: Depending on the amount of the loan, the lender may not find it cost effective to object to the discharge of that payday loan debt.
Payday loans are typically pretty small, so if you only have this one loan, and you have ANY kind of explanation as to how you intended to repay it at the time you took out the loan, you may be able to dissuade them from filing an objection (assuming they contact you first) or they may simply opt not to file at all.
You clearly need to have a qualified bankruptcy attorney analyze your situation.
Legal disclaimer: Mark J. Markus practices law in California only. The information is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Answering this question does not in any way constitute legal representation.
I agree with attorney, Markus. Most Payday loans are small so these companies most likely won't file a fraud action in either the Chapter 7 or Chapter 13. Contact your bank and let them know to stop the automatic deduction from your bank account.
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