Filing Bankruptcy Will Eliminate Out-Of-Control Payday Loans

With a large number of Americans filing for bankruptcy every year many are asking, what are the causes? Many attribute it to the real estate meltdown back in 2007 and others blame the credit industry for their lackadaisical attitude on how they give credit cards to individuals. In most cases currently, the perfect storm has been created starting with the real estate market collapse. After the real estate market collapsed, the rest of the economy got drug down with it. These individuals that were living beyond their means are no longer making the easy money that they were in the past.

Alabama Bankruptcy Lawyer, Bankruptcy Law Attorneys, Houston Bankruptcy Lawyers,

Every industry suffered, when the credit market dried up, families were no longer taking extravagant vacations and buying new cars. When individuals stop making the money they were in the past or even worse were unemployed, they started to slide down the financial slope into oblivion. The first thing that happens is choices have to be made about eliminating any luxuries. If that doesn't help, the decision needs to be made of which bills to pay and which to default on. This is where the wheels start to come off and the individual should be rushing in to see a bankruptcy attorney immediately. Usually, this is where people that have no available credit on their credit cards, start to look into payday loans. Payday loans in theory, are not a bad thing if they are used for an emergency to get quick cash. But when this is the only money available to survive on, it will lead to disaster.

Long before a debtor starts using payday loans to get by, they should have already visited a bankruptcy attorney to discuss filing for bankruptcy. But with these individuals, filing bankruptcy is usually their last option. Most people don't understand how much a payday loan really costs. Many of these loans have a term of two weeks with the interest riding at 18% for the term. When you think of 18%, it really doesn't sound like a lot of money. But when you consider there is 52 weeks in a year that interest would rise to 468% per year and that doesn't even include the late fees and compounding the interest. Looking at it this way you can see how these loans are completely crazy to get caught up in.

For comparison sake, let's say that Jim goes into his favorite local payday loan office to borrow $500 at 18%. After taking the loan Jim loses his job and can't immediately pay back the loan. After six months Jim's father gives him $5000 for a gift and Jim knows he has to settle up because of the extensive threats he's been getting and goes in to pay the balance. Once into the office Jim finds out that he now owes $3643 plus late fees. This is how fast the interest accumulates on a payday loan. Looking back, the idea of going to see a bankruptcy attorney and filing bankruptcy is starting to look a lot better now.

One thing that Chapter 7 bankruptcy will discharge is a payday loan. Payday loans are unsecured debts and will be wiped out in a Chapter 7 bankruptcy. This is why it's important to stress to not wait until things get out of control before seeking the help of a bankruptcy attorney. Sometimes you will be told that a bankruptcy filing is not in your best interest and you will be shown alternatives. Until you get the advice of an expert don't bury your head in the sand thinking it will go away.

Bankruptcy Laws

Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.

Rating of Bankruptcy Laws

Get Online Application at online Bankruptcy Lawyer.


Post a Comment