Bankruptcy And Payday Loans

Charlotte Bankruptcy attorney Bryan W. Stone answers the question: “Can I keep my car if I file bankruptcy?”


For those who have experienced serious financial hardships it is possible you have encountered payday lenders. These payday loans might appear to offer a quick way to get money, but the insanely high interest rates many charge can quickly spiral out of control and lead to a bottomless pit of debt. Though the payday loans might seem to offer help for those behind on bills, they almost always succeed in making an already bad situation much worse.


Percentage Money Symbol Charlotte Bankruptcy Attorney North Carolina Payday Loan LawyerThose who feel trapped by payday loans likely have wondered whether the loans are dischargeable in a North Carolina bankruptcy. The good news is that payday loans are totally dischargeable under the federal bankruptcy code. The reason is that under classifications contained in the bankruptcy code, payday loans almost always qualify as non-priority unsecured debts.


This category includes things like credit cards, medical debt, personal loans and other debts that were received by individuals without the use of collateral. Payday loans, like all other types of non-priority unsecured debts, are totally dischargeable in both Chapter 7 and Chapter 13 bankruptcies.


Though the debt is dischargeable in bankruptcy there are several special concerns that arise when dealing with payday loans. The first issue that can occur is that payday lenders have been known to object to discharges of debt that occurred less than 90 days before a person filed for bankruptcy. These creditors argue that the loans were taken out without any intention of paying them back, something that can result in debts not being discharged as part of the usual bankruptcy process.


When this accusation is made, bankruptcy courts look to see if there was fraudulent intent on the part of the borrower when the payday loan was made. If so, then the debt might very well be deemed non-dischargeable. To avoid this trouble in the first place, it is usually a good idea to wait at least 90 days from the date of the last time you took out a payday loan before filing for bankruptcy.


Another issue that occurs when dealing with payday loans is that many lenders already have and can try to cash post-dated checks. If you handed over a stack of post-dated checks when you got your last cash advance it is possible the company might still try and cash them despite your bankruptcy filing. If this happens, it is good to know that the automatic stay, which is a part of every bankruptcy filing, should protect you from having this money taken. In fact, if a lender tries to cash a post-dated check after you have filed for bankruptcy they may be required to return the money to the bankruptcy trustee given the breach of the stay.


If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC today at (704) 370-2828 or find more resources here. As professionals who are experienced in the bankruptcy arena, our attorneys will provide you with the best advice for your particular situation.


About The Author: 

Bryan 1  Bryan Stone is a Partner with Arnold & Smith, PLLC where he focuses his practice on all aspects of bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord tenant issues.  Originally from Macon Georgia, Mr. Stone attended the University of Georgia for a BBA in Banking and Finance and went on to Wake Forest to earn his law degree.  After law school Mr. Stone relocated to Charlotte where he has become quite involved in many local organizations.  He is currently the Chair of “Bravo!” the young professionals organization of Opera Carolina, he also founded the UGA Alumni Association of Charlotte.  In his spare time he enjoys perfecting his BBQ skills for the annual “Q-City BBQ Championships” and playing softball with the Mecklenburg County Bar Softball League.



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