Payday loans trap borrowers in cycles of debt with interest rates exceeding 400% APR. Bankruptcy can break the cycle. Here is how it works for Miami residents.
Yes. Payday loans are unsecured debts and are generally fully dischargeable in both Chapter 7 and Chapter 13 bankruptcy. The only exception is if the lender can prove the loan was obtained through fraud (such as providing false income information on the application).
Most payday lenders do not challenge discharge because the cost of litigation exceeds the loan amount. However, some lenders may file a non-dischargeability complaint if you took out the loan very close to filing.
The moment you file bankruptcy, the automatic stay stops all collection on payday loans:
Yes. Payday loans are unsecured debts and are fully dischargeable in both Chapter 7 and Chapter 13. The rare exception is loans obtained through fraud.
No. The automatic stay prohibits all collection including ACH debits. However, you should close the account or revoke the ACH authorization to be safe, as some lenders attempt withdrawals despite the stay.
No. Writing a check that bounces due to a payday loan is a civil matter, not a criminal one. Threats of arrest are illegal collection tactics. If a lender threatens this, document it.
Generally, no. Once you decide to file bankruptcy, continuing to pay payday loans depletes money you will need for the filing. Consult an attorney before stopping payments.
All of them. There is no limit to the number of debts you can include in a bankruptcy filing. Every payday loan, regardless of the lender, can be listed and discharged.
Filing bankruptcy stops any lawsuit through the automatic stay. Even if a judgment has been entered, the debt can still be discharged. In Florida, head-of-household wages are fully exempt from garnishment. For non-head-of-household, the federal limit of 25% of disposable earnings applies.