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Bad in the old days if you couldn’t get a bank-funded loan, desperate people would visit a loan shark. If you’ve watched any old gangster-type movies or read any pulpy detective novels set in the 1920s and 30s, you know that loan sharks are generally bad news. They offered high-interest rate personal loans and when the borrower couldn’t pay them back on time, a local heavy went to their house and used physical intimidation in an attempt to get their money.
These days, local loan sharks have gone corporate. Gone are the days of physical violence when borrowers can’t repay loans. These days, these predatory loan companies take the baseball bat to your credit score when you can’t afford the high-interest rates. Even worse, these companies have no problem using emotional intimidation in an attempt to get paid, even going so far as coercing people to withdraw money from retirement accounts or threatening them with arrest.
You should never pay debt with money from a retirement account and the police will never arrest you for an unpaid Payday loan debt, no matter what any unscrupulous lender tells you. If you’re dealing with uncontrollable debt, now may be the time to consider bankruptcy.
Even though predatory lending is generally illegal, many small lending agencies still attempt to target vulnerable individuals. Some of the common warning signs that a lender might be predatory include:
If you’ve fallen victim to a predatory payday loan lender, our Aurora bankruptcy lawyers are here to help. If you are facing financial struggles as a result of predatory lending or you are tired of the distress and embarrassment debt is causing you, bankruptcy may be the lifeline you need. Contact us for a free evaluation of your financial situation so we can figure out, together, how to get you on the road to a fresh financial start. Let our firm help you and your family get off the payday loan cycle and onto the road to financial recovery.
Payday loans are small, short-term, high-interest loans that typically come due on your next payday. Often referred to as cash advances, payday advances, paycheck advances, short-term loans, or fast cash loans, no matter what you call them, these types of loans can be some of the hardest types of debt to get rid of.
The mechanics of these “quick cash now” places are quite simple. When you walk in the door, you and the lender will come to an agreement about how much money you want to borrow. Then the lender will have you sign over a check for the amount of money you’re borrowing plus the interest rate. Then the lender typically gives you the cash, minus the interest rate, and then cashes your check once it’s time to repay. Some payday loan places may even require the borrower to provide banking account information so the payday loan company can disburse funds directly into your designated account.
If that sounds too good to be true, that’s because it is. Many Aurora residents find themselves taking out new payday loans before they’ve paid off the last one because they don’t have enough money in their bank account to cover the loan amount plus interest. This is because the interest rates on payday loans are typically astronomical.
High-priced, short-term debt is inherently unsuitable for borrowers coming up short on regular expenses. Each loan leaves them with significantly less income to meet the next round of
expenses, which leads them to continue to pay payday loan fees in a cycle of debt that they can’t escape.
There is some good news for residents of Aurora. Unlike other states that have no regulations for these kinds of predatory lenders, in Colorado, charging excessive interest rates or predatory loan practices is prohibited as criminal usury, thanks to Colorado’s Proposition 111. Proposition 111, also known as the Limits on Payday Loan Charges Initiative, was passed in 2018 and designed to reduce the interest rate on short-term loans to a yearly rate of 36 percent. It also eliminated all other finance charges and fees associated with payday lending.
However, our Aurora bankruptcy attorneys feel the need to point out that even though predatory lending is regulated by state and federal laws to cap the interest rate that these businesses can charge customers, at the end of the day, the legal interest rate allowed is still unreasonably high and forces many residents in the Arapahoe County area into a never-ending cycle of payday borrowing just to stay afloat.
We aren’t trying to paint a negative picture about every lender–there are plenty of credible lenders that want to help people achieve their dreams through financing a loan, but there are also those who want to take advantage by lending people money they cannot afford to borrow. These predatory lenders are only interested in making a profit, even if that means preying on the desperation of Aurora residents looking for a helping hand to tide them over until their next paycheck.
If you’ve fallen prey to a predatory payday lender, the good news is, you can still recover from your financial mistake. The key is to work with one of our experienced Aurora debt relief attorneys. You need someone who is familiar with state regulations on payday loans and who knows how to help people who are in debt. Contact our firm today to schedule a free case evaluation with one of our experienced Colorado Springs area bankruptcy attorneys.
As experienced debt relief attorneys who have been working bankruptcy cases in Colorado for years, our Aurora bankruptcy lawyers have noticed a recent alarming uptick in prospective clients who have considerable debt from payday loans.
And it’s not just the debt itself that these clients are seeking relief from, it’s the threatening tactics that these predatory lenders use– calling debtors at all hours of the day and night, sending increasingly threatening letters; some clients have reported that some of these companies have threatened them with jail time if they don’t pay their bills, or pretended to be the police calling to collect the debt.
Let us go ahead and give you some valuable information for your peace of mind.
Bankruptcy exists to give hard-working people who are down on their luck financially a fresh start. There are two Chapters available in Colorado to individuals seeking payday loan debt relief through bankruptcy, Chapter 7 and Chapter 13.
The first thing you should know is that whether you file for Chapter 7 or Chapter 13 bankruptcy in Colorado, as soon as you submit your filing to the court an automatic stay goes into effect. This is a mechanism created by federal bankruptcy law that acts as a bar to a creditor collecting a debt. So if you’ve been harassed and threatened by payday lenders seeking debt repayment, those calls, letters, and e-mails must immediately cease as soon as you file bankruptcy.
In Chapter 7 Bankruptcy, also known as liquidation bankruptcy, filers hope to earn a discharge of most or all of their unsecured debt by the end of the process. Discharge means the debt is forgiven and doesn’t get repaid. Unlike secured debt, unsecured debt includes anything not backed by property or collateral, including small personal loans like payday loans.
In a Chapter 13 bankruptcy, also known as a “wage-earners bankruptcy” the court requires the borrower to repay debt using a court-structured repayment plan. This repayment plan generally lasts anywhere from 3 to 5 years. Payday loans will be treated as any other unsecured debt and may be included in the repayment plan, allowing the debtor to repay creditors over a period of time from future income.
Payday loans seem like an appealing option when you’re struggling to pay your bills and falling behind on monthly payments. But sometimes, borrowers find themselves spiraling toward bankruptcy without even realizing it.
For many people, filing a bankruptcy case gives them freedom from debt they cannot pay. But is it right for you? Contact our CO bankruptcy attorneys today for a free case consultation. Our team of legal professionals can help you decide if bankruptcy is the best option for you.