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One of the most common reasons why prospective clients come into our Denver bankruptcy law firm is that debt collectors are harassing them. It starts with a strongly worded letter one day and then progresses to weekly letters, spamming emails, and threatening phone calls at all hours.
Some of the worst offenders are payday loan companies. Quite often payday companies will even stoop to harassing family members and the employers of people who have taken out the loan. These so-called businesses will even lie to you and say that you can be arrested and put in jail for not giving into their demands for cash, but rest assured that you cannot.
Make no mistake, Payday Loan outfits are unscrupulous predators that target hard-working, vulnerable people already dealing with debt that is most often no fault of their own. The attorneys at our Denver law firm have no patience for Payday loan businesses and are committed to helping clients discharge Payday loan debt whenever possible.
If you find yourself caught in a payday loan trap, you may want to consider the benefits of filing for bankruptcy protection. We have found that Coloradans that are struggling to pay back these loans are usually also struggling with their regular bills and may need help in finally conquering their outstanding debt.
Bankruptcy protection can give you the space you need to evaluate your financial situation and get back on track. Having the opportunity to get a fresh start financially could be just what you need.
Predatory lending is a term used to describe a wide range of unfair financial practices. Payday loans are small, short-term, high-interest loans that typically come due on your next payday. Their mechanics are quite simple and start with the lender providing the borrower with cash for the loan amount.
Commonly referred to as payday loans, other names you may have seen include cash advance loans, paycheck loans, short-term loans, payroll loans, payday advance, and fast-cash loans.
Payday loans are a trap that catches many struggling consumers. These types of loans tend to have a simple application process and very few requirements. They will typically look to see that you have an active account with a bank or credit union and a job or other verifiable source of income.
You provide your identification, banking, and other details. Once you’re approved, you usually receive your loan funds within 24 hours. The fees initially charged make these loans very expensive to begin with, but things get really rocky if you lack the funds to repay the loan and fees on the next payday, which is the situation that cash-strapped people frequently find themselves in.
In Colorado, charging excessive interest rates or predatory loan practices is prohibited as criminal usury, thanks to Denver’s Proposition 111, which was passed in 2018. Proposition 111, also known as the Limits on Payday Loan Charges Initiative, was designed to reduce the interest rate on short-term loans to a yearly rate of 36 percent and eliminated all other finance charges and fees associated with payday lending.
However, it’s important to note 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 Denver residents into a never-ending cycle of payday borrowing just to stay afloat. This vicious, insidious cycle can replay itself over and over again and can result in truly exorbitant fees being paid over the term of the loan.
Payday loan companies exist to set customers like you to become reliant on them, because the loans are due quickly, and the fees can continue adding up. These requirements often make it difficult for a borrower to pay off a loan and meet regular monthly expenses. Additionally, many payday loan users have loans from several different businesses, worsening their financial situation.
If you or someone you love is caught in a payday loan debt cycle and needs help figuring a way out, bankruptcy may be an option. For a no-cost case consultation, please contact our knowledgeable CO bankruptcy attorneys.
People use payday loans to avoid borrowing from family and friends and to avoid cutting back further on expenses. It’s generally seen as a stopgap measure for bankruptcy. But the sad truth is, these people often end up doing those things anyway to pay back the loan, landing them even deeper in debt.
Thanks to the negative stigma surrounding bankruptcy, many people go to desperate lengths to avoid having to file. Bankruptcy can be perceived as a failing or shameful. And while bankruptcy isn’t right for everyone, the truth is that the Federal Bankruptcy Code exists to give debtors a fresh financial start.
Financial distress often occurs gradually, showing multiple signs that your finances are deteriorating and you might want to start thinking about filing for bankruptcy. To avoid waiting until it’s too late, stay on the lookout for the following symptoms:
If you can relate to any of the above, bankruptcy may be the right choice for you. Bankruptcy exists because we deem it a societal good to give our fellow citizens a second chance. For personal debt relief in Colorado, petitioners can file either Chapter 7 or Chapter 13 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, the court will require 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.
It’s important to note that if you have been a victim of harassment from payday loan debt collectors, filing for either Chapter 7 or Chapter 13 bankruptcy can bring you almost immediate relief from the aggravation of incessant, threatening phone calls, e-mails, and letters. This is thanks to what’s known as the automatic stay. As soon as a petitioner files for personal bankruptcy in the Denver County area, the automatic stay goes into effect which prevents all debt collectors from further contact with the petitioner until the end of the bankruptcy case.
If you’re interested in learning more about Chapter 7 or Chapter 13 bankruptcy and which option may be right for you, you can find more in-depth information on this website or contact our Denver bankruptcy lawyers for a no-cost case consultation.
People in financial difficulty often turn to bad solutions because their options are limited. Issues like bad credit ratings, mounting debt, and struggling to make ends meet often lead them to predatory lenders that take advantage of them and, in most cases, make a bad situation worse.
If you live in Denver, Larimer, El Paso, Jefferson, or any of the surrounding counties, are in severe financial distress and are thinking about filing bankruptcy, please contact our Denver debt relief attorneys to discuss the best way to handle your situation.