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Most Larimer County Residents have heard of payday loan providers or have at least seen these businesses all over town. These buildings pop up like weeds, sprouting in urban areas and promising fast cash meant to tide you over until your next paycheck.
If you’ve never used one of these personal loan companies, consider yourself lucky. For some other Fort Collins residents, utilizing a service of this type is part of their daily routine. Unfortunately, due mostly to convenience or urgent need, many people who patronize these businesses overlook some of the risks of using a payday loan company versus a more traditional lender.
The mechanics of these “quick cash now” places are quite simple. When you walk in the door, you’ll tell the lender how much you want to borrow – the Colorado legal limit for these loans is $500 or less– and then the lender will have you sign over a check for the amount of money you’re borrowing plus the interest rate. Note that the payday lender will never ask you if you can afford to repay this loan, or check your bank account as a bank would. 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.
On the date of your next paycheck, the lender will cash the check you left them covering the loan plus the interest. Or if you gave them your bank account information, they will pull funds directly from your bank account.
It sounds simple, but many Fort Collins 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-interest, short-term debt is inherently impractical for borrowers who already have debt that they are struggling to pay off. Once the payday loan debt cycle has begun, each new payday loan leaves them with significantly less income to meet the next round of expenses, which leads them to continue to pay payday loan fees.
There is some good news for residents of Fort Collins, although if you’ve already fallen victim to predatory payday loans, this good news might serve as cold comfort.
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 and capped these small personal loans to $500.
With that being said, our Fort Collins debt relief lawyers also want 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 borrowers into a never-ending cycle of payday borrowing just to stay afloat.
Our Fort Collins bankruptcy lawyers aren’t trying to vilify all small personal loan lenders–there are plenty of credible lenders that want to help people meet their goals via financing a loan. We just want to point out that there also are individuals and companies out there who value profit above everything, and finance loans to individuals who they know cannot afford to pay the interest.
You see, the biggest problem with these predatory payday loan companies is that they often market to and target people who may be both desperate for a quick cash influx and the least able to absorb the high costs of these loans.
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 Fort Collins bankruptcy attorneys. You need someone on your side who is familiar with state regulations on payday loans and who has experience helping people who have predatory payday loan debt. Contact our firm today to schedule a free case evaluation with one of our experienced Larimer County bankruptcy attorneys.
Before we discuss bankruptcy options, it’s important to note that every financial and legal situation is unique and based on the facts and circumstances present. Therefore, it is not possible to recommend a usable legal strategy– this website was designed for informational purposes only. However, we can say that for many Fort Collins residents who have fallen into a debt cycle through payday loans, bankruptcy has provided solutions and a pathway out of debt.
You should consider Chapter 7 or Chapter 13 bankruptcy if:
It’s easy to get into trouble with payday loans. If you are struggling to pay your debts but finding it difficult to do so because you have very little money left over each month after paying your living expenses, filing for Chapter 7 or Chapter 13 bankruptcy in Fort Collins may be the solution to your debt troubles. Payday loans and other unsecured loans are included in your bankruptcy and are discharged, meaning you are no longer legally required to repay these debts.
Another benefit of filing bankruptcy to discharge payday loan debt is the automatic stay. This is a mechanism created by federal bankruptcy law that stops a creditor from 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.
Through bankruptcy, you may be able to get a fresh start to recover from your financial crisis and begin rebuilding your finances. Contact our Fort Collins bankruptcy attorneys to schedule your free case consultation and learn more about how Chapter 7 or Chapter 13 bankruptcy can help you with your payday loans and other debts.
We can’t stress enough that the best thing you can is stay far away from predatory lenders. If you’re at the point where you need quick cash, it’s better to talk to an attorney about bankruptcy and get a head start on the process. However, we understand that most consumers are well-meaning, hard-working people that take their debt seriously, so it’s understandable why people sometimes seek out payday loans.
The most important wisdom we can impart on this website is that you shouldn’t feel guilty or ashamed if payday loans have your financial position dire. Many of these lenders prey on people already dealing with difficult financial situations and take advantage of them when they are at their most desperate.
If you would like help with unmanageable debts, predatory payday loans, harassing creditors, lawsuits or garnishments for unpaid debts, or foreclosure and repossession due to debt, contact our Fort Collins bankruptcy attorneys today. Bankruptcy can be the right option to help you make a fresh financial start. Talking through your options with one of our Larimer County debt relief lawyers can help you make the best decision during this very stressful time.