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When you struggle to pay your bills, you sometimes have to reach out for fast cash. Unfortunately, many of these institutions in Thornton also engage in predatory practices. They take advantage of your needs by charging extremely high-interest rates or bloated fees, which grow even higher if payments are made late.
Before you know it, you may find yourself overwhelmed with debt. However, you may be eligible for relief from payday and MoneyTree lenders through Colorado bankruptcy. Colorado bankruptcy offers a way to clear the financial slate and find relief from overwhelming debt. To file a bankruptcy petition in Thornton Colorado, your first course of action should be speaking with an Adams County Attorney.
Payday loans are defined by the Consumer Financial Protection Bureau as quick, high-cost loans that generally are less than $500. These loans are also referred to as “paycheck advances” and are designed to help you with a sudden financial issue that may arise between paychecks. Recently, Colorado voters passed Proposition 111, which capped payday lenders at $500 in order to protect consumers from falling into unmanageable amounts of debt. Unfortunately, even at a cap of $500, payday loans can begin to add up fast as they often come with interest rates as high as 36%.
There are two types of debt that courts consider during bankruptcy proceedings. The first is a secured debt, which is backed by some form of collateral, like a mortgage on a home. If you default on the payment, the bank may foreclose on your home to recoup their losses.
The second type of debt is unsecured debt. This debt is based on your creditworthiness, a measure of your past financial history, income, and credit score. Unsecured debt is almost always discharged in bankruptcy. Payday and MoneyTree lenders offer unsecured debt, so anything owed is eligible to be discharged.
The first step in filing a bankruptcy petition is to speak with a Thornton bankruptcy attorney. A bankruptcy attorney is your biggest advocate when facing overwhelming debt, reviewing your case and providing understanding regarding the status of your payday loan debts. They will use their analysis and expertise to advise you on the best course of action, helping you to discharge these debts and regain your financial standing.
One of the ways to dispel payday loans through bankruptcy is with Chapter 13. Chapter 13 is a type of bankruptcy defined by Title 11 of the US legal code and considered to be a form of “reorganization bankruptcy”. It involves a court-mandated repayment plan between you and your creditors, which if followed discharges your debt at the end of the repayment period. This form of bankruptcy covers any debts accrued from payday lenders.
Another option to take care of your payday loan debt is Chapter 7 bankruptcy. Also known as “liquidation bankruptcy,” Chapter 7 is an agreement with your creditors overseen by Colorado courts. For this form of bankruptcy, debtors sell off their assets to cover the cost of debts. Chapter 7 is not available to everyone, however, and there are particular requirements from the state of Colorado that must be met first. Your Adams County bankruptcy attorney will help determine if you meet these qualifications.
If you’re ready to take care of your payday loan debts with bankruptcy, here are all the steps that will be taken during your Colorado bankruptcy proceedings:
1. Pre-Bankruptcy Counseling – First, you will meet with an attorney to discuss your bankruptcy options as well as attend credit counseling. The Department of Justice has a list of accredited programs on its website. You and your attorney will collect all necessary documentation including proof of debt, payments, and income.
2. File The Bankruptcy Petition – Next, your Thornton bankruptcy attorney will file a petition with the court. This is the most complicated part of the process, but your bankruptcy attorney will walk you through the process. Once the petition is filed with the courts, the bankruptcy timeline begins. In Chapter 7, this process usually spans about 4 to 5 months, and for Chapter 13 it is around 3 to 5 years.
3. Automatic Stay Goes Into Effect – The automatic stay notifies all creditors of your bankruptcy filing with a Notice of Stay. It also places a halt on all collections communications. During this time, you will not have to pay your payday lenders.
4. Meeting 341(a) Takes Place – Meeting 341(a) is also known as the “creditor’s meeting.” This is a meeting with your creditors and attorney, during which creditors may discuss any complaints or objections. Creditors may or may not choose to attend.
5. Debtor Education Course – Colorado mandates the completion of a debtors education course. This course takes about two hours to complete and, like the credit counseling course, providers can be found through the Department of Justice website.
6. Receive The Notice Of Discharge – Finally, once the bankruptcy timeline has ended, you will receive a Notice of Discharge. This Notice notifies you and your creditors that your debt (including payday lender debt) has been eliminated.
As part of the bankruptcy proceedings in Colorado, you will attend meeting 341(a), which is a meeting between you, your Thornton bankruptcy attorney, and your creditors. This meeting is designed to determine if there are any objections to the potential bankruptcy are present. Most often, the only time an objection is legitimate is when there is a case of fraud involved. Proof is required to legitimize any creditor objections. Your Adams County bankruptcy lawyer will guide you through the process of the meetings.
Unfortunately, when you declare bankruptcy, the bank looks at your entire financial situation. They look at all of your debts including your mortgage, car loans, and credit card debt along with any payday loan debts that may be present. Unfortunately, one cannot solely discharge payday loan debts using bankruptcy. The upside of this, however, is that you will be able to restructure or wipe out all of your current debt, helping you to get your entire financial situation back in good standing.
When you are facing overwhelming debt from payday loans, your Thornton bankruptcy attorney is your biggest advocate. Choosing a great attorney is key in ensuring that your rights are protected and you are making the best legal decisions for your financial situation. Start by identifying lawyers in Thoron that specialize in bankruptcy, then contact them for an informative consultation. They will go over your options, make sure you understand your rights, and determine what the right plan may be for you. Read reviews, check credentials with the Colorado State Bar Association, and make sure they’ve worked on a case like yours before choosing an attorney.
If you are buried in debt from payday loans, relief could be on the horizon. Contact a Thornton bankruptcy attorney today to see what solutions are available to you.