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For Jefferson County residents who find themselves needing a quick cash infusion to cover all of their monthly payments before their next paycheck comes in, payday loans seem like a great choice. This is because payday loans are quick and easy – you don’t have to fill out a tedious application, provide a bunch of extra documents, and wait several weeks for your money. Many places even advertise that you can be in and out in less than 30 minutes, cash in hand.
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 will 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. 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 Lakewood 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 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 Lakewood, 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 Lakewood bankruptcy attorneys also 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 Jefferson County into a never-ending cycle of payday borrowing just to stay afloat.
Our Lakewood debt relief attorneys 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.
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 Lakewood bankruptcy lawyers. 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 Jefferson County bankruptcy attorneys.
Despite the risks associated with payday loans, Lakewood residents continue to take them out for a variety of reasons. Many people don’t realize until too late that the original loan they took out to stretch funds until their next paycheck is now one of the main sources of their considerable debt.
Thankfully, bankruptcy is an option for Jefferson County residents stuck with payday loan 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 Jefferson County may be the solution to your debt troubles. Payday loans and other unsecured loans are included in your bankruptcy and are discharged, meaning you no longer are 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 can get a fresh start to recover from your financial crisis and begin rebuilding your finances. Contact our Lakewood 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.
Are you unsure if you have any recourse to get out of the vicious payday loan debt cycle?
Has your payday lender made it seem to you that this type of debt cannot be erased?
Are you wondering if bankruptcy is the right option for you?
If you are feeling pressured or threatened by predatory lenders or need help to get out of the cruel payday lending cycle, please reach out to our experienced Lakewood bankruptcy attorneys today. If you aren’t sure whether chapter 7 bankruptcy or chapter 13 bankruptcy would be best for your situation, our team of knowledgeable legal professionals would be happy to go over all of your debt relief options. Our goal is to get you on the path to financial health, through whatever means best fits your unique situation.