Newbie ~ Hello & I could really use some help re: payday loan hell.

[HopefulMamma]

Greetings all!

I've been reading on the forum for some time now & have decided that I can't wait anymore to file Chapter 7... I have Nolo's book on hold at the library & will have it tomorrow. I will utilize that, this forum and also the chapter 7 info packet the division in california that I live in, uses for filing.

I am so stressed, drained & feel on the verge of a complete freak out from so long hanging by my fingernails & lately my 1st 30 day late in forever for me and my husband.

I am concerned because I've read quite a bit about payday loans. I think I have - gulp *red face* - 11 out. Talk about insanity.

One my lenders is LendUp - and is of most concern me.. It is an account that when you pay off your loan early or on time, you receive the authorization to borrow larger & larger amounts. I am given time - installments - but because I can pay it off & get 'instant' increase in my loan when I do so - I am up to $800. Let's say I borrowed about 500/600/700 in the past 90 days. Each time I paid off the balance in full, so I don't owe anything but the last loan amount totaling about $865, which is due in bi-weekly installments of about $72 each. Is this something that would cause my Chapter 7 to be dismissed?

Also, I have been using payday loans for many months and some almost a year. I am trapped in that awful cycle that I have been desperately trying to get out of this entire time. Looking for a 2nd job, ways to decrease expenses (which was done 7 years or more ago - i.e. no cell phones, cable, one car, etc.. etc..) and not able to escape.

I understand pay day & installment loans are generally discharged and not usually disputed (?) by lender, but I am concerned with the whole $925 'in total payday loans' red flag issue.

I understand there is no legal advice here, just looking for others who have experience with MULTIPLE payday loans, half of which are long time cycles and the other half would be within the 90 days before filing (if we file now). Each loan with the exception of the Lendup one noted above are for $300 or less.

Can anyone share their experience and/or if they think I am ok to apply?

I am absolutely desperate to apply at this time because I am at the point where I'm short money and NEED to put in for Chapter 7 but but am afraid of a rejection.

We clearly will qualify for a 'no asset chapter 7 case' and I'll be filing pro se.

Thanks in advance for any replies.. My heart goes out to all who are in a similar situation or suffering financially.

Blessings ~ Hopeful

P.S. I didn't see where I could post a thread anywhere else so hope I'm in the right spot!

[HopefulMamma]

Anyone have successful CH7 with multiple recent Payday Loans??

Hello...Newbie here.

I'm reading about payday loans on NOLO site which seems to indicate that as long as I don't have any more than $925 in payday loans for a single lender, that will not trigger presumed abuse.

However most info out there seems to say abuse is presumed when there are any payday loans taken out within 70-90 days prior to bk...

I have never taken out any PDL with intention to defraud ... I'm basically in payda loan hell that I've been trying tp escape for over a year. I do have about 5 New loans $300 or less that are recent. Will this throw out my case or does the trustee look at whole picture.

Please, if anyone has experience successfully filing ch7 IN Spite of recent payday loans I reaaly would love to her from you.

Thank you!

HM

[justbroke]

Personally, I would not worry about payday loans taken before filing, unless you did it the day before and it was for thousands of dollars. The likelihood of a payday lender filing a complaint to determine dischargeability (an adversary proceeding -- AP) would cost them at least $1,000 to launch. (The cost alone to file such AP is $350. They would also incur attorney fees of at least $750 just to file, and not including litigating the AP.)

Of course, if they did file such on a low amount, they are likely to lose anyhow. Most people use payday loans to make ends meet for living expenses. Living expenses are almost always deemed necessary expenses and are an exception or defense to this "presumption". Unless you are fraudulently obtaining payday loans, I would not worry that I had $300, $700, or even $1,000 of outstanding loans.

[LadyInTheRed]

HopefullMamma, I merged your two threads to avoid getting responses in two places.

I agree with JB that a creditor is not likely to file an AP for such small amounts. Even if they did, which is always a possibility, it would only affect the dischargeability of the one debt, not cause your whole case to be dismissed.

I don't know where the $925 comes from. The threasholds for debts to be presumed dischargeable are $500 for luxury goods or services within 90 days of filing and $750 for cash advances within 70 days of filing. [ETA: Okay, now I know where the $925 comes from. The thresholds are adjusted every 3 years. The current threasholds are $650 for luxury goods and services and $925 for cash advances.] I would think that payday loans are considered cash advances. If so, the necessary expenses exception JB refers to does not apply. To be safe, put 90 days between your filing and the last payday loan [ETA: I actually think 70 days is pretty safe for a cash advance, but there are a lot of websites that combine both provisions and say 90 days. So, a creditor could make the same mistake which makes the 90 days safer. You don't want to have to deal with an AP, even if you do win]. Then, if a lender objects to discharge, they would have to prove you took the loan without intending to pay it. That is pretty hard to do and, as you read on the Nolo site, payday lenders are not viewed favorably.

If the payday lender has a post-dated check or authorization to automatically debit your account, I suggest you empty that account before your next pay day and open an account at a different bank to deposit your next paycheck.

Even if you are filing pro se, you should consult with some BK attorneys to get some of your questions answered. You don't have to tell them you are going to file pro se.

ETA: Make sure the Nolo book you checkout is the current version. As you can see by my edits above, important things change. Here's a link to a document containing other adjustments to amounts in the BK code: http://www.tnmb.uscourts.gov/documen...djustments.pdf.

[justbroke]

I agree that a payday loan meets the presumption requirements if it's over $925 and a cash advance. I was just arguing that I would "argue" that I used the payday loan for food or other necessary expenses.

For the most part, I would not worry about anything under $1,000 anyhow. However, as we write, always keep a good amount of time between using any credit or "cash advance" and the filing of a bankruptcy. Almost everyone agrees that 90 days is sufficient for most credit-related matters.

(This 90-day "distancing" is not a blanket rule for other types of financial transactions such as the sale and transfer of property such as cars, homes, stocks, bonds, etc.)

[frogger]

Also, I have been using payday loans for many months and some almost a year. I am trapped in that awful cycle that I have been desperately trying to get out of this entire time. Looking for a 2nd job, ways to decrease expenses (which was done 7 years or more ago - i.e. no cell phones, cable, one car, etc.. etc..) and not able to escape.

This is the key statement here for me. Payday loans were a normal part of her daily personal business life. It's not like the OP went out and just got a payday advance and then is running to file bankruptcy.

Personally, I wouldn't worry about them. I don't see any problems here.

[HopefulMamma]

I could cry and feel so grateful for coming upon this forum. I thank you all deeply from my heart for your responses. I have been sick to my stomach and on the verge of true panic over this, and having this resource is a true blessing.. I still have yet to completely read over the replies & respond (need privacy) but wanted to post and thank you sincerely for taking the time to respond. I may have questions later & hope you won't mind me asking them but that will probably have to be tomorrow.

Thanks again & blessings to all.......

C

[HopefulMamma]

P.S. Thanks kindly, Lady, for merging my threads...I appreciate it and know they are essentially the same in regards to question/topic. Sorry for the dupe.

C

[justbroke]

We are a community forum and we are here to share our experiences, opinions and even feelings! Feel free to ask whatever question that you like.

[seagoat77]

If you haven't already, and to give yourself breathing room, if these loans are being paid back via
ACH, revoke the authorization by faxing it to them or sending them a certified letter. You can find a sample letter by a simple web search. Then secure your bank account by closing the current one (make sure the bank freezes it so nothing hits it - I had one try to take a payment after I sent the letter. I was able to get the bank to reverse it and they put a freeze on it, though) and opening a new one to secure your funds. Keep copies to show your bank in case they try to continue to withdraw. Makes it a little easier so you can file a dispute with the bank. Been there, done that.

[HopefulMamma]

Many thanks, JB!

[HopefulMamma]

Thank you for the suggestion & info, seagoat.. Hubby and I just discussed this morning and will be arranging to close our current account asap & opening a new one.

I do have a question for you about the ACH revoke.. I would really like to do this, but I am trying to avoid adding lates (30/60/90 day variety) or collections to credit report. As I understand it, altho' debit is wiped out, lates and negative/derogatory info remains for the usual term of 7 years. This will affect how quickly we can raise our scores post-BK. If I do go ahead and submit for the revoke, I suppose I can expect that they will report as late or collection right away to the credit bureaus? I think that several of these pay day loans say they don't report regular 'on time payments' to the bureaus, BUT, that in the agreement made, they can report lates or collection activity if it comes down to that.

Additionally, More than 1/2 already have been contacted and NEW agreements have been made with them.

The agreements are either with creditor's IN-house collection department (no default has occurred yet) to pay in installments, OR, they allowed me to invoke California's "Extended Payment Plan" allowed once per year, to pay in installments.

I made these agreements because I intended to honor/repay the loan. But now, I am desperate and WOULD like to revoke THESE latest agreements, but not sure I want to really mess up credit with lates/collections (thinking again of post-bk clean up of report).

Is there anyway to manage or 'time' things so that I can revoke the ACH's without ruining my credit? Anything I'm missing that might be helpful?

I hope I am making sense.. I'm very excited we are pursuing BK as of today that I can hardly contain myself. The hope of being free of these long-time shackles feels incredible but I'm so nervous!

Many thanks for your help!

C

[bcohen]

Thank you for the suggestion & info, seagoat.. Hubby and I just discussed this morning and will be arranging to close our current account asap & opening a new one.

Remember that since the payday lenders will likely continue to try and debit the account repeatedly, this could cause the bank to reopen the account, and accrue a large negative balance due to overdraft fees. This is not a problem as long as your new account is at a different bank. Otherwise, if you simply close the account at your current bank, and open a new account at the same bank, you will have your money taken to pay these overdrafts on the old, closed account.

I do have a question for you about the ACH revoke.. I would really like to do this, but I am trying to avoid adding lates (30/60/90 day variety) or collections to credit report. As I understand it, altho' debit is wiped out, lates and negative/derogatory info remains for the usual term of 7 years. This will affect how quickly we can raise our scores post-BK. If I do go ahead and submit for the revoke, I suppose I can expect that they will report as late or collection right away to the credit bureaus?

Is there anyway to manage or 'time' things so that I can revoke the ACH's without ruining my credit? Anything I'm missing that might be helpful

Once you have made the decision to file for Chapter 7 bankruptcy, you have absolutely nothing to gain by paying toward ANY unsecured debts which would be discharged. This certainly includes payday loans. Do not worry about the fact that some of your payday lenders might report negative information to the credit bureaus. This will not affect your credit scores post-bankruptcy, nor will it affect your ability to obtain new credit once you are discharged. The bankruptcy itself is a major derogatory event, and even assuming you have perfect credit before filing, your scores will still fall to the 625-650 range. By the same token, a person who has multiple collections/judgments might have a credit score in the 500-525 range, and upon filing their score will rise to about 600, and upon discharge, it will rise to the same 625-650 that the person who previously had perfect credit would have!

[HopefulMamma]

Holy smokes! SO glad I found this forum!!

THANK YOU, bcohen, for your post.... I had NO idea that that could happen w/our bank!

Additionally, I was REALLY wondering about the whole credit score thing with regards to negative reports. What you note is very comforting. I do have one last question in regards to the post-bankruptcy 'clean up'..

I understand your explanation above in that our (currently good) credit score at post-bk would be roughly about the same as someone with multiple pre-bk lates/collections, but I wonder if it would be much harder or take longer for someone with multiple pre-bk collections/lates to improve or raise their credit score. ... What do you think?

I understand that lates/collections, etc.. stay on record for 7 years so I imagine it would have to have some effect (?) I will do more research but am curious what you might have to say in that regards.

Many thanks again for replying.. I can't say how happy I am to have come across bkforum!

C

[bcohen]

I was REALLY wondering about the whole credit score thing with regards to negative reports. What you note is very comforting. I do have one last question in regards to the post-bankruptcy 'clean up'..

I understand your explanation above in that our (currently good) credit score at post-bk would be roughly about the same as someone with multiple pre-bk lates/collections, but I wonder if it would be much harder or take longer for someone with multiple pre-bk collections/lates to improve or raise their credit score. ... I understand that lates/collections, etc.. stay on record for 7 years so I imagine it would have to have some effect (?) I will do more research but am curious what you might have to say in that regards.

Again, I will repeat: do not worry about any late payments which your creditors might report before your case is filed, or while the case is still open. Once the discharge is granted, and all of your debts show a $0 balance and "discharged in Chapter 7 bankruptcy", the past payment history on those accounts (whether good or bad) will not affect your credit scores going forward. What will affect your credit scores going forward is how you handle any new credit or new debts incurred after filing. Most people have no problem obtaining new credit cards or auto loans after their bankruptcy discharge, and if you handle those account(s) responsibly, you will have good credit again within a few months. (And of course, do not use payday loans, car title loans, fee-laden credit cards, or other usurious loan products ever again!)