Common Debt Traps: Payday Loans
Individuals who file for bankruptcy often do so because they have debt that they cannot reasonably pay off, such as payday loans. When a person is living paycheck to paycheck, it can be very difficult to cope with unexpected emergencies such as a vehicle repair or medical bill. This may prompt the individual to turn to a payday loan for relief. Unlike credible lenders, payday lenders capitalize on a borrower’s inability to pay off debt.
The borrower is typically required to provide a postdated check in exchange for a short-term loan. The lender subtracts excessive fees from the loan before the borrower even gets the money. Then, the loan will be due in full when the borrower receives his or her next paycheck. Since it is usually not feasible to pay the loan in full, the borrower has to take out another loan to pay off the first one, minus the same excessive lending fees. This cycle continues and the end result is that the borrower continues to pay substantial fees every pay period while being unable to pay off the principal. For borrowers who cannot break free of this debt trap, filing for bankruptcy may be the only reasonable option.
If you’re thinking of filing for bankruptcy in Aurora, Schaumburg, or the surrounding areas, you need the help of a seasoned bankruptcy lawyer on your side to help you get back on track financially