Bankruptcy and Pay Day Loan Debt

Pay day loans seem to becoming more and more common in Utah. Indeed, Utah has high per capital population who use pay day loan services for short term loan needs. Unlike many other states, Utah has relatively minimal regulations on the pay day loan market. Over the past few years, pay day lenders have popped up all over the states. The lack of state regulations has prompted some cities throughout the state to enact zoning ordinances which limit the number of pay day loans in a city’s jurisdictional boundaries. The access to pay day loan offices and the market strategies of these companies induced many individuals in Utah take on these types of short term loans. Now, in a bad economy with no end yet in sight, many individuals are struggling to pay off these loans and are being harassed by creditors.

Pay day loans typically carry much higher interest rates than conventional bank loans or even credit card debt. Indeed, in some cases, individuals have been stuck with interest rates exceeding 100% of the actually money borrowed by the debtor. Because of these rates, many debtors are simply unable to pay back the loans with the ever mounting and accruing interest.

For individuals who have fallen in the web of pay day loan companies, there is hope. Like many other types of debt, pay day loans are generally dischargeable in bankruptcy. Even if your loan was secured with property such as a car or recreational vehicle, which is common under many pay day loan agreements, your short term loan may likely be discharged in bankruptcy.

Alternatives to Pay Day Loan Shopping

Many people do not know that there are some great alternatives to pay day loans available. For instance, since the pay day loan waive has swept over, banks have wanted a piece of the pie and have formulated new loan packages targeted at short term loan customers. Indeed, many local banks in Utah offer new short term loans that work in much the same way as pay day loans. The advantages to going with a traditional bank include greater consumer protections and lower interest rates. Many bigger banks have yet picked up on this type of lending but local banks and credit unions in many cases have.

The federal government has considered programs to help individuals obtain small loans during this economic downturn. For instance, recently the federal government was offering short term loans (up to about 90 days) for smaller amounts (generally $2,500 and under). This program may become widely available in the near future. Consumers should check into all of these options prior to getting roped into a local pay day loan shop where you will be paying extremely high interest rates and tough penalties upon a default.

Get Help. Speak with a Bankruptcy Lawyer Today

Those who are sinking in consumer debt whether it is from pay day loans, credit cards, medical bills, or some other type of debt, should speak to an experienced bankruptcy lawyer regarding their personalized debt relief options. At Salcido Law Firm, we provide free consultations to individuals in Utah suffering from pay day loan debts and other potentially dischargeable obligations. We can be reached anytime at 801.413.1753.