Can I Eliminate Pay Day Loans with Bankruptcy?

Bankruptcy Attorney

Pay Day loans can be both a blessing a curse. On the one hand, they offer consumers who lack an emergency savings account or access to credit cards access to financing. On the other hand, payday loans, with their stringent terms and high-interest rates can quickly spiral into an uncontrollable cycle. Payday loans typically come in the form of a small too modest short-term loan. They are designed, in fact, to get you to your next paycheck.

Secured vs. Unsecured Debt

Secured debt is, as the name implies, a debt that is secured by some property as collateral. If you default on payments, then the creditor has the right to take the property back and sue you for any additional balance. Alternatively, unsecured debt isn’t secured by any property and includes medical bills, credit card debt, and payday loans. Unsecured debt in Chapter 7 is discharged at the conclusion of your bankctupty case. In a Chapter 13 bankruptcy, some or all of your unsecured debt can be eliminated depending on your income.

Ohio Pay-day Consumer Protections

The purpose of consumer protection laws in Ohio and 20 other US states is to prevent predatory lending. Payday loans have a rather notorious reputation for being unregulated, doing business with low to no credit consumers in a “wild west” style environment. States included Ohio, Indiana, Illinois and 19 other states have enacted legislation authorizing payday loans, while 18 other states prohibit extremely high cost payday lending. The Ohio Short Term Loan Act of 2008, offered protection for consumers in the state by both capping annual interests at 28% and a maximum loan amount of $500.Furthermore, Ohio Rev. Code 1321.35 et seq. includes that payday loans additional loan terms, debt limits, and collection limits.


You should consult with a bankruptcy attorney in Cincinnati before deciding to take out a payday loan. Especially, before considering filing for Chapter 7 or Chapter 13 bankruptcy. Additionally, if you are unsure of the legality or practices of payday lenders, you are encouraged to submit a complaint to the Consumer Financial Protection Bureau. If you have already taken out payday loans, contact an Ohio Bankruptcy Lawyer to find out your options.

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