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Discharging Payday loans in Bankruptcy

Discharging Payday loans in Bankruptcy
January 11, 2023

In tough economic times, many American Seniors on fixed incomes do desperate things to make ends meet. It is no secret, that many senior citizens in Florida must keep working to afford basic necessities. Some are becoming trapped in a destructive cycle of payday loans. A payday loan is a short term, high interest loan that is secured by a post-dated check. The company loans the borrower a few hundred dollars that is repaid on the borrower’s next payday. What is meant to be a small, convenient, and short-term loan to pay an immediate expense (take for instance, an overdue utility bill), can often result in multiple loans and the start of an endless debt cycle. Unfortunately, elderly payday loan borrowers are unable to free themselves from this cycle and are forced to seek bankruptcy protection.

Individuals often worry that the payday loan company may file a criminal “bad check” charge if the payday loan is included in the bankruptcy. The payday loan company wants you to believe this, and many have their customers sign a certification that the borrower is not contemplating a senior citizen bankruptcy.

While there are a few exceptions, generally being unable to pay a post-dated check is not a crime. When you wrote the check both you and the payday loan company knew there were not sufficient funds in your bank account to pay the check. Because there was no present intent to pay, the post-dated check is not a “bad check,” only a future promise to repay the loan.

Even after your bankruptcy is filed, a post-dated check may be presented for payment. In some cases (notably in the 6th and 8th Circuit Court of Appeals) courts have stated that the presentment of the post-dated check does not violate the automatic stay provisions of the bankruptcy code. However, some courts have said that the funds collected by the payday loan company is an “avoidable transfer” meaning the bankruptcy court could order the company to return the money.

If you are over the age of 65 and have payday loans, consult with an experienced elder needs bankruptcy attorney. It is important to identify any outstanding payday loan before filing bankruptcy. Most payday loans are discharged without issue; however, payday loan companies are becoming increasingly more knowledgeable and aggressive towards debtors in bankruptcy. Discuss the matter with your attorney and protect your legal rights.

Floridians over the age of 65 have needs that differ from other populations. 

If you are a senior in need of financial relief from your debts, a senior citizen bankruptcy may be your solution.  At Elder Needs Law, PLLC, all we do is consumer asset protection, Medicaid planning, Estate planning, probate and bankruptcy for seniors.  We protect assets from the government, nursing homes, spouses, family members, and creditors.  Please consult with a bankruptcy professional that focuses their practice on the senior population.  You have more options than you might think, and some options have hidden costs and fees you want to avoid.  You owe it to your family to weigh all your options and to be fully informed with a plan of action in place.  Please contact Elder Needs Law, PLLC at 305-614-7379 or look us up on the web at for more information on how the asset protection attorneys at Elder Needs Law, PLLC can help you and your family.

Jason Neufeld is the Founder and Managing Partner of Elder Needs Law, a Florida estate planning and elder law firm he created in 2017. With more than 15 years of experience practicing law, he represents clients in a wide range of legal matters, including Medicaid planning, estate planning, elder law, probate, Medicare, and life insurance.

Jason received his Juris Doctor from the University of Miami — School of Law and is a member of the Florida Bar and the Broward County Bar Association. He has received numerous accolades for his work, including being named a Rising Star and Super Lawyer by Super Lawyers and among the Florida Legal Elite by Florida Trend in 2024.

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