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Chapter 7 may be a better solution than payday loans

The overwhelming feeling of being out of money before all the bills are paid is something many in Kentucky can appreciate. While the option of filing for Chapter 7 bankruptcy may provide some with relief from their debts, some may first try alternative methods of debt relief. Unfortunately, far from providing a solution, some of these methods compound the situation.

One woman describes falling short on the money she needed to pay her rent. She decided to borrow $200 from a payday loan store, writing a check for $215 for the loan and a fee. However, when the deadline for repayment arrived two weeks later, the woman was no closer to having solved her financial situation, so she borrowed more from the payday lender. More interest and fees were added, and before she knew it, the woman had paid over $1,400 in interest to the payday loan store.

Kentucky residents have paid millions of dollars to payday lenders, who take advantage of their desperate circumstances by providing quick cash with little investigation into a person's creditworthiness. Most people using payday lenders are already nearing financial disaster. However, federal lawmakers are considering legislation to limit the ability of predatory lenders to profit from others' unfortunate situations.

Those in Kentucky facing financial struggles have options beyond payday loans. Rather than dealing with the short-term solution, Chapter 7 bankruptcy can address the deeper issue of out-of-control finances by seeking the discharge of many unsecured debt, such as credit cards and medical bills. A compassionate bankruptcy attorney can provide information and assistance to anyone seeking debt relief.

Source: kentucky.com, "Quick cash from payday loans comes at a high price", John Cheves, July 8, 2017

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