Why Declaring Bankruptcy Can Be Good If You Have Numerous Outstanding Payday Loans

Posted on: 27 February 2019

Obtaining a payday loan may be necessary for a variety of reasons, but if you're still struggling financially afterward, you might decide to obtain another such loan. It's easy to accumulate loans from several payday lenders in a short amount of time, and this can leave you in a deep financial hole that is difficult to climb out of. If you're in this situation, it might be time to think about declaring bankruptcy. Doing so can help you to eliminate these debts and put this difficult period behind you. Consult with a legal professional to determine if your situation warrants a bankruptcy declaration. Here are some reasons that this move is a good one in your situation.

The Debts Might Be Impossible To Repay

Perhaps the worst thing about a payday loan is how high the interest rates typically are. While a payday loan can be okay to get if you know you can pay it off before having to pay interest, this isn't the case for many recipients of these loans. When you consider what you took as a loan versus what you now owe in interest — especially if you've taken out several payday loans in quick succession — it might be apparent to you that you'll never be able to repay what you owe. Bankruptcy is sensible in this situation.

Lender Tactics Border On Harassment

One thing that you'll frequently find with payday loan lenders is that they can aggressively pursue you when you owe them money. While it's reasonable to expect any creditor to seek what you owe, you may feel as though payday loan lenders are bordering on harassment when it comes to making contact with you. For example, the lender might send repeated letters to your home, call you at home and at work, and even make threats against you. By declaring bankruptcy, you can put these difficult scenarios behind you.

A Chance To Rebuild Credit

Declaring bankruptcy affects your credit rating, but so does having a number of outstanding payday loans that you're not making payments on. While you might have dreams of paying off these loans and restoring your credit, doing so might be impractical. Consult with a bankruptcy attorney about your financial situation, and he or she may indicate that declaring bankruptcy to wipe out these debts, followed by some responsible spending with a credit card, can be effective for rebuilding your credit.

For more information, contact a local chapter 13 bankruptcy lawyer