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What is Chapter 7 bankruptcy?

Chapter 7 helps a debtor to discharge all the debts on him/ her without having to repay them. Mainly all the unsecured debts are likely to be included in bankruptcy. And by filing for its protection, the court’s stay goes into effect automatically. When this happens, your payday creditor will not be able to threaten, sue, call you or garnish your wages.

To get your debts listed in Chapter 7, firstly, you need to qualify a ‘Means Test’. In this test, your family monthly income is considered in comparison to the respective state’s median income. And, on the successful qualification of the test, all your debts can be discharged now. Even if you do not qualify the test, there is another bankruptcy for you namely, Chapter 13.

Chapter 7 can include payday loans

Being an unsecured debt and not secured or priority debt, payday loans can be listed in bankruptcy. On filing this for payday lending, it will be unlawful for your payday lenders to ask you or threaten you for paying back the loan.

You should be more careful while signing the terms and conditions of a cash advance loan while applying for them. As the lenders often play tricks on the borrowers by including a condition as a disclaimer, stating that this loan is not going to be discharged under any bankruptcy. Also, sometimes the creditors claim that the borrower took the loan with an intention of not paying it. But be informed that the payday loans are like any other unsecured loans and are fully dischargeable under in a bankruptcy proceeding.

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