Can Bankruptcy Get Rid Of Payday Loans?

Yes. Payday loans generally do not have any collateral attached to them and are not provided with any priority treatment under the Bankruptcy Code. They are general unsecured creditors and therefore subject to the bankruptcy discharge. Timing is important when it comes to payday loans. Since they are short-term loans by definition, the only argument they have in bankruptcy to except their debt from discharge is that you took out the loan immediately prior to bankruptcy, knowing that you were going to file. As they are the bottom-feeders of the credit world, this argument generally does not hold up but you want to avoid taking out a payday loan just prior to filing (like to pay your legal fees). Renewing or rolling over an existing loan, where no new funds are lent to you, is not an issue.

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