Payday loans and BKR Ch. 7

[Bailey3017]

My husband and I have several storefront PDLs and online PDLs.

We also have a signature loan with Regional Finance in TN. It was for 1,000.00 and we've paid it down to 650.00. They showed up at my husbands work the other day.

Due to a car accident my husband had back in Jan. 2010 and not having insurance at the time (totally my fault at letting it lapse), he is having to pay the other drivers insurance claims to their respective insurance companies. The total for all of that is over 30,000.00. We have paid some part of it but in no way in any shape to pay it all now. Once company (allstate) got a judgement against my husband today. As long as we make the agreed upon payments they will go no further with legal action, etc.

We have decided that between the insurance claims and the PDLs, and other loan that it best to file Ch. 7 due to there are no funds left at the end of the payday to live off of.

My main question is...will all the PDLs be able to be included in the BKR filing and be discharged?

Any info would be greatly appreciated!

[1stStep]

Pay day loans are unsecured loans and are for the most part able to be discharged...also the Allstate judgment and any other unsecured claims are also largely dischargeable.

Contact a BK lawyer since everyone's circumstances are different and the local courts have their own nuances and rules.

[LearningasIgo]

OP: My main question is...will all the PDLs be able to be included in the BKR filing and be discharged?

______________________________

In general, what can be discharged in BK7:

Credit card debts

Medical bills

Lawsuit judgments

Debts arising from car accidents

Obligations under leases and contracts

Personal loans (even with a handshake) and promissory notes

...and for sure, payday loans....

[1stStep]

They are able to be included...as far as being discharged, it will depend on whether or not PDL company fights the BK.

[LearningasIgo]

The odds of any creditor, especially the unsecured variety, fighting the Bk is next to never happening. In the usual and typical BK7, no assets case, RARELY does a creditor shows up to contest at the 341 meeting, and while they have X amount of days to do so, whether they attend the 341 meeting or not, it's a LONG shot that they would contest. While it is a possibility, it is not close to a probability and shouldn't be much of a concern or worry of the typical BK7 filer.

[Methuss]

The Payday loans will be discharged. You will probably not be able to discharge the insurance liability judgment. This debt was caused by an injury your husband was found liable for and unless you live in Wisconsin you were breaking the law by driving without liability insurance. If you commit a crime and hurt someone in the process that is almost always non-dischargeable.

Allstate will fight like hell -- and they have some seriously ruthless lawyers -- to ensure you do not get a discharge on this judgment they have. It's what insurance companies do.

Edited August 16, 2011 by Methuss

[LearningasIgo]

A barometer for debts arising from car accidents is something on the order of "...willful and malicious intent...." Any that come under that umbrella are most likely not dischargable. Drunk driving, for example.

However, having no insurance or inadequate insurance, I think (may be wrong) have a good chance for discharge. That's my interpretation. As I said, though, that may be incorrect. Just the example of, for example, having insurance but not enough to cover the financial consequences, would seem a debt that would discharge. That certainly would not be "willful and malicious". Maybe not having insurance at all would slide into that willful and malicious category, but seems there might be many reasons for the non insurance, some of them benign.

[WhoCares1000]

I would not worry about the Payday loans. Those are unsecured and they really do not want to get in front of a judge and complain about fraud when their whole business model is based on fraud to begin with. The courts are not kind to that.

I would however worry about the accident thing. All states (even WI and NH and WI now requires insurance) have fiscal responsibility laws and it could be stated that you willfully and maliciously drove a vehicle that does not have insurance on it.

I would suggest a lawyer because this is really not a normal case. You can save up the money you would have used to pay the payday loans and get a lawyer. They will call and froth and scream and in the end maybe even violate federal law but once you file for BK7, they cannot do anything.

[jq26]

Issue #1: Pay day loans: dischargeable. No question.

Issue #2: The judgment from the car accident: dischargeable. You may have been negligent per se (negligent by reason of violation of state statute), but you did not commit an intentional tort.

1) The courts require tortious conduct AND willful & malicious conduct. This is limited to intentional torts. Negligent and reckless torts are outside the realm of this bk provision. Example: you punch someone in the face and they are granted a judgment for $10,000. That's the intentional tort of battery, so not dischargeable. If you are texting on your phone and you mow someone down, that's stupid but not an intentional tort. Therefore, it is still dischargeable. That's the current state of the law, whether we agree or not.

"In 1998, . . . the Supreme Court clarified that the § 523(a)(6)

exception “is confined to debts ‘based on what the law has for

generations called an intentional tort.’” Geiger, 523 U.S. at 60

(quoting Geiger v. Kawaauhau (In re Geiger), 113 F.3d 848, 852 (8th

Cir. 1997)(en banc)).

2) Discharge of even the worst intentional tort would be automatic unless the creditor requests a hearing and fights it. That's expensive, and adds another impediment to collection for intentional tort creditors. It also means that a) intentional tort creditors with small judgments likely ignore the case filing and do not seek a hearing and exception to discharge, and those creditors with "borderline" cases think twice before seeking a hearing and footing the legal bill in an uphill battle.

[jq26]

A bit off topic, but to clear up any confusion:

Drunk driving, for example.

Different from willful & malicious. But they don't get off easy. Because even though 523(a)(6) doesn't deem these claims excepted from discharge, 523(a)(9) deems them nondischargeable:

...for death or personal injury caused by the debtor’s operation of a motor vehicle, vessel, or aircraft if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance;

Worse for the debtor who created debts that arose from drunk driving is the fact that these debts are nondischargeable regardless of whether they're listed in the filing or not, and creditors of this type do not have to dispute them. So debtors can list them in their filing, creditors do nothing, and they are automatically deemed nondischargeable. If you are intoxicated and you cause damage by vehicle, that'll stick to you for life.

[Bailey3017]

Thanks so much to all for your responses! It eased my mind until we were able to meet with the attorney.

We met with him yesterday and are actually going to do a Ch. 13 filing, which is fine for our finances and situation. None the less we are on the road to being able to live and not pay out tons of interest to these PDLs that we were sooooooo stupid to get. Lesson learned and will NEVER do again!!!!!

Now it's just getting to ensure the online PDLs do not draft my account tomorrow! Eeeeeecccckkkk! Working on that today.

[jq26]

Can you call your bank and freeze the account temporarily?

[LearningasIgo]

We met with him yesterday and are actually going to do a Ch. 13 filing, which is fine for our finances and situation.

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Just curious why CH13? Of course, if it was the "means test" non qualification, then curiosity resolved.

In general, CH13 wouldn't make sense unless it is a means test problem. Usually there are at least five years of payments to deal with, albeit at a reduced percentage. But an added problem is that some folks find that this, too, becomes unmanageable, especially when "Murphy's Law" is always hanging around to lower its gavel.

But, just curious.

[Bailey3017]

jq26 - Yes they were able to do a stop payment on the said internet PDL drafts. Cost me 35.00 each but was a LOT less than the actual amounts being drafted!!!

LearningasIgo - It wasnt the means test, we met that with flying colors. My husband and I had filed Ch. 13 back in 2006 due to job loss and trying to keep our home we had at the time. You have to be 6 yrs out of Ch. 13 prior to filing a Ch. 7, but we could file Ch. 13 again with the time frame were in so we did that. Our BKR attorney stated we can convert it to Ch. 7 in Oct. of 2012 to avoid the 3-5 yrs of payments.

On a side note, I didn't realize how much debt we TRUELY had until I had to write it all down, one by one! It was disheartning and disgusting! How easy it is to get in over your head with a simple writing of a check or online application. Never again. Unfortunately we learned our lesson the hard way. At the time we felt as tho we had no other option, but now finding that we did...just don't do it! Find another way or deal with whatever debt it is.

Anyone reading this I state to you that ANY type of PDL is a HORRIBLE idea and DON'T DO IT! Plain and simple! These people were great to work with as long as they were getting my money every two weeks, their attitudes changed greatly once they were advised that they would have to wait to get any funds and we were filing Ch. 13! It's a shame they are even legal and allowed to operate but it is what it is and if I can stop one person from getting one of these loans then I feel like I've done good by sharing my experience with them!

Now it's time to save money and function within our means!

[Bailey3017]

Also I wanted to note we were able to include the insurance claims! Another monkey off our back as well.

[Bailey3017]

Just wanted to give an update to this post - DH and I have converted to CH 7 and are having our meeting of creditors on the 15th! We were still able to include all creditors (PDLs and AllState). Hopefully things will go well at the meeting and then will be said and done.