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Pay Day Loans-NEVER and I mean NEVER use them

debt relief attorneyI know times are tough sometimes and with the economy of today, our pay checks do not seem to be enough to meet all of our financial needs.  I agree that most Americans do not make enough money and deserve to make more money.  However, payday loans are not the way to go.

Payday loan companies have been around for years and are nothing new.  However, the economy today is opening up a new market for payday lenders.  The overall intent of payday lenders was not malicious but it has turned today to pray on those in great financial need or least on people who think they are in great need for quick cash.

What I mean by my last statement is that often people who are in fear turn to loans such as Payday loans out of panic or desperation.  A payday loan is a loan that often requires an outrageous interest rate with sever penalties for late payments.  Also, these lenders often require payments back by pre-written checks or an automatic withdraw from your checking account.

I think you get the point.  It is easy to get the point if you are thinking with a clear head and not under undue stress.  If I offered you a loan with interest of 30% plus and demand the repayment schedule by pre-written checks or automatic payments out of your checking account as a condition of the loan you would probably say absolutely not.

Nevertheless, consumers continue to trust in programs such as loan modifications or payday loans rather than what the law provides to you.  The reality is if you are in need to use a payday loan, something in your financial life is not working correctly.  Yes, I meant not working correctly.  I did not say you are not making enough money or that things are too expensive.  In order for your finances to work correctly, your expenses must be paid with what you earn.  If your expenses exceed your income, you have to make a change in your life and not get a payday loan.

If you chose to take the route of a payday loan and not make a change in your life, you are going to regret the uphill battle of trying to get right with the payday loans.  The loan will without a doubt put you in a worst position than you can be without using the loans.  If you are finding yourself needing to consider a payday loan, I would advise you seek professional help with your finances before you take the plunge into payday loan hell.

What happens to my mortgage if I file bankruptcy?

Many homeowners facing serious financial problems turn to the United States Bankruptcy court for debt relief.  They are looking for a way to eliminate all of those pesky credit card bills.  In some cases a creditor has even gone so far as to file a law suit and put a lien on the Debtor’s home, where the bankruptcy will strip the lien and remove the obligation to pay even when the property is sold.  However, the one consequence of a bankruptcy discharge that confuses many people is that a mortgage on real estate even if the home owner is current and continues to make all payments does get discharged in a bankruptcy.

There are a few exceptions to this rule of complete discharge, such as if the Debtor reaffirms the debt and proactively asks a Judge to not include the mortgage in the overall discharge, but that requires a showing of necessity to the Judge, and in most cases is highly inadvisable.

In general, several things will happen to your mortgage upon receiving a Chapter 7 discharge.  First, you will likely stop receiving bills from your mortgage servicer.  This may even happen with in a month of filing your bankruptcy case.  The reason for it is that pursuant to 11 U.S.C. § 362, there is an automatic stay which means that no creditor can try to collect a debt that is included in the bankruptcy.  You will also note that if you pull your credit report, the bank is likely not reporting your payments any longer, whether they are on time or not.  The reason for this again is that the responsibility to make the payments has been discharged.

Not withstanding these facts, if your property has less equity then the state exemptions allow, you do get to stay in your home so long as your remain current with the mortgage payments pursuant to your original contract.  Where many people get confused is understanding that even though the mortgage itself is discharged the lien against the property remains.  That is because the lien runs with the land itself, and if you were to sell the property, you must still pay off the lien.  Because of this fact, many banks will offer to refinance the lien so that they can get you on the hook for a new financial obligation.  You should remember that you do not need to do so, but in some cases, there may be a benefit if the property is worth less, the bank may offer to refinance at a lower rate, in order to create personal liability again.

There are many other more complex issues that can arise as a result of filing for bankruptcy and how it may affect your home particularly if you have equity in the home and it is a good idea before doing anything to speak to a qualified bankruptcy attorney in your area.