As previously discussed, payday loans are referred to as “predatory” loans. These companies target desperate individuals who are in serious financial difficulties. They have run out of all options to borrow money and now must turn to these unscrupulous organizations.
The interest rates range from 24% to 149%. In addition, there is usually an origination fee of 5-10% add to the interest rates.
Recently, the Bankruptcy Court awarded Debtor emotional distress damages of $12,000 as well as the $575 loan amount $370 in bank fees, $12,000 in punitive damages, etc. for a total of $27,483.
This payday loan company (Check Into Cash of Washington Inc. “CIC”) filed several appeals and the Debtor remained successful in the amounts awarded by the Court.
What happened? The Debtor being desperate for immediate cash contacted Check Into Cash of Washington, Inc. and took out a $575 payday loan. Before payment was due, the Debtor put a stop payment on the check that she had provided to CIC to secure the loan. The Debtor advised CIC that she decided to file Chapter 7 Bankruptcy and gave the name of her attorney.
When the bankruptcy was in effect, the Debtor noticed that CIC had cashed her check and caused an overdraft.
The Debtor was successful since CIC willfully violated the automatic stay in effect which does not allow creditors to collect or seek collection from a Debtor.
You should be aware of your rights when you file for bankruptcy and don’t allow creditors to take advantage of you.