State/Country relating to question: Kansas
At present, I have continued to pay every loan on time, but had to do "rollovers" or pay the minimum on an established "line of credit" wherein my payment- although high ($200/2 weeks on $1500 loan) approximately less than $20 is applied to the principal out of every payment.
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At this time, it would be prudent to close the bank accounts associated with these payday loans and open new accounts at a different bank. You would never be able to pay off the loans with the astronomical interest rates. Your credit has already taken a hit from fallen behind. So, it would not get much worse if you fail to pay the loans.
You would get harassing phone calls and mostly illegal threats to arrest you and put you in jail if you do not pay. These are meant to scare you into borrowing money to pay off the loans that you can no longer afford. Do not fall for these threats and illegal collection tactics. You may also be sued.
To stop all the harassments and potential lawsuits, you may consider filing Chapter 7 bankruptcy to wipe out the debt and get a fresh start. You may be eligible to file for Chapter 7 bankruptcy protection, if you meet the means test—the income test. If your income is equal to or less than the current income guidelines for your family size in your state, you would be eligible to file for a Chapter 7 bankruptcy all things being equal. The income used in calculating the means test is the income for the 6 months before the filing of the bankruptcy petition. This means that if you are filing for bankruptcy protection this month, June 2012, the income that would be used is your income from December 2011 to May 2012. If you are filing next month, July 2012, the income that would be used in the means test calculation would be the income from January 2012 to June 2012, etc. In Chapter 7, if the Court grants you a Discharge your debts will be wiped out. You would get a clean state, a fresh start.
The filling fee for Chapter 7 is $306.00. You may able to waive this filing fee if your income is 150% below the current poverty guidelines. Click here for current poverty guidelines:
These are current income guidelines for the State of Kansas:
Family size of one person $42,924.00 Family size of two persons $57,562.00 Family size of three persons $64,834 .00 Family size of four persons $74,959.00 Add $7,500.00 for additional individual
You must receive budget and credit counseling from an approved credit counseling agency and obtain a Certificate of Credit Counselling to be filed with his bankruptcy case. The agency will review possible options available to you in credit counseling and assist you in reviewing your budget. Different agencies provide the counseling in-person, by telephone, or over the Internet.
It is usually a good idea for you to meet with an attorney before you receive the required credit counseling. Unlike a credit counselor, who cannot give legal advice, an attorney can provide counseling on whether bankruptcy is the best option. If bankruptcy is not the right answer for you, a good attorney will offer a range of other suggestions. The attorney can also provide you with a list of approved credit counseling agencies, or you can check the website for the United States Trustee Program office at http://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm
After your case is filed, you must complete an approved course in personal finances. This course will take approximately two hours to complete. Your attorney can give you a list of organizations that provide approved courses, or you can check the website for the United States Trustee Program office at http://www.usdoj.gov/ust/eo/bapcpa/ccde/de_approved.htm
Consult a local bankruptcy attorney for further explanations of your rights and responsibilities.
The sites below are good resources for finding bankruptcy attorneys in your area:
If you cannot afford an attorney, then the next best alternative will be to use bankruptcy petition preparer. Bankruptcy petition preparers prepare bankruptcy forms but they cannot give you legal advice because they are not attorneys. Click on the links below for some of the bankruptcy petition preparers. You can do some searches on Google or Yahoo if you do not like the ones on the links below.
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